collective investment schemes (property funds and ...€¦ · web viewcollective investment...

Collective Investment Schemes (Property Funds and Miscellaneous) Amendments Rules 2016QFCRA Rules 2016-1

The Board of the Qatar Financial Centre Regulatory Authority makes the following rules, and gives the following guidance, under the Financial Services Regulations.

Dated 06 September 2016.

Abdulla Saoud Al-ThaniChairman

VZ

Collective Investment Schemes (Property Funds and Miscellaneous) Amendments Rules 2016QFCRA Rules 2016-1

made under theFinancial Services Regulations

ContentsPage

1 Name of rules 12 Commencement 13 Amendments 14 Explanatory notes 1

VZ contents

pageSchedule 1 Amendments relating to QFC retail property

funds 2

contents VZ

1 Name of rulesThese rules are the Error: Reference source not found.

2 CommencementThese rules commence on 19 September 2016.

3 AmendmentsThese rules amend the Collective Investment Scheme Rules 2010.

4 Explanatory notesAn explanatory note in these rules is not part of these rules.

VZ Collective Investment Schemes (Property Funds andMiscellaneous) Amendments Rules 2016

page 1

Schedule 1 Amendments relating to QFC retail property funds

(see r 3)

[1.1] Rule 1.2.5, note 1substituteNote 1 For a QFC scheme, the name would be entered in:

(a) the scheme’s unitholder register (see rule 4.1.6 (1)); or(b) if the unit is a listed unit—the QCSD’s, or relevant exchange’s,

registry or system (see rule 4.1.6 (3)).Explanatory noteThis amendment is consequential on the ability of some schemes to list in the Qatar Stock Exchange or other regulated exchanges.

[1.2] Rule 1.2.9 (1), excluding the notessubstitute

(1) The independent entity of a collective investment scheme (or scheme) is the person (however described) responsible, under rule 4.2.6, for safeguarding the scheme property.

Explanatory noteThis amendment recognises the ability of the operator of a property fund to take custody, or make arrangements for custody, of immovables in limited cases.

[1.3] Rule 1.2.9 (1), note 2omit(see r 4.2.6 (Property safeguarding functions of independent entity—all QFC schemes))

Explanatory noteThis amendment omits an unnecessary cross reference.

page 2 Collective Investment Schemes (Property Funds andMiscellaneous) Amendments Rules 2016

VZ

[1.4] Rule 1.2.10 (3)substitute

(3) Subject to subrule (4), a scheme registered under these rules must be an open-ended scheme.

(4) A QFC retail scheme that is a property fund may be closed-ended or open-ended. A REIT must be a closed-ended scheme.

Explanatory noteThis amendment inserts a provision to allow a retail scheme to be closed-ended if it is a property fund.

[1.5] Rule 1.3.4substitute

1.3.4 Types of QFC retail schemesQFC retail schemes may be UCITS type schemes or property funds.

Explanatory noteThis amendment is consequential on the introduction of retail schemes that are property funds.

[1.6] After rule 1.3.5insert

1.3.5A What is a QFC retail property fund?A QFC retail scheme is a property fund if:(a) the scheme’s constitutional document contains the statement

required by rule 12.2.1 (Extra constitution requirements—QFC retail property funds); or

(b) the scheme is an umbrella scheme that is a property fund and each subscheme would be a property fund if it were a separate scheme.

Explanatory noteThis amendment describes what is a QFC retail property fund.


page 3

[1.7] Rule 1.3.7substitute

1.3.7 What is a QFC collective investment company (or CIC)?(1) A company incorporated under the Companies Regulations 2005 is

a QFC collective investment company (or CIC) if its articles of association provide that the company is established for the sole purpose of constituting a collective investment scheme.Note Articles of association is defined in the glossary.

(2) If the CIC is an open-ended scheme, it must be an open-ended company with variable share capital.

Explanatory noteThis amendment recognises that a CIC can now be closed-ended if it is a property fund.

[1.8] Rule 4.1.3 (2) (f)substitute(f) not acquire or dispose of immovables without first giving the

independent entity written notice of the acquisition or disposal.Explanatory noteThis amendment is consequential on the introduction of retail schemes that are property funds.


(1) Subject to subrule (3), the operator of a QFC scheme must ensure that a register of unitholders is kept as part of the operator’s records under rule 4.1.7.

Explanatory noteThis amendment and the next are consequential on the ability of QFC scheme to now be listed.

[1.10] After rule 4.1.6 (2), note 2insert

(3) For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, the records (held in the QCSD’s, or in the relevant exchange’s, registry or system) of transfers or titles to


VZ

units in the scheme is taken to be the unitholder register. A record in the QCSD’s, or relevant exchange’s, registry or system is conclusive evidence of title.

[1.11] Rule 4.2.6 (1), notesubstituteNote For the exceptions to this rule, see rule 4.2.6 (6).

Explanatory noteThis amendment inserts a pointer to where the exceptions can be found.

[1.12] After rule 4.2.6 (5)insert

(6) This rule does not apply in relation to an immovable that is part of the scheme property if:(a) the operator of the fund has made adequate alternative

arrangements for the immovable in accordance with rule 12.3.1; or

(b) the fund is a REIT and the operator of the fund holds the immovable as custodian in accordance with rule 12.6.9.

Note The operator of the fund is responsible for safeguarding an immovable described in rule 4.2.6 (6).

Explanatory noteThis amendment recognises the ability of the operator of a property fund to take custody, or make arrangements for custody, of immovables in limited cases.

[1.13] After rule 4.2.10 (3), noteinsert

(3A) If the QFC scheme is a property fund and the exception in rule 4.2.6 (6) (a) or (b) applies, the certificate must include a description of the immovable for which the independent entity is not responsible.

Explanatory noteThis amendment is consequential on new rule 4.2.6 (6).


page 5

[1.14] Rule 5.1.1 (d)substitute(d) any standing independent valuer of the scheme;


[1.15] Rule 5.1.3 (1)omit

(1) This ruleinsert

(1) Subject to subrule (3), this ruleExplanatory noteThis amendment and the next insert, in favour of REITs, an exception to the notice required for transactions with affected persons.


(3) This rule does not apply to a REIT if the transaction is for the acquisition or sale of an immovable in Qatar and all of the conditions in rule 12.6.10 are satisfied.

[1.17] Rule 5.1.4 (1)omit

(1) This ruleinsert

(1) Subject to subrule (4), this ruleExplanatory noteThis amendment and the next insert, in favour of REITs, an exception to the approval required for transactions with affected persons. The amendments also clarify the approval and notice required for other property funds.


VZ


(2) The operator must not enter into the transaction unless the unitholders have given prior approval to the transaction at a general meeting in accordance with the constitutional document. If the scheme is a property fund, the approval may be by ordinary resolution of the unitholders.

(3) For subrule (2), the operator must give notice to unitholders of the results of the voting in relation to the approval. The notice must be given as soon as practicable after the general meeting.

(4) This rule does not apply to a REIT if the transaction is for the acquisition or sale of an immovable in Qatar and all of the conditions in rule 12.6.10 are satisfied.

[1.19] Rule 5.1.5 (1) (d)omitapproval.insertapproval; and

Explanatory noteThis amendment and the next add a requirement for a certificate relating to transactions with affected persons.

[1.20] After rule 5.1.5 (1) (d)insert(e) a written certificate by the operator stating that each

transaction was in accordance with these rules and the scheme’s constitutional document.

[1.21] Rule 5.2.3 (3) (a) and (b)substitute(a) if the scheme is a qualified investor scheme—Schedule 3

(Prospectus content—QFC qualified investor schemes);


page 7

(b) if the scheme is a retail scheme other than a REIT—Schedule 4 (Prospectus content—QFC retail schemes); and

(c) if the scheme is a REIT—Schedule 5 (Prospectus content—REITs).

Explanatory noteThis amendment is consequential on new Schedule 5 that applies to prospectus of REITs.

[1.22] Rule 5.2.6 (2)omitmaterially significant changeinsertfundamental change

Explanatory noteThis amendment and the next 2 clarify the kind of change to which the rule applies.

[1.23] Rule 5.2.6 (2), example of materially significant changesubstituteNote For what constitutes fundamental change, see definition in glossary and

rule 5.4.2.

[1.24] Rule 5.4.1insertNote For what constitutes fundamental change, see definition in glossary and

rule 5.4.2.

[1.25] Rule 5.6.1 (1), including notesubstitute

(1) The operator of a QFC scheme must prepare and keep the scheme’s financial accounts and statements in accordance with IFRS, US GAAP or other accounting standards approved in writing by the Regulatory Authority.

