Collective Investment Schemes (Qualifying Professional Investor Funds)(Class Q) Rules and Guidance, 2021

Summary

This document sets out the Guernsey Financial Services Commission's Class Q Rules and Guidance 2021, which replace the 1998 Class Q Rules and govern Qualifying Professional Investor Funds (Class Q Schemes) authorised under the Protection of Investors (Bailiwick of Guernsey) Law, 2020. The Rules cover the full life-cycle of a Class Q Scheme, including investor eligibility, constitution and investment powers, unit dealings, the roles of the manager, designated administrator and custodian/trustee, income distribution, reporting to holders, meetings, information particulars and authorisation.

• Investor eligibility: The manager (and company/directors for a company scheme) must take reasonable steps and have procedures in place to ensure units are beneficially owned only by qualifying professional investors, with limited exceptions for transfers on death, bankruptcy or similar events.
• Constitution and investment powers: Principal documents and information particulars must be filed with the Commission; investments must spread risk and stay within disclosed limits, with prior Commission notification and holder notice required before significant departures or additional fees/charges.
• Manager and custodian/trustee structure: Every scheme must have a designated administrator and a designated custodian or trustee, who must be separate, independently licensed Guernsey-based persons with no common officers or subsidiary relationship to the manager.
• Notifications to the Commission: The designated administrator or custodian/trustee must give prior written notice of proposals to change fees, investment/borrowing powers, the custodian/trustee, holders' voting rights, or to replace the manager; breaches of investment/borrowing limits not rectified within three months must also be notified.
• Reporting and information particulars: Schemes must prepare and publish annual reports and financial statements, maintain a register of holders, and prepare, publish and keep accurate information particulars (per Schedule 1), which must not be false or misleading.
• Authorisation and transition: Schemes must apply for authorisation with the required declarations; transitional and savings provisions apply following revocation of the 1998 Rules.

The Rules came into force on 1 November 2021 and apply to every Class Q Scheme, including umbrella and multi-class funds, unless the Commission grants a written exclusion or modification for a specific scheme.

Key obligations

• The manager, and in a company scheme the company and directors, must take all reasonable steps to ensure units are beneficially owned only by qualifying professional investors, and must have procedures for investors to confirm their qualifying status.
• Partly paid units transferred to a non-qualifying investor on death, bankruptcy, desastre, curatelle or similar must be redeemed by the manager as soon as practicable.
• Signed or certified copies of the principal documents and information particulars, and any amendments, must be filed with the Commission.
• No expenses, fees or charges beyond those disclosed may be paid out of scheme property unless the Commission is notified, requirements are met, holders are given prior notice, and information particulars are revised.
• No significant departure from disclosed investment or borrowing limits may be made without prior Commission notification, compliance with the Rules, prior holder notice, and revision of information particulars.
• If a breach of investment or borrowing limits is not rectified within three months, the manager must notify the Commission.
• The manager (or custodian/trustee if it required suspension) must inform the Commission immediately, with reasons, if dealings in units are suspended.
• The manager or company must establish and maintain a register of holders containing specified details, kept complete and up to date, and must supply holders with free copies of their register entries on request.
• Every scheme must have a designated administrator and a designated custodian or trustee, which must be separate, independently licensed Guernsey entities with no common officers or subsidiary relationship to the manager.
• The designated administrator must give prior written notice to the Commission before paying additional fees/expenses, altering investment/borrowing powers, replacing the custodian or trustee, or altering holders' voting or participation rights.
• The custodian or trustee must give prior written notice to the Commission before replacing the manager of the scheme.
• An auditor must be appointed at the outset of the scheme and upon any vacancy.
• Annual reports and financial statements must be prepared, published, and offered to purchasers of units.
• Information particulars must be prepared in accordance with Schedule 1, published, kept current, and must not be false or misleading.
• An application for authorisation, including the required declarations, must be made to the Commission.

Applies to

Class Q Schemes (Qualifying Professional Investor Funds), managers of Class Q Schemes, designated administrators, custodians and trustees, directors of company schemes, auditors of Class Q Schemes, holders/investors in Class Q Schemes

Deadlines

• 1 November 2021: Commencement date of the Class Q Rules, 2021, which replace the 1998 Class Q Rules.
• three months: If a breach of investment or borrowing limits or restrictions has not been rectified within three months, the manager must notify the Commission.

Related documents

• This document is made under Protection of Investors (Bailiwick of Guernsey) Law, 2020