Explanatory note

These Regulations make provision as to the investment and borrowing powers exercisable in relation to an authorised unit trust scheme. The regulations make provisions for several different categories of scheme only one of which, a money market fund, may invest in property which is not transferable securities within the meaning of the regulations. The regulations impose limits on the proportion of a scheme which may be invested in property of particular kinds, but enable cash and near cash to be held for the purposes described in regulation 11(1)(a) and also enable property of the scheme to be utilised in transactions designed to reduce risk arising in the management of the scheme.

The regulations also limit the extent to which sums may be borrowed which are repayable out of the property of the scheme, the extent to which the manager of a scheme may, in his capacity as manager, enter into underwriting and sub-underwriting agreements and the circumstances in which the trustee or manager may agree to dispose of property of the scheme. Regulation 33 prohibits certain property of the scheme being lent or used to discharge obligations arising under guarantees or indemnities.

The regulations impose duties on managers and trustees concerning observance of their provisions.