6.1. Investment Companies prescribed type of Company for Companies Regulations

For Part 11 (Other types of Company) of the AIFC Companies Regulations, an Investment Company is prescribed as a type of Company.

6.2. Investment Companies: modification of Companies Regulations and general powers of AFSA

6.2.1. In accordance with section 143(2)(b) (Incorporation of prescribed type of Company) of the AIFC Companies Regulations, the application of section 74 (Directors) of those Regulations is modified in relation to its application to an Investment Company to permit an Investment Company to be managed by 1 Director, which may be a Body Corporate.

6.2.2. This Part is additional to the provisions of any AIFC Regulations or any other provisions of AIFC Rules that may apply to the incorporation of, or conversion to, an Investment Company, or that may apply to the operations and affairs and winding up of an Investment Company, including, for example, the provisions of the AIFC Companies Regulations, the AIFC Financial Services Framework Regulations, the AIFC Collective Investment Scheme Rules, the AIFC Insolvency Regulations and the AIFC Insolvency Rules.

6.2.3. This Part does not limit any powers of the AFSA under AIFC Financial Services Framework Regulations, the AIFC Collective Investment Scheme Rules or any other Legislation Administered by the AFSA.

6.3. Incorporation of, or conversion into, Investment Company

6.3.1. Subject to AIFC Companies Regulations and any other provisions of these Rules:

• (a) a Company may be incorporated, under section 143 (Incorporation of prescribed types of Company) of those Regulations, as an Investment Company; or
• (b) an existing Company may, if authorised by its Articles of Association and by a Special Resolution, be converted, under that section, into an Investment Company.

6.3.2. An Investment Company must either be an Open-Ended Investment Company or a Closed-Ended Investment Company.

6.3.3. However, a Company must not be incorporated as an Investment Company, an existing Company must not be converted into an Investment Company, and a Company must not operate an Investment Company, unless:

• (a) the Company is formed, and is to operate, for the sole purpose of conducting the business of a Fund; and
• (b) the AFSA has given its prior Written consent.

6.3.4. An application for the incorporation of a Company as an Investment Company, or for the conversion of an existing Company into an Investment Company, must be accompanied by a copy of any consent given by the AFSA under subrule 6.3.3.

6.3.5. An Investment Company must, ensure that, whenever it uses its name, the name is immediately followed by:

• (a) for a Closed-Ended Investment Company—the words ‘Closed-Ended Investment Company’ or the abbreviation ‘CEIC’; and
• (b) for an Open-Ended Investment Company—the words ‘Open-Ended Investment Company’ or the abbreviation ‘OEIC’.

6.3.6. To remove any doubt, the relevant words or abbreviations mentioned in subrule 6.3.5 must be used instead of any words or abbreviation that the Investment Company would otherwise have been required or permitted to use immediately following its name under section 37 (Name of Private Company) or 38 (Name of Public Company) of the AIFC Companies Regulations.

6.3.7. Also, to remove any doubt, subrule 6.3.5 does not limit section 21 (Prohibition against use of misleading, deceptive or conflicting Company names) of the AIFC Companies Regulations.

6.3.8. The Articles of Association of an Investment Company that is an Open-Ended Investment Company must state that it is an Open-Ended Investment Company with variable share capital.

6.3.9. Subject as otherwise provided in the Articles of Association, Shareholders are entitled, on request, to have their Shares redeemed by the Fund Manager at a price based on the net asset value of the property of the Fund and decided in accordance with and at such intervals as may be prescribed by the Articles of Association and any relevant Legislation Administered by the AFSA.

6.3.10. In addition to any other requirements under the AIFC Companies Regulations and these Rules, the Articles of Association of an Investment Company must contain provisions about the following matters:

• (a) the objects of the Investment Company, including:

(i) detail about the kind of property in which the Investment Company is to

invest; and

(ii) a statement that the object of the Investment Company is to invest in property of that kind with the aim of spreading investment risk or with the aim of investing in a single property, as the case may be, and of giving its Shareholders the benefit of the results of the management of that property;

• (b) matters required to be included in the Articles of Association under the AIFCCollective Investment Scheme Rules or by the AFSA under or for those Rules.

6.3.11. The Articles of Association of an Investment Company that is a Closed-Ended Investment Company must state that it is a Closed-Ended Investment Company with fixed share capital.