(1A) If the operator decides to prepare and keep the financial accounts and statements in accordance with a standard other than the one it


VZ

has previously used, it must notify the authority in writing before beginning to do so.

Explanatory noteThis amendment removes the reference to UK GAAP and adds an obligation for the operator to inform the Regulatory Authority if it changes accounting standards.


(4) In this rule:IFRS means International Financial Reporting Standards.US GAAP means generally accepted accounting principles in the United States of America.

Explanatory noteThis amendment removes the definition of UK GAAP which is no longer used in this rule.

[1.27] Rule 5.6.2 (8)omit

Explanatory noteThis amendment removes a definition that is now in the glossary.

[1.28] Rule 5.6.9 (1) and (2)substitute

(1) The operator of a QFC retail scheme must prepare:(a) a long report for each annual accounting period; and(b) a short report for each half-yearly accounting period that does

not end at the end of an annual accounting period.(2) The long report and short report must be prepared in accordance

with this Division.Note Annual accounting period and half-yearly accounting period are

defined in the glossary.Explanatory noteThis amendment reduces the frequency of reporting.


page 9

[1.29] Rule 6.2.14 (2), guidance, paragraph (a)omitvaluers;insertvaluers (for example, a member of the Royal Institute of Chartered Surveyors (MRICS), a RICS registered valuer or a body recognised by RICS);

Explanatory noteThis amendment adds examples of valuers.

[1.30] Rule 6.2.16 (2) (c), including notesubstitute(c) the person:

(i) becomes insolvent;(ii) is wound up or put into liquidation; or

(iii) is placed in receivership or administration; or(d) the person ceases to be eligible to be appointed as the standing

independent valuer.Explanatory noteThis amendment adds grounds to remove a standing independent valuer.

[1.31] Rule 7.2.2 (1)omit all the words before paragraph (a)insertThe scheme property of a QFC retail scheme (other than a QFC retail property fund) must be invested only in any 1 or more of the following:

Explanatory noteThis amendment and the next insert pointers to the rule allowing QFC retail funds that are property funds to make other kinds of investments.


VZ

[1.32] Rule 7.2.2 (1), Notes 1, 2 and 3substituteNote 1 A QFC retail scheme cannot invest in precious metals or commodity

contracts. A QFC retail scheme that is a QFC retail property fund can invest in immovables, property-related assets and other investments (see rule 12.1.4).

Note 2 Transferable security is defined in rule 7.1.6. For investments that are treated as transferable securities, see the following provisions: rule 7.4.2 (Investments in closed-ended schemes as transferable

securities—QFC retail schemes) rule 7.4.3 (Investments linked etc to other assets as transferable

securities—QFC retail schemes).

[1.33] Rule 7.2.2 (2)omit

Explanatory noteThis amendment is consequential on the amendment of rule 7.2.2 (1).

[1.34] Rule 7.3.2 (1) (b) (ii)omit

less thatinsert

less thanExplanatory noteThis amendment corrects a typographical error.

[1.35] Rule 7.7.3 (1), including notesubstitute

(1) The operator of a QFC retail scheme (other than a retail property fund) must ensure that the scheme’s total borrowing does not, on any day, exceed 10% of its net asset value.Note For the limits on borrowing by QFC retail property funds, see

rule 12.5.9.


page 11

Explanatory noteThis amendment recognises that REITs have a different limit on borrowing.

[1.36] Rule 8.2.2 (7)omit

(7) However, an interest in an immovableinsert

(7) An interest in an immovableExplanatory noteThis amendment removes an unnecessary word.


(7) Any part of the scheme property that is not an investment must be valued at fair value. An interest in an immovable held by a QFC retail property fund must be valued by the fund’s standing independent valuer under rule 12.5.6.Note Under rules 12.3.2 (3) and 12.5.6, an investment in an intermediate

holding vehicle for the purpose of holding an immovable:(a) must be treated as if it were a direct investment in the immovable;

and(b) must be valued as an immovable.



(4) The operator and independent entity must rely on the unitholder register as conclusive evidence of the persons entitled to the units entered on it, unless the units are listed units.Note Under rule 4.1.6 (3), the records (held in the QCSD or in the relevant

exchange’s registry or system) of transfers or titles to units in the scheme are taken to be the definitive unitholder register and a record in that registry or system is conclusive evidence of title to a listed unit.


VZ

Explanatory noteThis amendment is consequential on the ability of QFC schemes to now be listed.

[1.39] Rule 8.3.1 (7)omit

(7) However, subrule (5) (b)substitute

(7) However, subrule (6) (b)Explanatory noteThis amendment corrects a typographical error.


(8) Despite anything in this rule, the transfer of a listed unit may be made electronically or in any other way permitted by the rules of the exchange where it is listed (or by the regulator of that exchange). A transfer made in such a way is sufficient to transfer title to the unit.

Explanatory noteThis amendment allows listed units to be transferred electronically or in other ways.


(3) For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, a record (held in the QCSD’s, or relevant exchange’s, registry or system) of a transfer or title to a unit is taken to be a document evidencing title to the unit.

Explanatory noteThis amendment is consequential on the ability of QFC schemes to be listed.


page 13

[1.42] After Part 9.1, headinginsertNote for Part 9.1Nothing in this Part diminishes the power of the exchange where units are listed (or the power of the regulator of that exchange) to suspend, in accordance with its rules, trading in the listed units.

Explanatory noteThis amendment clarifies the effect of this Part on listed units.

[1.43] Rule 9.1.1 (11) (b)omit

with 1 insert

within 1 Explanatory noteThis amendment corrects a typographical error.

[1.44] Chapter 12substitute

Chapter 12 QFC retail property funds

Part 12.1 General12.1.1 Introduction

(1) In addition to UCITS type schemes, Islamic funds and money-market funds, QFC schemes may be property funds, feeder funds and funds of funds.

(2) This Chapter sets out specific requirements that apply to QFC retail property funds, including real estate investment trusts or REITs.


VZ

12.1.2 Concepts relating to property funds(1) A property fund may be a qualified investor scheme or a retail

scheme. A property fund may or may not be listed in the Qatar Stock Exchange or in any other regulated exchange.Note Qualified investor scheme and retail scheme are defined in rules 1.3.2

and 1.3.3 respectively. A REIT must be listed in the Qatar Stock Exchange or another regulated exchange (see rule 12.6.2 (2) (b)).

(2) A property fund that is a qualified investor scheme must be open-ended so as to allow redemption of units. A property fund that is a retail scheme may be closed-ended or open-ended.Note For open-ended scheme and closed-ended scheme, see rule 1.2.10. A

REIT must be closed-ended (see rule 12.6.2 (2) (a)).

12.1.3 Application of Chapter 12(1) This Chapter applies only to a QFC retail scheme that is a property

fund (QFC retail property fund). REITs are a subset of QFC retail property funds.

(2) This Chapter applies to each subscheme of a QFC retail property fund that is an umbrella scheme as if each subscheme were a separate retail property fund. However, a REIT cannot be an umbrella scheme.

12.1.4 Permissible investments—QFC retail property funds(1) At least 75% of the gross asset value of a QFC retail property fund

must at all times be invested in at least 3 immovables that generate recurrent rental income. GuidanceThe Regulatory Authority expects the choice of immovables to be appropriate for, and consistent with, fund diversification and risk-spreading.

(2) Subject to subrule (3), the remaining 25% of the gross asset value of the fund may be invested (for purposes of liquidity and diversification) in a combination of the following investments:(a) immovables (whether or not the immovables generate recurrent

rental income);


page 15

(b) property-related assets;(c) units in other property funds;(d) cash; (e) government or public securities.

(3) For subrule (2):(a) no more than 5% of the remaining 25% may be invested in a

combination of property-related assets and units in other property funds (but only if the investment or investments do not result in a fundamental change in the fund’s overall risk profile); and

(b) no more than 5% of the remaining 25% may be invested in assets, units, government or public securities issued by a single issuer.

(4) Subrules (1) to (3) do not apply:(a) during the initial 6-month period of the fund’s operation;(b) during any period specified for the purpose in the fund’s

prospectus; or(c) during any period approved for the purpose by special

resolution of the unitholders.(5) If a REIT invests in property-related assets, units in other property

funds, government or public securities under subrule (2), the assets, units or securities must be listed and traded on a recognised exchange (within the meaning of the Banking Business Prudential Rules 2014).Note In the Banking Business Prudential Rules 2014 recognised exchange

means:(a) one of over 100 exchanges listed in Schedule 1 of those rules

(including the major exchanges in the Gulf region); or(b) an exchange listed in a notice published by the Regulatory

Authority on an approved website.


