From time to time a fund that sets out to operate so as to meet
the conditions for certification as a distributing fund may find
that it has not met one of the required conditions.
Loss of distributing fund status could have serious adverse
effects upon investors in that fund, especially upon long term
investors. Recognising that fact, the legislation gives the Board
the power to disregard certain breaches of the investment
restriction test (section 760(3)(a)) in very limited circumstances
- in particular, where the Board are satisfied that
If a failure to meet the conditions has occurred and appears to
come into this category, then we ask you to tell us, explain what
has happened and tell us what steps have been taken to correct the
situation.
If there has been any other failure to meet the conditions
for approval by a fund that has, nevertheless, sought and intended
to operate in a way that would obtain certification, it is also
better to tell us, especially if you are applying for certification
despite that breach.
If you are relying on any statutory provision other than
Paragraph 14 to mitigate what otherwise might be seen as a breach
of the conditions, again it is best to tell us.
The message is plain - if you are aware of a factor that
might impact upon the fund’s ability to be certified as a
distributing fund, tell us. Do not leave us to discover problems,
as that will only lead to enquiries and will delay settlement of
the fund’s application.
This does not mean that a fund that does not meet the
relevant conditions cannot still be certified as if it had met
those conditions. Simply that information provided fully, openly
and without prompting is most helpful to us in considering whether
or not to exercise the power under Paragraph 14.
