Changing the depository of an open-ended investment company
Produced in partnership with Jonathan Bayliss of Partner, Charles Russell Speechlys LLP
Changing the depository of an open-ended investment company

The following Financial Services guidance note Produced in partnership with Jonathan Bayliss of Partner, Charles Russell Speechlys LLP provides comprehensive and up to date legal information covering:

  • Changing the depository of an open-ended investment company
  • Introduction to OEICS and depositories
  • Why do depository changes occur?
  • Preliminary considerations when changing a depository
  • Review the instrument of incorporation of the OEIC
  • Review the depositary agreement
  • Choose the new depositary
  • Consider depositary disclosure requirements
  • Consider change categorisation under COLL
  • Review operational implications and plan handover
  • more

Introduction to OEICS and depositories

An open-ended investment company (OEIC) is an investment fund in corporate form, as defined in section 236 of the Financial Services and Markets Act 2000 (FSMA 2000). OEICs aim to spread investment risk and give investors the benefit of the management of the investments.

OEICs are subject to the Open Ended Investment Company Regulations 2001 (SI 2001/1228) (OEIC Regulations), pursuant to which they are required to have a depositary (regulation 15), responsible for the safekeeping and day-to-day administration of the fund’s assets.

There is guidance provided in the Financial Conduct Authority's (FCA) handbook relating to the role of the depositary and, specifically, COLL 6.5 deals with the appointment and replacement of the depositary.

Why do depository changes occur?

Changes to the depositary of an OEIC typically occur as a result of commercial considerations of the authorised corporate director (ACD), but may also arise out of a change in ownership of the depositary or the ACD, which causes a breach of the requirement in Regulation 15(8)(f) of OEIC Regulations that the depositary be independent from the company and its directors.

Pursuant to Regulation 26, the FCA may also apply to the court for the removal and replacement of a depositary.