VZ

12.1.5 Use of certain names—QFC retail property funds(1) The operator of a QFC scheme must ensure that the name of the

scheme, or of a class of units, does not state or imply that the scheme is a property fund unless the scheme is a property fund.

(2) The operator of a QFC umbrella scheme must ensure that the name of a subscheme, or of a class of units in a subscheme, does not state or imply that the subscheme is a property fund unless the subscheme is a property fund.Note 1 Other restrictions on the use of the term “real estate investment trust” or

REIT may apply (see rule 12.6.2 (1)).Note 2 A REIT cannot be an umbrella scheme (see rule 12.1.3 (2)).

12.1.6 Other provisions continue to apply to QFC retail property funds that are not REITs

(1) Except as set out in column 3 of table 12.1.6A, the provisions of these rules described in columns 1 and 2 continue to apply to a QFC retail property fund that is not a REIT.Note For the provisions of these rules that apply to REITs, see rule 12.6.4 and

table 12.6.4A.

(2) Neither table 12.1.6A nor 12.1.6B is exhaustive. Each table is a guide for those who intend to establish and register a QFC retail property fund that is not a REIT.

Table 12.1.6A Application of provisions to QFC retail property funds

column 1applicable provisions

column 2description of contents of provisions

column 3provisions that do not apply

Chapter 1 general provisions, basic concepts and key terms

Chapter 2 registration of scheme

Chapter 3 constitutional requirements and units

Division 3.2.Brules 3.1.1 (b) and


page 17




3.2.12

Chapter 4 operator and independent entity

Chapter 5 investor relations, affected persons, prospectus, approvals, meetings, reports, accounts and auditors

Divisions 5.4.A, 5.5.A and 5.6.B

Chapter 7 investment and borrowing

Parts 7.2, 7.3, 7.4, 7.5 and 7.6

rules 7.7.2, 7.7.3 and 7.7.6

Chapter 8 operating duties and responsibilities, dealing, valuation pricing, register, outsourcing, payments, accounting and income distribution

Divisions 8.1.A, 8.2.A, 8.2.C and 8.6.A

Chapter 9 suspension, winding up and transfer schemes

Chapter 10 financial promotions and investment activities

Parts 10.2 and 10.3

Chapter11 other provisions and fees Part 11.3

Schedule 1 arrangements that are not


VZ




collective investment schemes

Schedule 2 contents of constitutional document

Parts S2.2, S2.3 and S2.4

Schedule 4 contents of prospectus rules S4.23 and S4.24

(3) COND also deals with collective investment schemes, and the definitions of packaged product and product provider in those rules include a unit in a collective investment scheme and the operator of a collective investment scheme, respectively. The provisions of COND described in table 12.1.6B may, among others, apply to QFC retail property funds.


page 19

Table 12.1.6B COND provisions that may apply to QFC retail property funds

column 1provisions


rules 2.5.5 and 2.5.6 inducements

Part 3.3 financial promotions

rule 4.1.1 (2) and Divisions 4.5.B and 4.5.C

personal account transactions and dealing and managing

rules 4.2.4 and 4.2.8 initial contact by telephone and terms of business

rules 4.3.6 and 4.3.7 independence

rules 4.3.13 and 4.3.14

form and content of product disclosure document

rules 4.3.21 to 4.3.30

additional disclosure required: including opening statement, risk and reward profile, projections, charges and expenses, past performance chart, closing statement and recordkeeping

rule S2.3 confirmation notes

12.1.7 Offer of QFC retail property funds An offer of units in a listed QFC retail property fund (including a REIT) must be in accordance with the IOSCO principles and the practices and procedures of the Qatar Stock Exchange or other regulated exchange where it is listed.


VZ

Part 12.2 Constitutional document and prospectus—QFC retail property funds

12.2.1 Extra constitution requirements—QFC retail property fundsIn addition to the matters required under Schedule 2 (Constitutional document content—QFC schemes), the constitutional document of a QFC retail property fund must include the following:(a) a statement that the fund is a QFC retail property fund;(b) a statement whether the fund is a closed-ended scheme or an

open-ended scheme;(c) a statement whether the aim of the fund is to spread investment

risks.(d) a statement that the fund invests in at least 3 immovables that

generate recurrent rental income.Note For statements on restrictions on investment and borrowing, see

rule S2.11. See also rule 12.1.4 on permissible investments and rule 12.5.9 for borrowing limits.

12.2.2 Prohibited amendments of constitutional document—QFC retail property fundsThe constitutional document of a QFC retail property fund must not be amended in such a way that the fund ceases to be a property fund.


page 21

Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC retail property funds

12.3.1 Operator may make alternative custody arrangements for immovables in certain jurisdictions—QFC retail property funds

(1) For the purpose of meeting legal requirements in relation to the ownership of an immovable in the jurisdiction where the immovable is located, the operator of a QFC retail property fund may make alternative arrangements for the custody of the immovable.ExampleThis rule may apply if legal title to an immovable cannot be held in Qatar or another GCC country because of the law of another jurisdiction. In such a situation, custody of the immovable by the independent entity may not be possible, and arrangements for declarations of trust, indemnities and resolutions relating to the transfer of custody may have to be made.

(2) The arrangements must not give the operator unfettered control over the scheme property. If the arrangements involve joint ownership or the use of intermediate holding vehicles, the arrangements must be in accordance with whichever of rules 12.3.2 to 12.3.6 apply.

(3) The operator must satisfy the Regulatory Authority that the arrangements:(a) are for the purpose stated in subrule (1);(b) comply with subrule (2); and(c) are legally effective in the QFC and in the jurisdiction where

the immovable is located.Note Under rule 4.2.6 (6) (a), the independent entity of a property fund is not

responsible in relation to an immovable that is subject to alternative arrangements in accordance with this rule.


VZ

12.3.2 Joint ownership arrangements—QFC retail property funds

(1) A QFC retail property fund may enter into an arrangement for the joint ownership of an immovable in accordance with this rule (joint ownership arrangement).

(2) Before a QFC retail property fund enters into a joint ownership arrangement, the operator of the fund:(a) must be able to demonstrate that the arrangement is in the

interests of the unitholders;(b) must ensure that, under the arrangement:

(i) the fund has a majority stake or holding in relation to the arrangement;

(ii) the fund has, at all times, more than 50% ownership and control of each immovable subject to the arrangement;

(iii) the fund has the freedom to dispose of its interest in each immovable; and

(iv) the liability of the fund does not exceed the percentage of its interest in the arrangement;

(c) must ensure that due diligence is conducted to identify restrictions and constraints that may limit the fund’s direct ownership of a 100% interest in any immovable subject to the arrangement; and

(d) must obtain a legal opinion about the arrangement.(3) An investment in an intermediate holding vehicle for the purpose of

holding an immovable (whether wholly or through a joint ownership arrangement) must be treated as if it were a direct investment in the immovable. The investment must be valued as an immovable under rule 12.5.6.


page 23

(4) Despite subrule (2) (b) (i), the Regulatory Authority may permit a QFC retail property fund to enter into a joint ownership arrangement in which the fund does not have a majority stake or holding if:(a) the authority is satisfied that the interests of the unitholders are

adequately protected (for example, the other joint owner of the property is a public sector entity in Qatar); or

(b) the law of the jurisdiction where the immovable is located requires local ownership or control of 51% or more.

(5) Despite subrule (2) (b) (ii), the Regulatory Authority may permit a QFC retail property fund to hold title to an immovable under a joint ownership arrangement, but without holding more than 50% ownership and control of the immovable, if the authority is satisfied that the interests of the unitholders are adequately protected.

(6) For subrule (2) (d), the legal opinion must include:(a) a description of the significant terms of the arrangement;(b) a statement whether the fund will have good marketable legal

and beneficial title in each immovable subject to the arrangement;

(c) a description of the equity and profit-sharing arrangements of the parties to the contract;

(d) a statement that the contract and joint ownership arrangements are legal, valid, binding and enforceable under applicable law;

(e) a statement that all necessary licences and consents required in the jurisdiction where the immovable is located have been obtained;

(f) any restriction on the fund disposing of its interest, in whole or in part, in the immovable; and

(g) if relevant, the implication of any foreign law that may limit the fund’s direct ownership of a 100% interest in the immovable.


