UK Protected Cell Companies - Mazars - United Kingdom
UK Protected Cell Companies
HM Treasury has now opened to consultation its proposal for umbrella UK Open Ended Investment Companies to be constituted as Protected Cell Companies. Comments are invited until 27 September 2009.
This proposal will ensure that the assets and liabilities of each sub-fund in a UK umbrella ICVC will be segregated, reducing the perceived legal risk of contagion in an umbrella fund and allowing the UK to compete with offshore centres like Jersey, Guernsey and Bermuda.
Assets received or liabilities incurred by an umbrella company on behalf of its sub-funds or in order to enable the operation of those sub-funds and which are not attributable to any particular sub-fund may be allocated between the sub-funds in a manner which the umbrella company considers is fair to shareholders.
In consequence of the segregated structure, cross-investment by one sub-fund into another will be permissible, unlike the current position.
Combined with the recent tax reforms, the proposed is likely to represent an enhancement to the ability to structure UK Qualified Investor Schemes bearing different levels of risk as an umbrella ICVC.
It is also proposed to make protected cell status compulsory for existing OEICs, with a one year transitional period, during which all noncompliant existing agreements must expire or be renegotiated.
The consultation document may be found here.
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