6.3.12. The Articles of Association of an Investment Company must comply with this Part, the AIFC Collective Investment Scheme Rules and any requirements imposed by the AFSA under or for those Rules.

6.3.13. An Investment Company may alter its Articles of Association by Special Resolution to comply with this Part, the AIFC Collective Investment Scheme Rules and any requirements imposed by theAFSA under or for those Rules.

6.4. Investment Companies: permissible uses and AFSA consents

6.4.1. An application for consent under 7.3.3 (Incorporation of, or conversion into, Investment Company) in relation to a Company must be made to the AFSA by the Company and the Operator and must be in the form, contain the information and be accompanied by the Documents and additional information, required by the AFSA.

6.4.2. The AFSA may, in its absolute discretion, refuse to give its consent if it considers it necessary or appropriate to do so in the interests of the AIFC.

6.4.3. If the AFSA refuses to give its consent, the AFSA must, as soon as practicable after it makes the decision, give the applicants Written notice of the decision and, if requested by an applicant, give the applicants Written reasons for the decision.

6.5. Investment Companies: revocation of AFSA consents

6.5.1. The AFSA may, at any time and at its absolute discretion, revoke a consent given for an Investment Company under rule 6.3.3 (Incorporation of, or conversion into, Investment Company) if it considers it necessary or appropriate to do so in the interests of the AIFC.

6.5.2. Before revoking the consent, the AFSA must consider whether any necessary and appropriate steps have been taken to secure 1 or more of the following under the AIFC Insolvency Regulations:

• (a) the appointment of a Receiver or Administrative Receiver for the Investment Company; or
• (b) the winding up of the Investment Company.

6.5.3. If the AFSA revokes the consent, the AFSA must, as soon as practicable after it makes the decision, give the Investment Company and the Fund Manager Written notice of the decision and, if requested by the Company or Fund Manager, give the Company or Fund Manager Written reasons for the decision.

6.5.4. On receipt of the notice under subrule 6.5.3, the Investment Company and its Fund Manager must immediately give Written notice of the revocation of the AFSA’s consent to:

• (a) each regulatory authority in every jurisdiction to which the consent related before its revocation; and
• (b) each Shareholder of the Investment Company. 6.5.5. A notice required to be given under subrule 6.5.4 may be given jointly by the Investment Company and its Fund Manager.

6.6. Investment Companies: directions by AFSA

6.6.1. The AFSA may, in the interests of the AIFC, give a direction under this rule to an Investment Company or any of its Directors.

6.6.2. Without limiting subrule 6.6.1, a direction under this rule may:

• (a) require the Investment Company to cease the issue or redemption, or both the issue and redemption, of Shares or any class of Shares in the Company; or
• (b) require the Investment Company, or any Director of the Company, to apply to the Court under the AIFC Insolvency Regulations or AIFC Insolvency Rules for any 1 or more of the following:

(i) the appointment of a Receiver or Administrative Receiver for the Company;

(ii) the winding up of the Company; or

• (c) require that the affairs of the Investment Company be wound up otherwise than by the Court.

6.6.3. If a consent given for an Investment Company under rule 6.3.3 (Incorporation of, or conversion into, Investment Company) is revoked, the revocation does not affect the operation of any direction that is then in force in relation to the Company under this rule; and a direction may be given in relation to a Company under this rule if a direction was in force under this rule in relation to the Company when the consent was revoked.

6.6.4. However, a direction may not be given under this rule in relation to an Investment Company if an order appointing a Receiver or Manager, or a winding up order, has been made by the Court in relation to the Company.

6.6.5. If a direction is in force under this rule in relation to an Investment Company, the AFSA may, on its own initiative or on the application of the Company or its Fund Manager, revoke or the direction if it considers it necessary or appropriate to do so in the interests of the AIFC.

6.6.6. A direction under this rule takes effect:

• (a) immediately, if the notice states that it is to take effect immediately; or
• (b) on the date specified in the notice.

6.6.7. If the AFSA proposes to give a direction to a Person under this rule, or gives a direction to a Person under this rule with immediate effect, it must give a Written notice about the direction to the Person. If the AFSA gives a notice to a Director of the Investment Company, it must also give a Written notice about the direction to the Company.