VZ

12.3.3 Information about joint ownership arrangements—QFC retail property fundsThe operator of a QFC retail property fund that has entered into a joint ownership arrangement in an immovable must include in the next operator’s report under rule 5.6.13:(a) the ownership structure of the fund’s interest and the material

terms of the arrangements, including:(i) restrictions on the fund disposing of its interest; and

(ii) the effect of the restrictions on the value of the interest;(b) the identity, background and ownership of the other legal and

beneficial owners of the immovable;(c) any previous transactions by the other owners with the fund in

relation to the immovable;(d) agreements for remuneration, fee-sharing and other financial

matters that have been, or will be, entered into between the fund and the other owners or their associates;

(e) a summary of the legal opinion required by rule 12.3.2 (2) (d) in relation to the immovable;

(f) if there are any restrictions on foreign ownership of the immovable subject to the arrangement:(i) the nature and duration of the restrictions;

(ii) the effect of the restrictions on the operations and financial position of the fund as a whole; and

(iii) the standing independent valuer’s opinion and evaluation of the effect of the restrictions on the value of the immovable; and

(g) any other information that the unitholders may reasonably require to make an informed judgment about the arrangements.


page 25

12.3.4 Use of intermediate holding vehicles to hold immovables—QFC retail property funds

(1) Subject to subrule (2), an immovable may be held by a QFC retail property fund through 1 or 2 intermediate holding vehicles, if:(a) the purpose of each vehicle is to enable the fund to hold

immovables; and(b) either:

(i) the vehicle or each vehicle is majority-owned or majority-held by the fund; or

(ii) an intermediate holding vehicle that is majority-owned or majority-held by the fund (the first vehicle) holds the immovable through another intermediate holding vehicle (the second vehicle) for the sole purpose of directly holding the immovable for the fund (or arranging financing for the fund) and the second vehicle is majority-owned or majority-held by the first.

Note An investment in an intermediate holding vehicle for the purpose of holding an immovable must be treated as if were a direct investment in the immovable, see rule 12.3.2 (3).

(2) The Regulatory Authority may permit a QFC retail property fund to hold an immovable through a series of more than 2 intermediate holding vehicles if the operator of the fund satisfies the authority that it is necessary to do so (for example when it is necessary for the fund to meet a legal or regulatory requirement in another jurisdiction).GuidanceIn giving permission for a fund to have more than 2 intermediate holding vehicles, the Regulatory Authority would be guided by, among others, the structure of the fund and whether the structure is clear, easily understood and transparent to retail investors.

(3) If practicable, an intermediate holding vehicle of a QFC retail property fund must have the same auditor and accounting reference date as the fund.


VZ

(4) The accounts of any intermediate holding vehicle of a QFC retail property fund must be consolidated into the annual and half-yearly reports of the fund.

(5) Despite subrule (1) (b), the Regulatory Authority may permit a QFC retail property fund (or the first intermediate holding vehicle) to hold an immovable through an intermediate holding vehicle even if the fund or vehicle does not have a majority ownership or holding if the authority is satisfied that less than majority ownership or holding is reasonable in the circumstances and the interests of the unitholders are adequately protected.

12.3.5 Duty of operator in relation to intermediate holding vehicles

(1) The operator of a QFC retail property fund that uses an intermediate holding vehicle or vehicles to hold immovables must ensure that:(a) neither the constitution of the intermediate holding vehicle or

vehicles nor the organisation, transactions or activities of any of the vehicles contravenes a requirement of this Chapter;

(b) subject to subrule (3), the governing body of each of the vehicles is appointed by the operator with the approval of the fund’s independent entity and investment committee (if any);

(c) each of the vehicles undertakes the purchase, sale and management of immovables on behalf of the fund in accordance with the fund’s investment objectives, strategies and policy; and

(d) the interests of the unitholders are otherwise adequately protected.

(2) The operator of a QFC retail property fund may, by the use of inter-company debt, transfer capital and income between the fund and an intermediate holding vehicle of the fund if:(a) the purpose of the transfer is for investment in immovables or

the repatriation of income generated by such an investment;


page 27

(b) a record of inter-company debt is kept to provide an accurate audit trail; and

(c) interest paid out on the debt instruments that gave rise to the inter-company debt is equivalent to the net rental income earned from the immovables less the intermediate holding vehicle’s reasonable running costs (including tax).

(3) Subrule (1) (b) does not apply to an intermediate holding vehicle if:(a) the vehicle does not have a majority stake or holding in

relation to a joint ownership arrangement over the immovable; or

(b) the vehicle, at the time the immovable was acquired, was already established in another jurisdiction.

12.3.6 Report on use of intermediate holding vehicles to purchase immovables—QFC retail property funds

(1) If a QFC retail property fund purchases an immovable through the acquisition of an intermediate holding vehicle, the operator of the fund must ensure that a report is prepared on:(a) the profit and loss of the vehicle for each of the 3 years

preceding the transaction (or any shorter period for which the intermediate holding vehicle was in existence); and

(b) the assets and liabilities of the vehicle as at a date that is not earlier than 6 months from the date of the report.

(2) Despite subrule (1) (b), the Regulatory Authority may require that the report on the assets and liabilities of the vehicle be as at a date closer to the date of the report.ExampleThe Regulatory Authority may require (generally or for a particular case) a different date if an intervening event has made the date used, or proposed to be used, unreliable.


VZ

(3) The report may be prepared by the fund’s auditor or another QFC approved auditor. The report may also be prepared by an auditor from a jurisdiction which registers and regulates auditors in a way comparable to QFC approved auditors, but only if the operator of the fund notifies the Regulatory Authority of the auditor’s name and address before the report is prepared.

(4) The report:(a) must state how the profits and losses of the vehicle would have

affected the fund if the fund had, at all material times, held the shares proposed to be acquired; and

(b) if the intermediate holding vehicle has subsidiaries—must deal with the profits or losses and the assets and liabilities of the vehicle and its subsidiaries (whether jointly or separately).

(5) The operator must also ensure that a valuation report for the intermediate holding vehicle’s interest in immovables is prepared in accordance with rules 12.4.3, 12.5.6 and 12.5.7.

Part 12.4 Standing independent valuer—QFC retail property funds

12.4.1 Appointment of standing independent valuer—QFC retail property funds

(1) A QFC retail property fund must at all times have a valuer for the fund (standing independent valuer).

(2) The operator of a QFC retail property fund must, with the independent entity’s approval, appoint a person as standing independent valuer.Note As a general rule, a person cannot be the standing independent valuer

for the same fund for more than 5 continuous years (see rule 12.4.4).

(3) A person must not be appointed as the standing independent valuer unless:(a) the person carries on the business of valuing immovables;


page 29

(b) the operator and the independent entity are satisfied that the person has the skills, experience, qualifications and attributes to be the standing independent valuer of the fund, having regard to the fund’s investment objectives, strategies and policy; and

(c) the person is independent of:(i) the operator and independent entity;

(ii) if the fund is a CIC—the fund; and(iii) a member (however described) of the governing body of

the operator, the independent entity or, for a CIC, the fund.

Guidance for para (3) (b)The operator and independent entity should be satisfied that:(a) the person is a fellow or associate (however described), or has key personnel

who are fellows or associates (however described), of a relevant recognised professional body of surveyors or property valuers (for example, a member of the Royal Institute of Chartered Surveyors (MRICS), a RICS registered valuer or a body recognised by RICS);

(b) the person has, or has access to, expertise relevant to the fund and, in particular, knowledge and experience in the valuation of immovables of the relevant kind in the relevant area;

(c) the person has robust internal controls and checks and balances to ensure:(i) the integrity of valuation reports; and

(ii) that valuation reports are properly and professionally prepared in accordance with international best practice;

(d) the person has adequate professional indemnity insurance; and(e) the person does not have ownership or other commercial links with other

persons providing services to the fund (for example, investment advisers) that could impair the person’s ability to provide independent and objective valuation services to the fund.

(4) Without limiting subrule (3) (c), a person (A) is not independent of another person (B) if:(a) A has, at any time during the last 2 years, been involved in

material business dealings with B (otherwise than in the


VZ

exercise of their respective functions as the holders of positions in relation to any scheme); or

(b) B has a material interest in A or A has a material interest in B.

12.4.2 Standing independent valuer not to deal in immovables—QFC retail property fundsThe standing independent valuer of a QFC retail property fund must not be personally engaged, and must not have an associated person who is engaged, in finding immovables for the fund or finding the fund for immovables.

