5A

Arrangements are not a collective investment scheme if—

a

the property to which the arrangements relate (other than cash awaiting investment) consists of shares;

b

they constitute a complying fund;

c

each participant is the owner of a part of the property to which the arrangements relate and, to the extent that his part of that property—

i

comprises relevant shares of a class which are admitted to the Official List of any member State or to dealings on a recognised investment exchange, he is entitled to withdraw it any any time after the end of the period of five years beginning with the date on which the shares in question were issued;

ii

comprises relevant shares which do not fall within (i) above, he is entitled to withdraw it at any time after the end of the period of two years beginning with the date upon which the period referred to in (i) above expired.;

iii

comprises any other shares, he is entitled to withdraw it at any time after the end of the period of six months beginning with the date upon which the shares in question ceased to be relevant shares; and

iv

comprises cash which the operator has not agreed (conditionally or unconditionally) to apply in subscribing for shares, he is entitled to withdraw it at any time; and

d

the arrangements would meet the conditions described in paragraph (c) of subsection (5) above were it not for the fact that the operator is entitled to exercise all or any of the rights conferred by shares included within the property to which the arrangements relate.

5B

For the purposes of subsection (5A) above—

a

“shares” means investments falling within paragraph 1 of Schedule 1 to this Act;

b

shares shall be regarded as being relevant shares if and so long as they are shares in respect of which neither—

i

a claim for relief, made in accordance with section 306 of the Income and Corporation Taxes Act 19884 has been disallowed; nor

ii

an assessment has been made pursuant to section 307 of that Act withdrawing or refusing relief by reason of the body corporate in which the shares are held having ceased to be a body corporate which is a qualifying company for the purposes of section 293 of that Act; and

c

arrangements shall be regarded as constituting a complying fund if they provide that—

i

the operator will, so far as practicable, make investments each of which, subject to each participant’s individual circumstances, qualify for relief by virtue of Chapter III of Part VII of the Income and Corporation Taxes Act 1988; and

ii

the minimum subscription to the arrangements made by each participant must be not less than £2000.

l

arrangements under which the rights or interests of the participants are represented by the following—

i

investments falling within paragraph 2 of Schedule 1 to this Act which are issued by a single body corporate which is not an open-ended investment company or which are issued by a single issuer which is not a body corporate and are guaranteed by the government of the United Kingdom, of Northern Ireland, or of any country or territory outside the United Kingdom; or

ii

investments falling within sub-paragraph (i) above which are convertible into or exchangeable for investments falling within paragraph 1 of Schedule 1 to this Act provided that those latter investments are issued by the same person as issued the investments falling within sub-paragraph (i) or are issued by a single other issuer; or

iii

investments falling within paragraph 3 of Schedule 1 to this Act issued by the same government, local authority or public authority; or

iv

investments falling within paragraph 4 of Schedule 1 to this Act which are issued otherwise than by an open-ended investment company and which confer rights in respect of investments, issued by the same issuer, falling within paragraph 1 of Schedule 1 to this Act or within sub-paragraph (i), (ii) or (iii) above;re issued otherwise than by an open-ended investment company and which confer rights in respect of investments, issued by the same issuer, falling within paragraph 1 of Schedule 1 to this Act or within sub-paragraph (i), (ii) or (iii) above;

m

arrangements which would fall within paragraph (l) were it not for the fact that the rights or interests of a participant (“the counterparty”) whose ordinary business involves him in engaging in activities which fall within Part II of Schedule 1 to this Act or would do so apart from Part III or Part IV of that Schedule are or include rights or interests under a swap arrangement, that is to say, an arrangement the purpose of which is to facilitate 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, being an arrangement under which—

i

the counterparty is entitled to receive amounts (whether representing principal or interest) payable in respect of any property subject to the scheme or sums determined by reference to such amounts; and

ii

the counterparty makes payments (whether or not of the same amount and whether or not in the same currency as those referred to in (i) above) which are calculated in accordance with an agreed formula by reference to the amounts or sums referred to in (i) above.

n

arrangements under which the rights or interests of participants are rights to or interests in money held in a common account in circumstances in which the money so held is held on the understanding that an amount representing the contribution of each participant is to be applied either in making payments to him or in satisfaction of sums owed by him or in the acquisition of property or the provision of services for him.