PART XIII

Investment Companies

252. —(1) In this Part—

“the Bank” means the Central Bank of Ireland;

“investment company” means a company to which this Part applies and “company” shall be construed accordingly;

“property” means real or personal property of whatever kind (including securities);

“the UCITS Regulations” means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989).

(2) For the purposes of the application by this Part of certain provisions of the UCITS Regulations to investment companies, the said provisions shall be construed as one with the Companies Acts.

253. —(1) Notwithstanding anything in the Companies Acts, the memorandum of a company to which this Part applies may in respect of the share capital of the company state in lieu of the matters specified in paragraph (a) of section 6 (4) of the Principal Act—

(a) that the share capital of the company shall be equal to the value for the time being of the issued share capital of the company, and

(b) the division of that share capital into a specified number of shares without assigning any nominal value thereto,

and the form of memorandum set out in Table B of the First Schedule to the Principal Act or Part I of the Second Schedule to the Companies (Amendment) Act, 1983 , as may be appropriate, shall have effect with respect to such company with the necessary modifications.

(2) This Part applies to a company limited by shares (not being a company to which the UCITS Regulations apply)—

(a) the sole object of which is stated in its memorandum to be the collective investment of its funds in property with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds; and

(b) the articles or memorandum of which provide—

(i) that the actual value of the paid up share capital of the company shall be at all times equal to the value of the assets of any kind of the company after the deduction of its liabilities, and

(ii) that the shares of the company shall, at the request of any of the holders thereof, be purchased by the company directly or indirectly out of the company's assets.

(3) For the purposes of subsection (2) (b) (ii), action taken by a company to ensure that the stock exchange value of its shares does not deviate from its net asset value by more than a percentage specified in its articles (which deviation shall not be so specified as greater than 5 per cent) shall be regarded as the equivalent of purchase of its shares by the company.

(4) The memorandum or articles of a company shall be regarded as providing for the matters referred to in paragraphs (a) and (b) of subsection (2) notwithstanding the inclusion in the memorandum or articles with respect thereto of incidental or supplementary provisions.

(5) In the Companies Acts—

(a) a reference to a company limited by shares shall be construed as including an investment company within the meaning of this Part and a reference to a share in, or the share capital of, a company limited by shares shall be construed accordingly, and

(b) a reference to the nominal value of an issued or allotted share in, or of the issued or allotted share capital of, a company limited by shares shall be construed, in the case of an investment company, as a reference to the value of the consideration for which the share or share capital (as the case may be) has been issued or allotted.

254. —(1) Subject to subsection (2), the purchase by an investment company of its own shares shall be on such terms and in such manner as may be provided by its articles.

(2) An investment company shall not purchase its own shares unless they are fully paid.

(3) For the avoidance of doubt, nothing in the Companies Acts shall require an investment company to create any reserve account.

255. —(1) Shares of an investment company which have been purchased by the company shall be cancelled and the amount of the company's issued share capital shall be reduced by the amount of the consideration paid by the company for the purchase of the shares.

(2) (a) Where a company has purchased or is about to purchase any of its own shares, it shall have the power to issue an equal number of shares in place of those purchased and for the purposes of section 68 of the Finance Act, 1973 , the issue of those replacement shares shall constitute a chargeable transaction if, but only if, the actual value of the shares so issued exceeds the actual value of the shares purchased at the date of their purchase and, where the issue of shares does constitute a chargeable transaction for those purposes, the amount on which stamp duty on the relevant statement relating to that transaction is chargeable under section 69 of the Finance Act, 1973 , shall be the difference between—

(i) the amount on which the duty would be so chargeable if the shares had not been issued in place of shares purchased under this section, and

(ii) the value of the shares purchased at the date of their purchase.

(b) Where new shares are issued before the purchase of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of paragraph (a) unless the old shares are purchased within one month after the issue of the new shares.

256. —(1) An investment company shall not carry on business in the State unless it has been authorised to do so by the Bank on the basis of criteria approved by the Minister.

(2) A person shall not carry on business on behalf of an investment company, insofar as relates to the purchase or sale of the shares of the investment company, unless the investment company has been authorised in the manner referred to in subsection (1).

(3) The Bank shall not authorise an investment company to carry on business in the State unless the company has paid up share capital which, in the opinion of the Bank, will be sufficient to enable it to conduct its business effectively and meet its liabilities.