12.4.3 Basis of valuation by standing independent valuer—QFC retail property funds

(1) A valuation of an interest in an immovable by the standing independent valuer of a QFC retail property fund must be:(a) on the basis of ‘open market value’ (as defined in the

constitutional document and the latest filed prospectus); or(b) on another appropriate basis.Guidance1 The constitutional document and latest filed prospectus would be expected to

define “open market value” using an authoritative text such as the latest edition of the Royal Institute of Chartered Surveyors’ publication called “RICS Valuation - Professional Standards (the Red Book)”.

2 In considering whether valuation of an interest in an immovable by the standing independent valuer is made on an appropriate basis, the operator should consider whether the valuation was made in accordance with internationally accepted valuation principles, procedures and definitions as set out in the International Valuations Standards published by the International Valuation Standards Committee.

(2) The basis on which the standing independent valuer makes a valuation is subject to the constitutional document and the latest filed prospectus.

(3) In making a valuation, the standing independent valuer:(a) may treat the contents of a building as part of the building; and


page 31

(b) must disregard any arrangement to dispose of an interest in an immovable held as part of the scheme property unless the valuer is satisfied on reasonable grounds that the arrangement is legally enforceable.

Note For the valuations that a standing independent valuer is required to do, see: rule 12.5.2 (1) (c) (valuation before acquisition of immovables) rule 12.5.4 (1) (b) (valuation before disposal of immovables) rule 12.5.6 (annual and periodic valuations of immovables)

12.4.4 Reappointment of standing independent valuer—QFC retail property funds

(1) No person may be a standing independent valuer of a QFC retail property fund for a continuous period of 5 years, unless the person is reappointed in accordance with this rule.

(2) If the operator of a QFC retail property fund wishes to reappoint a person after the person has served 5 continuous years, the operator must put the position to tender before the end of the 5 years.

(3) If the operator decides (with the approval of the independent entity) to reappoint the same person following the tender process, the operator must state the reasons, and summarise the evidence, for the reappointment in the next operator’s report under rule 5.6.13.

(4) A reappointment under this rule must not exceed 5 years and cannot be further extended.

12.4.5 Removal of standing independent valuer—QFC retail property funds

(1) The operator of a QFC retail property fund may, with the independent entity’s approval, remove the standing independent valuer at any time.

(2) The operator of a QFC retail property fund must remove a person as the standing independent valuer if:(a) a special resolution of the unitholders is passed to remove the

person;


VZ

(b) the person breaches the prohibition against dealing in immovables under rule 12.4.2;

(c) the person:(i) becomes insolvent;

(ii) is wound up or put into liquidation; or(iii) is placed in receivership or administration; or

(d) the person ceases to be eligible to be appointed as the standing independent valuer.

(3) The power to remove the standing independent valuer has effect despite anything in any agreement between the valuer and all or any of the following:(a) the operator;(b) the independent entity;(c) the fund.

Part 12.5 Investments—QFC retail property funds

12.5.1 Investment committee—QFC retail property funds(1) This rule applies to a QFC retail property fund that is not a CIT.

Note Rule 12.5.1 does not apply to a REIT (see table 12.6.4A).

(2) The fund must have an investment committee of at least 3 members. The operator must make arrangements for the unitholders to elect the members of the committee after the fund starts operations, and thereafter:(a) at least once every 5 years; and (b) each time there is a vacancy.

(3) A person is not eligible for election as a member unless the operator and independent entity are satisfied that the person has the skills, experience and qualifications to review investment opportunities for the fund.


page 33

(4) The members of the committee must be independent of the operator and must not be involved in the fund’s day to day management. No person may be a member for more than 5 continuous years.

12.5.2 Requirements for making investments in immovables—QFC retail property funds

(1) The operator of a QFC retail property fund must ensure that the fund does not invest in an immovable to be held as part of the scheme property unless all the following requirements are complied with:(a) the immovable must be located in a jurisdiction specified in the

latest filed prospectus;(b) the operator must have taken reasonable care to determine that

the title to the interest to be acquired in the immovable is a good marketable legal and beneficial title;

(c) the standing independent valuer has valued the interest and the operator and independent entity have received a report on the valuation.

Note See rule 12.5.5 (Reports on valuation of immovables before acquisition or disposal—QFC retail property funds).

(2) However, the report of the standing independent valuer must not be relied on to acquire the interest in an immovable if:(a) the interest is not acquired, or agreed by enforceable contract

to be acquired, within 6 months after the date of the report;(b) it is (or should reasonably be) apparent to the operator that the

valuer’s report cannot, or can no longer, reasonably be relied on; or

(c) the price of the interest is, or becomes, more than 105% of the valuation of the interest stated in the report.


VZ

12.5.3 Operator’s duties in relation to title and insurance of immovables—QFC retail property funds

(1) The operator of a QFC retail property fund must ensure that the fund holds good marketable legal and beneficial title in all its immovables (whether directly or through an intermediate holding vehicle or vehicles).

(2) An arrangement entered into in relation to scheme property for the purposes of Islamic finance arrangements where the legal title to the property is held by a financial institution complies with subrule (1) if:(a) there is a statement in the fund’s prospectus that the fund may

enter into such arrangements; or(b) the unitholders have by special resolution approved the fund’s

entry into such arrangements.GuidanceUnder rule 12.5.3 (2) operators can use certain Islamic structures such as ijara for transactions that require the financial institution providing the financing to be the legal owner of the immovable.

(3) The operator must ensure that the fund does not grant any person an option to acquire any scheme property.

(4) The operator must take all reasonable care to arrange adequate property insurance and public liability insurance for immovables held as part of the scheme property.

12.5.4 Operator’s duties in relation to option premiums and disposal of immovables—QFC retail property funds

(1) The operator of a QFC retail property fund must ensure that the following requirements are complied with in relation to interests in immovables held as part of the fund’s scheme property:(a) the total of all premiums paid in any 12-month period for

options to purchase interests in immovables must not exceed 10% of the fund’s gross asset value, calculated at the date of the granting of the option;


page 35

(b) an interest in an immovable must not be disposed of unless:(i) the standing independent valuer has valued the interest;

and(ii) the operator and independent entity have received a

report on the valuation.Note See rule 12.5.5 (Reports on valuation of immovables

before acquisition or disposal—QFC retail property funds).

(2) However, a report of the standing independent valuer must not be relied on under subrule (1) (b) to dispose of an interest in an immovable if the interest is not disposed of, or agreed by enforceable contract to be disposed of, within 6 months after the date of the report.

12.5.5 Reports on valuation of immovables before acquisition or disposal—QFC retail property funds

(1) This rule applies to a report by a standing independent valuer in relation to a proposed acquisition or disposal of an interest in an immovable.Note For the valuation in relation to proposed acquisition of an immovable,

see rule 12.5.2 (1) (c). For the valuation in relation to proposed disposal of an immovable, see rule 12.5.4 (1) (b).

(2) The report:(a) must include a brief description of the immovable, including:

(i) its location and existing use;(ii) the nature of the interest the fund is proposing to acquire,

or dispose of, in the immovable;(iii) any encumbrances affecting the immovable;(iv) whether the immovable is leased and, if leased, the terms

of the lease and its expiry;(v) the capital value of the immovable at the date of

valuation;(vi) the net monthly income (if any) from the immovable; and


VZ

(vii) any other matter that may affect the immovable or the value of the interest;

(b) must include all material details about the basis of valuation and the assumptions used;

(c) must describe and explain the valuation methods used;(d) if more than 1 valuation method is available—must explain the

reasons for choosing a particular method;(e) must outline the structure and condition of the relevant market,

including an analysis of the supply and demand situation, the market trend, and investment activities;

(f) must confirm that the valuer continues to be eligible to be the standing independent valuer for the firm and that the report is prepared on a fair and unbiased basis; and

(g) must be dated as at the date the valuation is made.

12.5.6 Annual and periodic valuation of immovables—QFC retail property funds

(1) The following provisions apply in relation to the valuation of interests in immovables (including investments in intermediate holding vehicles for the purpose of holding immovables) held as part of the scheme property of a QFC retail property fund:(a) the operator must ensure that the standing independent valuer:

(i) values, at least once a year, all the interests in immovables held as part of the scheme property, on the basis of a full valuation with physical inspection (including, if the immovable is or includes a building, internal inspection of the building); and

(ii) gives the operator and independent entity a report on the valuation;

(b) for paragraph (a), any inspection in relation to adjacent properties of a similar nature and value may be limited to the inspection of only a single representative property;


page 37

(c) the operator must ensure that the standing independent valuer:(i) values, at least once a month, all the interests in

immovables held as part of the scheme property, on the basis of a review of the last full valuation (unless the valuer decides that the valuation of an interest in an immovable should be made on the basis mentioned in paragraph (a)); and

(ii) gives the operator and independent entity a report on the valuation;

Note Subrule (1) (c) does not apply to a REIT (see table 12.6.4A).

