The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 make amendments to retained EU law related to Undertakings for Collective Investment in Transferable Securities (UCITS; see Directive 2009/65/EC). Restriction is in line with the UK's overarching approach where UK authorised funds must have a depository that is established (had a registered office) and has a place of business in the UK. Prior to the UK's exit from the EU, it was possible for eligible EEA firms to establish a branch in the UK, then receive a top-up permission to carry out depositary services in the UK. After exit-day, this position was changed such that EU/EEA firms are treated the same as all other third-country firms. As such, from the entry into force on 31.12.2020 of the amendments laid out in the 2019 regulations, depending on the legal form of the fund, the depositary, trustee, operator and/or manager of a UK authorised fund must be a body corporate incorporated in the UK. However, a transitional arrangement was provided for to minimise disruption for firms carrying out this business. The transitional arrangement allows branches of EU/EEA firms to obtain temporary permissions to continue to operate in the UK. By virtue of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018, the duration of the temporary permission would be, in principle, three years from the end of the Brexit transition period on 31.12.2020.
"243 Authorisation orders [: authorised unit trust schemes].
(1)If, on an application under section [242(1)(a)] in respect of a unit trust scheme, the [FCA]—
(a)is satisfied that the scheme complies with the requirements set out in this section,
(b)is satisfied that the scheme complies with the requirements of the trust scheme rules, and
(c)has been provided with a copy of the trust deed and a certificate signed by a solicitor to the effect that it complies with such of the requirements of this section or those rules as relate to its contents,
the [FCA] may make an order declaring the scheme to be an authorised unit trust scheme. [...]
[(5)The manager and the trustee must each be a body corporate incorporated in the United Kingdom or another EEA State, and the affairs of each must be administered in the country in which it is incorporated.
(5A)The trustee must have a place of business in the United Kingdom, and the manager must have a place of business in the United Kingdom or in another EEA State.]
(6)If the manager is incorporated in another EEA State, the scheme must not be one which satisfies the requirements prescribed for the purposes of section 264.
(7)The manager and the trustee must each be an authorised person and the manager must have permission to act as manager and the trustee must have permission to act as trustee.
[...]
[261D. Authorisation orders [: authorised contractual schemes]
(1)If, on an application under section [261C(1)(a)] in respect of a contractual scheme, the FCA—
(a)is satisfied that the scheme complies with the requirements set out in this section and section 261E,
(b)is satisfied that the scheme complies with the requirements of contractual scheme rules, and
(c)has been provided with a copy of the contractual scheme deed and a certificate signed by a solicitor to the effect that it complies with such of the requirements of this section or those rules as relate to its contents,
the FCA may make an order declaring the scheme to be an authorised contractual scheme. [...]
(5)The operator and the depositary must each be a body corporate incorporated in the United Kingdom or another EEA State, and the affairs of each must be administered in the country in which it is incorporated.
(6)The depositary must have a place of business in the United Kingdom, and the operator must have a place of business in the United Kingdom or in another EEA State.
(7)If the operator is incorporated in another EEA State, the scheme must not be one which satisfies the requirements prescribed for the purposes of section 264.
(8)The operator and the depositary must each be an authorised person, and the operator must have [such permission as may be necessary to act as operator] and the depositary must have permission to act as depositary.
[...]" (Financial Services and Markets Act 2000 (UKPGA 2000 c. 8), as amended by The Money Market Funds Regulations 2018 (S.I. 2018/698), Sections 243 and 261D)
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"Requirements for authorisation
15.—(1) The requirements referred to in regulation 14(1)(a) [and 14(1A)(b)] are as follows.
(2) The company and its instrument of incorporation must comply with the requirements of these regulations and [FCA rules].
(3) The head office of the company must be situated [in England and Wales (or Wales), in Scotland or in Northern Ireland]. [...]
[(6) If the company has only one director, that director must be a body corporate which is an authorised person and which has a Part 4A permission to carry on the regulated activity of managing a UCITS or, as the case may be, managing an AIF.] [...]
(8) The person appointed as the depositary of the company—
(a)must be a body corporate incorporated in the United Kingdom or another EEA State;
(b)must have a place of business in the United Kingdom;
(c)must have its affairs administered in the country in which it is incorporated;
(d)must be an authorised person;
(e)must have permission under Part IV of the Act to act as the depositary of an open-ended investment company [that is a UCITS or, as the case may be, of an open-ended investment company that is an AIF]; and
(f)must be independent of the company and of the persons appointed as directors of the company. [...]" (The Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended by The Money Market Funds Regulations 2018 (S.I. 2018/698), Regulation 15)
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"PART 2 Amendments of the Financial Services and Markets Act 2000
Authorisation orders: unit trust schemes
8.—(1) Section 243 (authorisation orders) is amended as follows.
(2) In subsection (5) —
(a)omit "or another EEA State";
(b)for "country in which it is incorporated" substitute " United Kingdom ".
(3) For subsection (5A) substitute—
"(5A) The manager and the trustee must each have a place of business in the United Kingdom.".
(4) Omit subsection (6).