(4) An application by an investment company for the authorisation referred to in subsection (1) shall be made in writing to the Bank and contain such information as the Bank may specify for the purpose of determining the application (including such additional information as the Bank may specify in the course of determining the application).

(5) Where the Bank proposes to grant an authorisation to an investment company under this section and the Bank is satisfied that the company will raise capital by promoting the sale of its shares to the public, the Bank shall, in granting the authorisation, designate the company as an investment company which may raise capital in that manner, and “designated company” in this section and section 257 shall be construed accordingly.

(6) In the event that a designated company does not promote the sale of its shares to the public within a period, not greater than six months, which shall be specified in the authorisation under this section, the company shall, on the expiry of the period so specified, be deemed to have ceased to be a designated company.

(7) An investment company which is not a designated company shall not raise capital by promoting the sale of its shares to the public.

(8) A company incorporated outside the State which, if it were incorporated in the State, would be a company to which this Part applies shall not advertise or market its shares in any way in the State without the approval of the Bank, which approval may be subject to such conditions as the Bank considers appropriate and prudent for the purposes of the orderly and proper regulation of so much of the business of companies of that type as is conducted in the State.

(9) This section is without prejudice to sections 6 and 19 of the Companies (Amendment) Act, 1983 .

257. —(1) Notwithstanding any other powers which may be available to the Bank under any other enactment, order or regulation, the Bank may impose such conditions for the granting of an authorisation to a company under section 256 as it considers appropriate and prudent for the purposes of the orderly and proper regulation of the business of investment companies.

(2) Conditions imposed under subsection (1) may be imposed generally, or by reference to particular classes of company or business (including, but not limited to, whether or not an investment company is a designated company), or by reference to any other matter the Bank considers appropriate and prudent for the purposes of the orderly and proper regulation of the business of investment companies.

(3) The power to impose conditions referred to in subsection (1) shall include a power to impose such further conditions from time to time as the Bank considers appropriate and prudent for the purposesof the orderly and proper regulation of the business of investment companies.

(4) Without prejudice to the generality of subsections (1), (2) and (3), conditions imposed by the Bank on an investment company may make provision for any or all of the following matters—

(a) the prudential requirements of the investment policies of the company,

(b) prospectuses and other information disseminated by the company,

(c) the vesting of the assets or specified assets of the company in a person nominated by the Bank with such of the powers or duties of a trustee with regard to the company as are specified by the Bank,

(d) such other supervisory and reporting requirements and conditions relating to its business as the Bank considers appropriate and prudent to impose on the company from time to time for the purposes referred to in the aforesaid subsections.

(5) A company shall comply with any conditions relating to its authorisation or business imposed by the Bank.

258. —Regulations 14, 30, 63, 83 (2) to (7), and 99 to 105 of the UCITS Regulations shall apply to an investment company as they apply to the bodies to which those Regulations relate subject to the following modifications—

(a) a reference in those Regulations to a term or expression specified in the second column of the Table to this section at any reference number shall be construed, where the context admits, as a reference to the term or expression specified in the third column of the said Table at that reference number, and

(b) references to cognate terms or expressions in those Regulations shall be construed accordingly.

TABLE

259. —An authorisation by the Bank under section 256 of an investment company shall not constitute a warranty by the Bank as to the creditworthiness or financial standing of that company and the Bank shall not be liable by virtue of that authorisation or by reason of its exercise of the functions conferred on it by this Part (or any regulations made under this Part) in relation to investment companies for any default of the company unless the Bank acted in bad faith in exercising such functions.

260. —(1) None of the following provisions of the Principal Act shall apply to an investment company, namely sections 60, 69, 70, 72, 119 and 125.

(2) None of the following provisions of the Companies (Amendment) Act, 1983 , shall apply to an investment company, namely sections 5 (2), 23 to 25, 40, 41 and Part IV.

(3) Section 14 of the Companies (Amendment) Act, 1986 , shall not apply to an investment company.

(4) None of the following provisions of this Act shall apply to an investment company, namely Chapters 2 to 4 of Part IV , and Part XI .

261. —The Minister may make such regulations as he considers necessary for the purposes of giving full effect to the provisions of this Part.

262. —Where a company contravenes—

(a) any of the provisions of this Part, or

(b) any regulations made in relation thereto (whether under this Part or under any other enactment), or

(c) any condition in relation to its authorisation or business imposed by the Bank under section 257 ,

the company and every officer thereof who is in default shall be guilty of an offence.