(d) if the operator or independent entity becomes aware of any matter that appears likely:(i) to affect the valuation of an interest in an immovable; or

(ii) to cause the standing independent valuer to decide to value on the basis mentioned in paragraph (a) instead of on the basis mentioned in paragraph (c);

it must immediately notify the standing independent valuer about the matter;

(e) the operator must use its best endeavours to ensure that any other affected person immediately notifies the standing independent valuer if the affected person becomes aware of a matter mentioned in paragraph (d).

(2) The valuation of an interest in an immovable under this rule has effect for these rules until the next valuation of the interest under this rule.

12.5.7 Annual and other periodic valuation reports—QFC retail property funds

(1) This rule applies to a report by a standing independent valuer in relation to a valuation of interests in immovables under rule 12.5.6.


VZ

(2) The report:(a) must include a brief description of each immovable in which

the fund holds an interest, including:(i) its location and existing use;

(ii) the nature of the interest the fund holds in the immovable;

(iii) any encumbrances affecting the immovable;(iv) whether the immovable is leased and, if leased, the terms

of the lease and its expiry;(v) the capital value of the immovable at the date of

valuation;(vi) the net monthly income (if any) from the immovable; and

(vii) any other matter that may affect the immovable or the value of the interest;

(b) must include all material details about the basis of valuation and the assumptions used;

(c) must describe and explain the valuation methods used;(d) if more than 1 valuation method is available—must explain the

reasons for choosing a particular method;(e) must outline the structure and condition of the relevant market,

including an analysis of the supply and demand situation, the market trend, and investment activities;

(f) must confirm that the valuer continues to be eligible to be the standing independent valuer for the firm and that the report is prepared on a fair and unbiased basis; and

(g) must be dated as at the date the valuation is made.


page 39

12.5.8 Valuation of financial instruments—QFC retail property funds

(1) This rule applies in relation to the valuation of financial instruments of the following kinds held as part of the scheme property of a QFC retail property fund:(a) securities listed on the Qatar Stock Exchange or another

regulated exchange;(b) unlisted debt securities;(c) government or public securities;(d) instruments issued by other property funds.

(2) The instruments must be valued independently and fairly, on a regular basis, in accordance with the fund’s constitutional document. The valuation must be done in accordance with the accounting standards adopted for preparing the fund’s financial statements and with industry standards and best practices.

12.5.9 Borrowing by QFC retail property funds(1) A QFC retail property fund may borrow money (directly or through

any intermediate holding vehicle) for the use of the fund to finance an investment or for operating purposes. The loan must be repaid out of the scheme property.

(2) Money may be borrowed under subrule (1) only from an eligible bank.

(3) The operator of the fund must ensure that any borrowing is entered into, maintained and monitored in accordance with the borrowing policy as stated in the fund’s prospectus. The operator must have regard in particular to:(a) the duration of any borrowing; and(b) the number of times the fund borrows in any period.

(4) The operator of the fund must also ensure that the fund’s total borrowing does not, on any day, exceed 50% of its gross asset value.


VZ

(5) All borrowing by the fund must be at arm’s length. The operator may pledge the fund’s assets to secure the borrowing.

(6) If the borrowing limit is exceeded, the operator must use its best endeavours to reduce the excess borrowing as soon as practicable. The operator must notify the unitholders and the Regulatory Authority of:(a) the breach;(b) the cause of the breach; and(c) any action that has been, or will be, taken to correct the breach.

(7) For this rule, borrowing by intermediate holding vehicles of the fund must be aggregated in calculating the total of the fund’s borrowing.

(8) This rule is subject to the obligation of the fund to comply with any restriction in the constitutional document. This rule does not apply to back-to-back borrowing.

Part 12.6 Real estate investment trusts12.6.1 Application of Part 12.6

This Part applies to real estate investment trusts. The operator of a retail property fund that is, or is held out as, a REIT must (subject to rule 12.6.4) comply with this Part in addition to the other Parts of this Chapter.

12.6.2 Real estate investment trusts or REITs(1) An operator, or any person marketing a fund, must not use the term

“Real Estate Investment Trust” or “REIT”, or refer to a fund or otherwise hold out a fund as being a real estate investment trust, unless the fund is a QFC retail property fund that satisfies subrule (2).

(2) A QFC retail property fund is a real estate investment trust (REIT) if:(a) the fund is a closed-ended scheme;


page 41

(b) the fund is listed in the Qatar Stock Exchange or in any other regulated exchange; and

(c) the fund’s constitutional document and prospectus state that the fund will distribute to unitholders at least 80% of its audited annual net income (adjusted to exclude any fair value capital gains).

Guidance1 For a REIT that holds an immovable through an intermediate holding vehicle

or vehicles, the timing of distributions of income may depend on the law of the jurisdiction where the vehicle or vehicles are established.

2 Nothing in this rule prevents a REIT from distributing more than the percentage stated in its constitutional document and prospectus. If the REIT proposes to distribute less than that percentage, rule 12.6.6 would apply and prior approval from unitholders would be required.

Note A REIT must be a QFC collective investment company or a QFC collective investment trust (see rule 12.6.3). A REIT must be primarily aimed at investments in income-generating immovables (see definition of property fund).

(3) If a REIT fails to satisfy a requirement in subrule (2), the operator and the independent entity of the REIT must notify the Regulatory Authority and the relevant exchange immediately, but within 1 business day. The notice must state any action that has been, or will be, taken to correct the breach.

12.6.3 Legal forms—REITsA real estate investment trust must take the form of a QFC collective investment company or a QFC collective investment trust.Note QFC collective investment company (CIC) and QFC collective

investment trust (CIT) are defined in rules 1.3.7 and 1.3.9 respectively.

12.6.4 Other provisions continue to apply to REITs(1) Except as set out in column 3 of table 12.6.4A, the provisions of

these rules described in columns 1 and 2 continue to apply to a REIT.

(2) Neither table 12.6.4A nor 12.6.4B is exhaustive. Each table is a guide for those who intend to establish and register a REIT.


VZ

(3) Because a REIT cannot take the form of a partnership, provisions that require a QFC retail property fund to be a QFC collective investment partnership or CIP do not apply. As a general rule, provisions that deal with umbrella schemes or the redemption of units do not apply to REITs since REITs must be closed-ended.

Table 12.6.4A Application of provisions to REITs




Chapter 1 general provisions, basic concepts and key terms

rules 1.3.6 (b) and 1.3.8

Chapter 2 registration of scheme

Chapter 3 constitutional requirements and units

Division 3.2.B

rules 3.1.1 (b) and 3.2.12

Chapter 4 operator and independent entity

Chapter 5 investor relations, affected persons, prospectus, approvals, meetings, reports, accounts and

Divisions 5.4.A, 5.5.A and 5.6.B

rules 5.6.1 (3), 5.6.9 (3), 5.6.11 (2) to (4), 5.6.12 (2) to (4), 5.6.13 (c), (l) and (m) and 5.6.17 (2) and (3),


page 43




auditors

Chapter 7 investment and borrowing

Parts 7.2, 7.3, 7.4, 7.5 and 7.6

rules 7.1.10, 7.7.2 , 7.7.3 and 7.7.6

Chapter 8 operating duties and responsibilities, dealing, valuation pricing, register, outsourcing, payments, accounting and income distribution

Divisions 8.1.A, 8.2.A, 8.2.C and 8.6.A

rules 8.1.10, 8.2.5, 8.2.14, 8.3.1, 8.3.3 (2), 8.3.4, 8.6.6, 8.6.11, 8.8.1, 8.8.2 and 8.9.2 (2) and (4)

Divisions 8.1.B, 8.2.B and 8.6.B in so far as they mention or allow redemption

Chapter 9 suspension, winding up and transfer schemes

rules 9.1.1 and 9.2.1

Chapter 10 financial promotions and investment activities

Parts 10.2 and 10.3

Chapter 11 other provisions and fees

Part 11.3

Chapter 12 QFC retail rules 12.5.1 and 12.5.6 (1) (c)


