Collective investment schemes—essentials
Collective investment schemes—essentials

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Collective investment schemes—essentials
  • Definition of a collective investment scheme
  • What amounts to an arrangement?
  • Property of a CIS
  • Participants in a CIS
  • Day-to-day control
  • What is meant by CIS ‘pooling’ and/or ‘managed as a whole’?
  • Unit
  • Operating a CIS
  • What are the exclusions from the definition of CIS?
  • More...

BREXIT: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance on the impact of Brexit on collective investment schemes that are UCITS or AIFs, please see Practice Notes: Impact of Brexit: UCITS—quick guide and Impact of Brexit: AIFMD—quick guide.

Definition of a collective investment scheme

The definition of a collective investment scheme (CIS) is contained in section 235 of the Financial Services and Markets Act 2000 (FSMA 2000). The definition is broad and somewhat vague and covers a broad variety of arrangements, not just traditional investment funds. The Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001, SI 2001/1062 (CIS Order) was therefore enacted to set out a number of arrangements which, if applicable, would mean that the arrangements in question would not be viewed as a CIS. Section 235 of FSMA 2000 defines a CIS as:

‘…any ‘arrangements’ with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits

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