6.6.8. A notice given to the Investment Company or a Director of the Company must:

• (a) give details of the direction; and
• (b) explain when the direction takes effect; and
• (c) state the AFSA’s reasons for giving the direction and for its decision about when the direction takes effect; and
• (d) tell the Company or Director that the Company or Director may make representations to the AFSA within the period specified in the notice.

6.6.9. If, having considered any representations made by the Investment Company or Director within the period specified in the notice, the AFSA decides:

• (a) to give, or not to give, the direction in the way proposed; or
• (b) to give the direction in a way other than the way proposed; or
• (c) if the direction has been given—to revoke, or not to revoke, the direction; the AFSA must, as soon as practicable after it makes the decision, give the Company or Director Written notice of the decision and must, if the Company or Director requests, give the Company or Director Written reasons for the decision.

6.7. Investment Companies: Shares and Register of Shareholders

6.7.1. An Investment Company may issue fractions of Shares if authorised by its Articles of Association.

6.7.2. The AFSA may prescribe in rules made under the AIFC Financial Services Framework Regulations the form and contents of share certificates of an Investment Company and how share certificates may be delivered by an Investment Company.

6.7.3. Nothing in subrule 6.7.2 must prevent an Investment Company issuing share certificates in a dematerialised (electronic) form.

6.7.4. Subject to any requirements that may be made by the AFSA under any Legislation Administered by the AFSA, an Investment Company may, after giving notice by press release, directly communicating with its Shareholders, posting notice on its website and, if its Fund is listed on an exchange, giving notice to the exchange, close its Register of Shareholders for any time or times not exceeding, in total, 30 days in each year.

6.7.5. Subrule 6.7.6 applies if:

1. (a) the Fund Manager for an Investment Company is satisfied that a Shareholder (the defaulting Shareholder) has Failed to make any payment in money or transfer of property due to the Fund Manager under these Rules or the Articles of Association of the Investment Company in relation to the creation and sale or resale of Shares to the Shareholder; and
2. (b) the Fund Manager receives any share certificate in relation to the Shares.

6.7.6. If this subrule applies, the Fund Manager must cancel or make any necessary amendments to the share certificate and make any necessary deletion or alteration in the Register of Shareholders. The Fund Manager is then entitled to the Shares in relation to which the defaulting Shareholder’s name has been removed from the Register of Shareholders until the Shares are cancelled or resold by the Fund Manager and the name of the purchaser entered in the register.

6.7.7. The Fund Manager of an Open-Ended Investment Company is taken to hold each Share during the times that neither the Fund Manager nor any other Person is entered in the Register of Shareholders as the holder of the Share.

6.7.8.    An Investment Company shall maintain its register of Shareholders in accordance with the requirements:

1. (a)in the AIFC Collective Investment Scheme Rules rule 7.10; and
2. (b)in Chapter 5 of Part 7 of the AIFC Companies Regulations, to the extent that such requirements are not inconsistent with the requirements referred to in (a).

6.8. Investment Companies: Share transfers and redemptions

6.8.1. The Articles of Association of an Investment Company may contain provision about any matter in relation to Share transfers for which provision is not made by the AIFC Companies Regulations or these Rules.

6.8.2. If any Shares of an Investment Company are transferred to the Company, the Company must cancel the Shares.

6.8.3. For section 54 (Transfer and registration of Shares and Debt Securities) of the AIFC Companies Regulations, an Investment Company may refuse to register a transfer of Shares if the transfer would result in a Contravention of any provision of the Company’s Articles of Association or would produce a result inconsistent with any provision of the Company’s prospectus.

6.8.4. Subject as otherwise provided in the Articles of Association, an Open-Ended Investment Company must redeem its Shares at a price based on the net asset value of the property of the Company in accordance with and at such intervals as may be prescribed by its Articles of Association and any relevant Legislation Administered by the AFSA. Chapters 5 (Registers of Shareholders and Debt Security Holders and share certificates) and 6 (Redemption and purchase of Shares) of Part 7 (Private Companies and Public Companies) of the AIFC Companies Regulations do not apply to the redemption of Shares by an Open-Ended Investment Company.

6.8.5. A Closed-Ended Investment Company must not purchase any Shares of any class of which it is the issuer, unless it does so on an Exchange Facility or another open market approved by the AFSA.