VZ




property funds

Schedule 1 arrangements that are not collective investment schemes

rules S1.14 (1) (b) and S1.15

Schedule 2 contents of constitutional document

Parts S2.2, S2.3 and S2.4

rules S2.9 (b), S2.18 and S2.19

Schedule 5 contents of prospectus

(4) COND also deal with collective investment schemes, and the definitions of packaged product and product provider in those rules include a unit in a collective investment scheme and the operator of a collective investment scheme, respectively. The provisions of COND described in table 12.6.4B may, among others, apply to REITs.


page 45

Table 12.6.4B COND provisions that may apply to REITs

column 1provisions


rules 2.5.5 and 2.5.6 inducements

Part 3.3 financial promotions

rule 4.1.1 (2) and Divisions 4.5.B and 4.5.C

personal account transactions and dealing and managing

rules 4.2.4 and 4.2.8 initial contact by telephone and terms of business

rules 4.3.6 and 4.3.7 independence

rules 4.3.13 and 4.3.14

form and content of product disclosure document

rules 4.3.21 to 4.3.30

additional disclosure required: including opening statement, risk and reward profile, projections, charges and expenses, past performance chart, closing statement and recordkeeping

rule S2.3 confirmation notes

12.6.5 Extra constitution requirements—REITs(1) The constitutional document of a REIT must state:

(a) that the fund is a real estate investment trust;(b) the exchange where the fund is listed;(c) the percentage (at least 80%) of its audited annual net income

(adjusted to exclude any fair value capital gains) that the fund intends to distribute to unitholders; and


VZ

(d) whether the fund is a collective investment company or a collective investment trust.

Note Because a REIT is a QFC retail property fund, its constitutional document must also include the matters set out in rule 12.2.1, such as a statement that the fund invests in at least 3 immovables that generate recurrent rental income.

(2) The income distribution policy required to be stated in the REIT’s constitutional document must include:(a) the REIT’s proposed distribution date or dates;(b) the person responsible for determining any adjustments (such

as evaluation surplus and gains on disposal of immovables) to distributable income;

(c) the basis for any adjustments mentioned in paragraph (b); and(d) if relevant, the procedures for calculating, paying and

accounting for income equalisation. Note For the other statements about income distribution that the

constitutional document of a REIT must contain, see rule S2.10.

12.6.6 Proposal to distribute less than stated percentageIf, for a particular annual distribution, the operator of a REIT proposes not to distribute the percentage (at least 80%) of its audited annual net income (adjusted to exclude any fair value capital gains) as stated in its constitutional document and prospectus, the proposal is taken to be a fundamental change for purposes of rule 5.4.2.Note Under rule 5.4.2, any fundamental change must have prior approval

from the unitholders.

12.6.7 REITs and intermediate holding vehiclesIf a REIT holds an immovable (whether located in or outside Qatar) through an intermediate holding vehicle, or a series of intermediate holding vehicles, the operator of the REIT must ensure that the vehicle, or each of the vehicles, distributes its income to the REIT. The income is to be distributed to the extent permitted by the law of the jurisdiction where the vehicle is established.


page 47

12.6.8 Investments by REITs in immovables under development(1) Subject to subrule (2), the operator of a REIT must ensure that any

investment in an immovable that is in the course of development (whether by the REIT on its own or in joint venture) is undertaken only if the REIT intends to hold the immovable on completion.

(2) The total contract value of the immovable under development or redevelopment must not exceed 30% of the gross asset value of the REIT.

(3) For this rule, development includes redevelopment but does not include refurbishment, retrofitting and renovation.

12.6.9 Custody of immovables by REIT operator(1) The operator of a REIT may act as custodian of an immovable that

is part of the fund’s scheme property if the operator has:(a) adequate systems and controls to segregate and protect the

immovable; and(b) effective arrangements to ensure that the immovable is not

available to creditors of the operator if the operator becomes insolvent.

Note Under rule 4.2.6 (6) (b), the independent entity of a REIT is not responsible in relation to an immovable held by the operator of the REIT as custodian in accordance with this rule. If the REIT operator acts as custodian, the fund’s prospectus must state that fact (see rule S5.20 (1)).

(2) The systems and controls to segregate and protect the immovable must ensure that:(a) legal title to the immovable is registered in the name of the

fund;(b) the operator identifies, manages and monitors any conflicts of

interest as a result of it acting as custodian; and(c) the operator designates by name or position the employees who

are responsible for safeguarding the ownership rights of the


VZ

fund over the immovable, including safekeeping documents evidencing title to the immovable.

(3) In designating an employee under subrule (2) (c), the operator must have regard to conflicts of interest that may arise between the employee’s function of safeguarding ownership rights and the employee’s other functions.GuidanceIn identifying, managing and monitoring conflicts of interest that may arise from acting as custodian, the operator must take into account that it is required to give priority to unitholders’ interests if there is a conflict between its own interests and those of unitholders.

12.6.10 Transactions with affected persons—REITs(1) The operator of a REIT need not comply with rules 5.1.3 and 5.1.4

(relating to notice and approval) for a transaction with an affected person if:(a) the transaction is for the acquisition or sale of an immovable in

Qatar;(b) the operator has general unitholder approval to enter into such

a transaction; and(c) the fund’s independent entity has confirmed in writing, before

the transaction is entered into:(i) that the transaction is on terms that comply with the

requirement to negotiate at arm’s length in rule 5.1.2 (2) (a); and

(ii) that all other requirements have been complied with.(2) For subrule (1) (b), the unitholder approval must be by ordinary

resolution passed at the previous annual general meeting of the fund. A unitholder who is an affected person proposing to enter into an affected person transaction, or a unitholder who is an associate of the affected person, must not vote on the resolution.


page 49

(3) The resolution must authorise the operator to enter into transactions with affected persons for the acquisition or sale of immovables in Qatar without obtaining prior unitholder approval in each case during the period for which the resolution is valid. The resolution is valid only until the date of the next annual general meeting of the fund (when it may be renewed).Note The operator of a REIT must disclose the existence of such an approval

in the fund’s prospectus (see rule S5.20 (2)).

(4) If the operator of a REIT enters into a transaction with an affected person under this rule, the operator must notify unitholders of the details of the transaction, including the identity of the affected person and the nature and extent of the person’s interest. The notice must be given as soon as practicable after entering into the transaction.Note For service and form of notices to unitholders, see rules 11.1.2 and

11.1.3. Notice may be given in the fund’s latest filed prospectus.

(5) If the operator operates more than 1 fund and a transaction involves 2 or more of them, the transaction is taken to be a transaction with an affected person for each fund.

12.6.11 Depositing cash with, and borrowing money from, affected persons—REITs

(1) The operator of a REIT must not deposit, with an affected person, cash that is part of the REIT’s assets unless:(a) the affected person is a regulated financial institution licensed

to accept deposits; and(b) the rate of interest that is to be paid on the deposit is not lower

than the prevailing commercial rate for a deposit of that size and term.

(2) The operator of a REIT must not borrow money from an affected person unless:(a) the affected person is a regulated financial institution licensed

to lend money; and


VZ

(b) the rate of interest to be charged on the borrowing is not higher than the prevailing commercial rate for a borrowing of that size and term.

12.6.12 Changes to disclosure about business with affected persons—REITsIf after the initial disclosure there is a significant change in the information and statements required under rule S5.18 relating to the competing business of an affected person, the operator must notify the unitholders of the change.Note For service and form of notices to unitholders, see rules 11.1.2 and

11.1.3. Notice may be given in the fund’s latest filed prospectus.

12.6.13 When additional approval required from independent entity—REITs

(1) This rule applies to a transaction between a REIT and an affected person if:(a) the transaction is in relation to:

(i) services provided in the ordinary course of estate management of an immovable of the fund (for example, renovation and maintenance work); or

(ii) engaging a property agent to provide services to the fund (for example, advisory services in transactions involving immovables); and

(b) the value of the transaction is 5% or more of the fund’s gross asset value, as disclosed in its latest audited accounts.

(2) The operator must ensure that such a transaction is entered into only with the approval of the fund’s independent entity.

12.6.14 Duty to notify relevant exchange—REITs(1) The operator and the independent entity of a REIT must notify the

exchange in which the REIT is listed if a material event occurs in relation to the REIT. The notice must be given immediately, but within 1 business day.


page 51

(2) In this rule, material event includes:(a) an event, or change in circumstances, that is likely to have a

significant adverse effect on the REIT or its unitholders;(b) an event, or change in circumstances, that is likely to result in

material prejudice or damage to the REIT or its unitholders;(c) a failure, in a material respect, to comply with the operator’s or

independent entity’s functions under these rules;(d) a major breach of the restrictions on the fund’s investment and

borrowing;(e) a material change in the fund’s risk management process;(f) any matter (other than the issue or redemption of units in the

ordinary course of business) that has a material effect on the size of the fund or the price of its units; and

(g) any other matter that is likely to result in (or that is, under the exchange’s rules, ground for) the suspension by the exchange of trading in listed units.