[...]
Authorisation orders: contractual schemes
16.—(1) Section 261D  (authorisation orders) is amended as follows.
(2) In subsection (5)—
(a)omit "or another EEA State";
(b)for "country in which it is incorporated" substitute " United Kingdom ".
(3) For subsection (6) substitute—
"(6) The operator and the depositary must each have a place of business in the United Kingdom.".
(4) Omit subsection (7).
[...]
PART 4 Other amendments of subordinate legislation
Open-Ended Investment Companies Regulations 2001
52.—(1) The Open-Ended Investment Companies Regulations 2001 are amended as follows.[...]
(3) In regulation 15(6) —
(a)after "body corporate which" insert " is incorporated in the UK, ";
(b)after "managing a" insert " UK ";
(4) In regulation 15(8)(a), omit "or another EEA State".
[...]
PART 8
Saving relating to certain EEA firms
Saving for certain EEA firms with temporary Part 4A permission
73.—(1) The amendments of section 243 of the 2000 Act made by regulation 8(1) to (3) do not prevent an authorised unit trust scheme from having as its manager or trustee a qualifying EEA firm, and do not apply to an authorised unit trust scheme whose manager or trustee is a qualifying EEA firm.
(2) The amendments of section 261D of the 2000 Act made by regulation 16(1) to (3) do not prevent an authorised contractual scheme from having as its manager or depositary a qualifying EEA firm, and do not apply to an authorised contractual scheme whose manager or depositary is a qualifying EEA firm.
(3) The amendments of regulation 15 of the Open-Ended Investment Companies Regulations 2001 made by regulation 52(3) and (4) do not prevent an authorised open-ended investment company from having as its depositary or sole director a qualifying EEA firm, and do not apply to an authorised open-ended investment company in relation to a depositary or sole director which is a qualifying EEA firm.
(4) A body corporate is for the purposes of this regulation a "qualifying EEA firm" if and so long as the body is, by virtue of regulation 8 or 11 of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018, treated as having a Part 4A permission relating to one or more regulated activities and either—
(a)those regulated activities include the regulated activity specified in Article 51ZA or 51ZC of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, or
(b)the body had immediately before [IP completion day], and continues to have, a Part 4A permission to carry on the regulated activity specified in Article 51ZB or 51ZD of that Order.[...]" (The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/325), Regulations 8, 16, 52 and 73, in force at 31.12.2020 on IP completion day)
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"CHAPTER 2 Temporary permission to carry on a regulated activity
Deemed permission under Part 4A of the Financial Services and Markets Act 2000
8.—(1) A person to whom this regulation applies shall be treated as if the person has permission to carry on a regulated activity in the United Kingdom under Part 4A of the 2000 Act.
(2) The regulated activity a person is permitted to carry on by virtue of this regulation is one which, immediately before [IP completion day], the person is authorised to carry on in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act.
[...]
CHAPTER 3 Temporary variation to carry on additional regulated activity
Deemed variation under Part 4A of the Financial Services and Markets Act 2000
11.—(1) A person to whom this regulation applies shall be treated as if the person's permission to carry on a regulated activity in the United Kingdom under Part 4A of the 2000 Act were varied.
(2) The variation is that the regulated activity the person is permitted to carry on includes one which, immediately before [IP completion day], the person is authorised to carry on in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act.
[...]
CHAPTER 5 Temporary permission and variation: duration
Period during which regulation 8 or 11 is to apply
17.—(1) For the purposes of regulations 9(2) and 12(2), the period is one that begins with [IP completion day] and ends—
(a)after three years beginning with the day on which [IP completion day] occurs, or
(b)if earlier, with a day determined in accordance with paragraph (3), (5) or (7).[...]" (The EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (SI 2018/1149), in force from 7 November 2018, Regulations 8, 11 and 17)
Financial Services and Markets Act 2000 (UKPGA 2000 c. 8), as amended by The Money Market Funds Regulations 2018 (S.I. 2018/698), Sections 243 and 261D
The Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended by The Money Market Funds Regulations 2018 (S.I. 2018/698), Regulation 15
The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/325), Regulations 8, 16, 52 and 73, in force at 31.12.2020 on IP completion day
The EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (SI 2018/1149), in force from 7 November 2018, Regulations 8, 11 and 17
[<a href="https://www.legislation.gov.uk/ukpga/2000/8/introduction">Act</a>],[<a href="https://www.legislation.gov.uk/uksi/2001/1228/introduction">Reg</a>],[<a href="https://www.legislation.gov.uk/uksi/2019/325/introduction">Reg</a>],[<a href="https://www.legislation.gov.uk/uksi/2018/1149/introduction">Reg</a>],[<a href="https://www.gov.uk/government/publications/draft-eu-exit-sis-for-investment-funds-and-their-managers/the-collective-investment-schemes-amendment-etc-eu-exit-regulations-2018-explanatory-information">Other</a>],[<a href="https://www.handbook.fca.org.uk/handbook/COLL/6/6B.html?date=2021-01-01&timeline=True">Other</a>]