• FUNDS 2.1 FUNDS 2.1 Exclusions

    • FUNDS 2.1.1

      The Regulator prescribes that an arrangement which otherwise amounts to a Fund does not constitute a Fund if it falls within one or more of the exclusions specified in this Chapter.

    • Deposits

      • FUNDS 2.1.2

        An arrangement does not constitute a Fund if the whole amount of each participant's contribution is a Deposit which is accepted by an Authorised Person authorised under its Financial Services Permission to carry on the Regulated Activity of Accepting Deposits.

    • Common accounts

      • FUNDS 2.1.3

        An arrangement does not constitute a Fund if:

        (a) the rights or interests of each participant in the arrangement are rights or interests in money held in a common account; and
        (b) the money is held in the account on the understanding that an amount representing the contribution of each participant is to be applied in making payments to him or in satisfaction of sums owed by him or in the acquisition of property for him or the provision of services to him.

    • Commercial activities unrelated to Regulated Activities

      • FUNDS 2.1.4

        An arrangement does not constitute a Fund if each of the participants in the arrangement:

        (a) carries on a business which does not involve the carrying on of any of the Regulated Activities specified under Schedule 1 of FSMR or an activity which would be such an activity were it not for any applicable exclusion; and
        (b) enters into the arrangement for commercial purposes related to that business where that participant carries on that business by virtue of being a participant in the arrangement.

    • Group arrangements

      • FUNDS 2.1.5

        An arrangement does not constitute a Fund if each of the participants is a Body Corporate in the same Group as the Person undertaking the fund management function in relation to the arrangement.

    • Franchise arrangements

      • FUNDS 2.1.6

        An arrangement does not constitute a Fund if the arrangement is a franchise arrangement.

    • Clearing services

      • FUNDS 2.1.7

        An arrangement does not constitute a Fund if the purpose of the arrangement is the provision of clearing services and the services are operated by a Recognised Body.

    • Certificates or Options

      • FUNDS 2.1.8

        An arrangement does not constitute a Fund if the rights or interests of the participants in the arrangement are Investments of the kind specified under Sections 92 or 94 of Schedule 1 of the FSMR.

    • Time-share and other 'property-enjoyment' related arrangements

      • FUNDS 2.1.9

        An arrangement does not constitute a Fund:

        (a) if the rights or interests of each of the participants in the arrangement are time share rights; or
        (b) if:
        (i) the predominant purpose of the arrangement is to enable the participants to share in the use or enjoyment of property or to make its use or enjoyment available gratuitously to others; and
        (ii) the property to which the arrangement relates does not consist of or include the currency of any country or territory or Investments, as defined in Part 3 of Schedule 1 of the FSMR or, which would be such Investments if not for any applicable exclusion.

    • Bodies corporate not undertaking investment management

      • FUNDS 2.1.10

        An arrangement does not constitute a Fund if the arrangement comprises a closed-ended Partnership or Body Corporate, unless on reasonable grounds the purpose or effect of such an arrangement appears to be the investment management, in the exercise of discretion for a collective purpose, of investments, for the benefit of the shareholders or partners.

    • Debentures and Warrants of a single issuer

      • FUNDS 2.1.11

        (a) An arrangement does not constitute a Fund if the rights or interests of the participants in the arrangement are represented by a Debenture or Warrant:
        (i) where the issuer of the Debenture or Warrant is a single issuer, and if that issuer is:
        (A) a Body Corporate, it is neither an open-ended investment company nor a closed-ended company the intent or purpose of which is investment management as specified in Rule 2.1.10; or
        (B) not a Body Corporate, the rights and interests of the Debenture or Warrant holder are guaranteed by the government of any country or territory; and
        (ii) which, if it is a convertible Security, the underlying Securities to which the Debenture or Warrant holder is entitled are Shares or Debentures issued, or to be issued, by the same issuer as the issuer of the Debenture or Warrant or single other issuer.
        (b) An arrangement that does not constitute a Fund by virtue of Rule 2.1.11(a) does not become a Fund merely because one of the participants in the arrangement is a person:
        (i) whose ordinary business involves him engaging in an activity that is a Regulated Activity as defined in Schedule 1 of FSMR or that would fall within an applicable exclusion from a Regulated Activity; and
        (ii) whose rights or interests in the arrangement are, or include, rights or interests in a swap arrangement under which he facilitates the making of payments to participants whether in a particular amount or currency or at a particular time or rate of interest or all or any combination of those things in settlement of the rights and interests of the other participants in the arrangement.

    • Insurance

      • FUNDS 2.1.12

        An arrangement does not constitute a Fund if it is a Contract of Insurance.

    • Profit Sharing Investment Accounts

      • FUNDS 2.1.13

        An arrangement does not constitute a Fund if it is an account or portfolio which is a Profit Sharing Investment Account.

    • Discretionary Portfolio Accounts

      • FUNDS 2.1.14

        An arrangement does not constitute a Fund if it is a portfolio or account managed under a Discretionary Portfolio Management Agreement.

    • Close Relative accounts

      • FUNDS 2.1.15

        An arrangement does not constitute a Fund if every participant in the arrangement is a Close Relative. For the purposes of this Rule, the defined term "Close Relative" includes grandchildren.

    • Sukuks

      • FUNDS 2.1.16

        An arrangement does not constitute a Fund if the rights or interests of the participants are evidenced by sukuk certificates where the holders of the certificates are entitled to rely on the credit worthiness of:

        (a) the issuer of the sukuk certificates; or
        (b) any other Person who has assumed obligations under the sukuk certificates,

        for obtaining their rights and benefits arising under the certificates.

    • Employee reward schemes

      • FUNDS 2.1.17

        An arrangement does not constitute a Fund if the arrangement is for the purposes of enabling or facilitating the operation of an employee compensation or reward scheme where the arrangement:

        (a) makes Securities available only to:
        (i) an Employee or former Employee of the Issuer or of another member of the same Group as the Issuer; or
        (ii) a Close Relative of any such Employee; and
        (b) is operated by the Issuer or by a member of the same Group as the Issuer or by a trustee who, in pursuance of the arrangements, holds the Securities issued by the Issuer for the benefit of any eligible Persons referred to in Rule 2.1.17(a)(i) or (ii).

    • Carried interest vehicles

      • FUNDS 2.1.18

        An arrangement does not constitute a Fund if it is a carried interest vehicle which is established solely for the purposes of enabling officers, directors or employees of a Fund Manager, or related persons, to participate in carried interest or similar profit generated by one or more Funds.

    • Private Financing Platforms

    • Private Financing Platforms

      • FUNDS 2.1.19

        An arrangement does not constitute a Fund if it is an arrangement made for the purpose of facilitating investment through a Private Financing Platform.