Designated Investment Funds Act, 1985

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Issuing, publishing or circulation of certain documents relating to designated investment funds restricted.

5.—(1) Neither a person who, under a scheme establishing a designated investment fund, is either a trustee or the manager of the fund, or is acting as auditor or solicitor to the fund, nor any other person shall issue, publish or circulate or cause to be published or printed—

(a) a prospectus relating to the fund, or

(b) a notice, brochure, circular or other document advertising, promoting or tending to promote—

(i) such a prospectus, or

(ii) the fund,

unless, at the time it is issued, published or circulated or caused to be published or printed, the terms of the prospectus, notice, brochure, circular or other document stand approved of by the Minister under this section.

(2) Where a prospectus, notice, brochure, circular or other document has been approved of by the Minister, a person shall not amend or otherwise alter its terms without the prior approval of the Minister of the amendment or other alteration.

(3) Subject to subsection (4) of this section, the Minister may, on an application for an approval under this section, allow the application, refuse the application or approve of the prospectus, notice, brochure, circular or other document to which the application relates subject to such modifications as may be specified in the approval.

(4) Without prejudice to the generality of subsection (3) of this section, the Minister shall not give an approval under this section as regards a prospectus or an alteration to or other amendment of a prospectus unless he is satisfied that—

(a) the requirements of section 4 (2) of this Act are satisfied as regards the prospectus, or, in case such an approval is sought as regards such an amendment or alteration, that the proposed amendment or alteration, if effected, would not cause the said requirements to cease to be so satisfied as regards the prospectus concerned, and

(b) the prospectus contains sufficient particulars of any remuneration, fees or other charges which are to be received, levied or otherwise made, either in respect of the management of, or otherwise in relation to, the relevant designated fund by the person managing the fund, and

(c) the prospectus contains a statement that no charges apart from the charges referred to in paragraph (b) of this subsection will be levied or otherwise made as regards the establishment, operation or management of such fund, and

(d) the prospectus contains a statement giving the following particulars as regards the person having the management of such fund—

(i) the name of the person together with sufficient information concerning his relevant experience, and

(ii) in case such person is a body corporate, the names of the directors or the persons comprising the managing authority of the body and also the names of any individual person or persons who, on the establishment of such fund, such body proposes to assign or to appoint to determine how the moneys forming such fund shall be invested or otherwise dealt with,

and

(e) the prospectus contains the name of the trustee, the auditors and any solicitor or stockbroker and any other adviser acting or to act on a fee basis, appointed or proposed to be appointed in relation to such fund and the name of the bank (or other financial institution) in which it is proposed to keep such fund, and

(f) the prospectus contains each of the following statements:

(i) a statement which the Minister is satisfied is appropriate regarding the risks involved in investing in an unquoted company and the limitations on the marketability of its shares, stocks or debentures (for example by reason of such shares, stocks or debentures not being quoted in the official list of any stock exchange),

(ii) a statement that—

(I) no liability whatsoever shall attach to the Minister,

(II) no right to the relief shall arise by reason only of the Minister's having given an approval under this section,

(iii) a statement that the person registered as the holder of any shares issued to such fund is, in the first instance, to be registered as a nominee for a particular participant (who need not be named),

(iv) a statement that no such subscriber shall be entitled to require any particular share or shares so issued to be either realised or transferred into his name before the period of five years beginning on the date on which the share or shares is or are issued to such fund has elapsed,

(v) a statement that if a subscriber to such fund gives notice to the person managing such fund of his intention to cease to be such a subscriber or otherwise to participate in such fund, all the shares which are so held on his behalf shall be sold or otherwise disposed of; provided a person who is willing to, and may duly, purchase or otherwise acquire them can be found,

(vi) a statement which the Minister considers sufficient regarding—

(I) the voting rights and rights of disposal arising by reason of shares issued to the fund being held by such a nominee, and

(II) the circumstances in which the exercise of such a right of disposal would affect a right to the relief,

(vii) a statement which the Minister considers to be adequate regarding any agreement or arrangement made or proposed to be made by or on behalf of the trustee of or the person managing the scheme for the transfer of shares paid for with moneys from the fund into the names of participants on the expiration of the period of five years beginning on the date of their issue or for the continued management under the scheme of such shares after such period of five years has expired, or, in case there is no such agreement or arrangement, a statement in that regard which the Minister considers to be adequate and referring to the provisions of section 6 of this Act,

(viii) a statement of the proposed maximum size of such fund, the closing date for the receipt of subscriptions to such fund and the circumstances in which such subscriptions will either not be accepted or be returned,

(ix) a statement which the Minister considers adequate regarding the nature of the investments it is intended to make through such fund together with any amount which is specified in the relevant scheme as being the maximum or minimum which may be invested through the fund in any individual investment,

(x) a statement which the Minister considers adequate regarding the payment of interest on any moneys in the fund which for the time being are not invested in shares issued to such fund and the payment of dividends on shares so issued,

(xi) a statement that each participant will, as soon as may be, be notified of the shares issued to such fund which are held on his behalf and that, as soon as may be after the whole of such fund has been invested in eligible shares, he will be provided with a statement giving particulars of the nature and number of eligible shares held on his behalf,

(xii) a statement that reports concerning such fund shall be made to participants at intervals stated in the prospectus (being intervals of not more than six months),

(xiii) a statement that the person managing the fund will not knowingly invest moneys forming part of the fund in shares of a company with which any person participating in the fund is for the purposes of section 14 of the Act of 1984 connected,

(xiv) a statement that the provisions of Chapter III of Part I of the Act of 1984 apply to such fund,

and

(g) the prospectus contains, in a prominent position, a statement that before subscribing any amount to such fund a prospective participant should consult a stockbroker, bank manager, solicitor, accountant or other professional adviser.

(5) Without prejudice to the generality of subsection (2) of this section, the Minister shall not give an approval under this section as regards a document referred to in paragraph (b) of subsection (1) of this section unless, in his opinion, the document—

(a) makes sufficiently clear the terms and conditions on or subject to which subscriptions to the relevant designated fund will, and will only, be accepted, and

(b) makes it sufficiently clear that any agreement purporting to amend or to exclude or partly exclude the application of any term or condition which by virtue of section 8 of this Act applies in relation to any such acceptance shall be void.

(6) Where a person issues, publishes or circulates any document which requires the approval of the Minister under this section and such document is so issued, published or circulated without the approval of the Minister, that person shall be guilty of an offence.

(7) Where an offence under subsection (6) of this section is committed by a body corporate and is proved to have been so committed with the consent or connivance of or to be attributable to any neglect on the part of a director, manager, secretary or other officer of the body corporate, the director, manager, secretary or other officer or any person purporting to act in such capacity shall, as well as the body corporate, be guilty of an offence and shall be liable to be proceeded against and punished accordingly.

(8) A person guilty of an offence under subsection (6) or (7) of this section shall be liable on summary conviction to a fine not exceeding £1,000.

(9) In this section “unquoted company” has the meaning assigned to it by section 11 (1) of the Act of 1984.