UKLR 11.2 Requirements for listing

The FCA will not admit shares of an applicant incorporated in a third country that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of the listing is not due to the need to protect investors.

An applicant must invest and manage its assets in a way which is consistent with its object of spreading investment risk.

1. (1)

   An applicant and its subsidiary undertakings must not conduct any trading activity which is significant in the context of its group as a whole.

2. (2)

   This rule does not prevent the businesses forming part of the investment portfolio of the applicant from conducting trading activities themselves.

1. (1)

   No more than 10%, in aggregate, of the value of the total assets of an applicant at admission may be invested in other listed closed-ended investment funds.

2. (2)

   The restriction in (1) does not apply to investments in closed-ended investment funds which themselves have published investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds.

1. (1) If an applicant principally invests its funds in another company or fund that invests in a portfolio of investments (a ‘master fund’), the applicant must ensure that:
   1. (a) the master fund’s investment policies are consistent with the applicant’s published investment policy and provide for spreading investment risk; and
   2. (b) the master fund in fact invests and manages its investments in a way that is consistent with the applicant’s published investment policy and spreads investment risk.
2. (2) Paragraph (1) applies whether the applicant invests its funds in the master fund directly or indirectly through other intermediaries.
3. (3) Where the applicant invests in the master fund through a chain of intermediaries between the applicant and the master fund, the applicant must ensure that each intermediary in the chain complies with paragraphs (1)(a) and (b).

An applicant must have a published investment policy that contains information about the policies which the closed-ended investment fund will follow relating to asset allocation, risk diversification, and gearing, and that includes maximum exposures.

The board of directors or equivalent body of the applicant must be able to act independently:

1. (1)

   of any investment manager appointed to manage investments of the applicant; and

2. (2)

   if the applicant (either directly or through other intermediaries) has an investment policy of principally investing its funds in another company or fund that invests in a portfolio of investments (a ‘master fund’), of the master fund and of any investment manager of the master fund.

UKLR 11.2.10R(2) does not apply if the company or fund which invests its funds in another company or fund is a subsidiary undertaking of the applicant.

For the purposes of UKLR 11.2.10R:

1. (1)

   the chair of the board or equivalent body of the applicant must be independent; and

2. (2)

   a majority of the board or equivalent body of the applicant must be independent (the chair may be included within that majority).

For the purposes of UKLR 11.2.10R and UKLR 11.2.12R, the following are not independent:

1. (1)

   directors, employees, partners, officers or professional advisers of or to:

   1. (a)

      an investment manager of the applicant;

   2. (b)

      a master fund or investment manager referred to in UKLR 11.2.10R(2); or

   3. (c)

      any other company in the same group as the investment manager of the applicant; or

2. (2)

   (subject to UKLR 11.2.14R) directors, employees or professional advisers of or to other investment companies or funds that are:

   1. (a)

      managed by the same investment manager as the investment manager to the applicant; or

   2. (b)

      managed by any other company in the same group as the investment manager to the applicant.

1. (1)

   This rule applies where a closed-ended investment fund has an external AIFM which has delegated portfolio management to another investment manager who is not in the same group as the external AIFM.

2. (2)

   Where this rule applies, the fact that a director of the closed-ended investment fund is also the director of another investment company or fund that is managed by the same external AIFM (or another company in the same group as the external AIFM) does not prevent that director from being regarded as independent for the purposes of UKLR 11.2.10R and UKLR 11.2.12R.

A person referred to in UKLR 11.2.13R(1) or (2) who is a director of the applicant must be subject to annual re-election by the applicant’s shareholders, unless they are independent in accordance with UKLR 11.2.14R.

The board of directors or equivalent body of the applicant must be in a position to effectively monitor and manage the performance of its key service providers, including any investment manager of the applicant.