12.6.15 Duty to notify Regulatory Authority of trading suspension(1) If an exchange on which a REIT is listed suspends trading in the

REIT’s units, the operator of the REIT:(a) must immediately notify the Regulatory Authority orally about

the suspension, giving the reasons (so far as the operator is aware of them) for the suspension; and

(b) must give the authority written confirmation of the suspension and those reasons within 1 business day.

(2) If the exchange permits trading in the units to re-start, the operator:(a) must immediately notify the Regulatory Authority about the

exchange’s decision orally; and(b) must give the authority written confirmation of the decision

within 1 business day.Explanatory noteThis amendment inserts a new Chapter on QFC retail property funds, including REITs.


VZ

[1.45] Rule S2.18 (1) a)omitthe scheme is an open-ended companyinsertthe scheme is a closed-ended company, or an open-ended company

Explanatory noteThis amendment and the next recognise that a CIC can now be a closed-ended company.

[1.46] Rule S2.18 (2)omitFor a CIC,insertFor a CIC that is open-ended,

[1.47] Rule S3.11substitute

S3.11 Register of unitholders(1) The address in the QFC where the unitholder register, or a copy of

the register, is available for inspection by unitholders and when it can be inspected.

(2) For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, how and when unitholders can obtain information about their holdings of the listed units and substantial holders of such units.



page 53

[1.48] Rule S4.2 (d) and (e)substitute(d) the legal form of the scheme;(e) whether the scheme is a UCITS type scheme or a property

fund;(ea) if the scheme (or a subscheme) is a property fund—whether the

scheme (or subscheme) is closed-ended or open-ended;Explanatory noteThis amendment is consequential on the introduction of retail schemes that are property funds.

[1.49] After rule S4.2insert

S4.2A Additional information—QFC retail property fundsIf the scheme is a QFC retail property fund, the following information and statements:(a) the nature of the commitment that participants will enter into;(b) details of any transactions entered into, or proposed to be

entered into, with affected persons;(c) full particulars of the nature and extent of the interest (if any)

of affected persons in the immovables owned, or proposed to be acquired, by the fund;

(d) details of significant participants and the number or percentage of units held, or proposed to be held, by each of them;

(e) a statement to explain the standards according to which property valuations are made;

(f) the insurance arrangement for the fund;(g) a statement of any material policy regarding immovables;(h) any other matter that the Regulatory Authority directs the

operator to include in the prospectus.


VZ

Explanatory noteThis amendment and the next insert requirements for the prospectus of certain property funds (consequential on the introduction of retail schemes that are property funds).

[1.50] After rule S4.4 (e)insert

(ea) if the scheme is a QFC retail property fund:(i) a list of the jurisdictions where immovables in which the

fund may invest are located; and(ii) if investment in an immovable has been, or is to be, made

through an intermediate holding vehicle or vehicles—a statement disclosing the existence of the intermediate holding vehicle or vehicles and confirming that the purpose of each vehicle is to enable the fund to hold immovables;

[1.51] Rule S4.4 (o), including notesubstitute(o) the historical performance (if any) of the scheme;

Explanatory noteThis amendment removes an unnecessary note.

[1.52] Rule S4.4 (s)omitthe kinds of information (which must be listed) mentioned in ruleinsertthe information listed in COLL, rule

Explanatory noteThis amendment omits redundant words.


page 55


S4.9 Investment adviser and independent valuer(1) If an investment adviser is retained in relation to the business of the

scheme:(a) the adviser’s name;(b) whether the adviser is an authorised firm;(c) if it conducts a significant activity other than providing

services to the scheme as an investment adviser—what the significant activity is; and

(d) a summary of the material provisions of the contracts to which the adviser is a party in relation to the scheme that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity.

(2) If the scheme has a standing independent valuer:(a) the valuer’s name; and(b) a summary of the material provisions of the contracts to which

the valuer is a party in relation to the scheme that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity.

Explanatory noteThis amendment is consequential on the introduction of retail schemes that are property funds (which require standing independent valuers).


VZ




(2) For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, how and when unitholders can obtain information about their holdings of the listed units and substantial holders of such units.


[1.55] After Schedule 4insert

Schedule 5 Prospectus content—REITs(see rule 5.2.3)

S5.1 Document statusA statement that the document is the prospectus of the REIT as at a particular date.

S5.2 Description of scheme etcThe following information and statements:(a) the name of the REIT;(b) that the REIT is a real estate investment trust and is registered

as a REIT under the Collective Investment Schemes Rules 2010;

(c) the registration number given to the REIT by the Regulatory Authority;


page 57

(d) whether the REIT is a collective investment company or a collective investment trust;

(e) the exchange where the REIT is listed; (f) the nature of the commitment that participants will enter into; (g) details of any transactions entered into, or proposed to be

entered into, with affected persons;Note For the meaning of affected person, see rule 5.1.1.

(h) full particulars of the nature and extent of the interest (if any) of affected persons in the immovables owned, or proposed to be acquired, by the REIT;

(i) details of significant participants and the number or percentage of units held, or proposed to be held, by each of them;

(j) a statement to explain the standards according to which property valuations are made;

(k) the insurance arrangement for the REIT; (l) a statement of any material policy regarding immovables;

(m) the percentage (at least 80%) of its audited annual net income (adjusted to exclude any fair value capital gains) that the REIT intends to distribute to unitholders;

(n) the maximum percentage of the REIT’s gross asset value at any time that may consist of property-related assets that are not traded or dealt in on the markets specified in the constitutional document;

(o) the maximum percentage of the REIT’s gross asset value at any time that may consist of immovables that are unoccupied and non-income-producing, or are in the course of substantial development, redevelopment or refurbishment;

(p) the maximum percentage of the REIT’s gross asset value at any time that may be invested in immovables that are subject to a security interest held otherwise than by the independent entity or its nominee or delegate;


VZ

(q) if the REIT is an Islamic fund—that the REIT is an Islamic fund;

(r) that the unitholders are not liable for:(i) the debts and other liabilities of the REIT; or

(ii) acts or omissions of the operator or independent entity;(s) if the REIT has not started to operate—when it is expected to

start to operate;(t) if the duration of the REIT is limited—a statement to that

effect, an indication of the duration and, if appropriate, of any conditions for extending the duration;

(u) the base currency of the REIT;(v) if the REIT is a CIC—its capital structure, including the

maximum and minimum sizes of its capital;(w) if applicable, any minimum initial investment;(x) that any notice or other document may be served on the

operator or independent entity at its registered address in the QFC or, if the independent entity is not an authorised firm, at its address for service;

(y) the circumstances in which the REIT may be wound up, and a summary of the procedure for, and the rights of the unitholders under, a winding-up;

(z) the governing law for the REIT.

S5.3 Islamic fundsIf the REIT is an Islamic fund, the following information:(a) that all operations of the REIT must be conducted in

accordance with Shari’a;(b) the names of the members of the Shari’a Supervisory Board

and their qualifications and education;(c) the manner and frequency of Shari’a reviews;


page 59

(d) the disclosure required by AAOIFI FSA 14.

S5.4 Investment objectives and policy etcThe following information in relation to the REIT’s investment objectives, strategies and policy:(a) the REIT’s investment objectives (including its financial

objectives) and, in particular:(i) the types of investments in which it may invest; and

(ii) the REIT’s investment strategies, including its approach to borrowing and gearing;

(b) the REIT’s policy for achieving its investment objectives, including:(i) the general nature of the portfolio and any intended

specialisation; (ii) the policy for the spreading of risk in the scheme

property; and(iii) the policy in relation to the exercise of borrowing

powers;(c) a list of the jurisdictions where immovables in which the REIT

may invest are located; (d) if investment in an immovable has been, or is to be, made

through an intermediate holding vehicle or vehicles—a statement disclosing the existence of the vehicle or vehicles and confirming that the purpose of each vehicle is to enable the REIT to hold immovables;

(e) an indication of any limits on the investment policy;(f) the types of assets that the scheme property may consist of;(g) the proportion of the scheme property that may consist of an

asset of any description;(h) the kind of transactions that may be effected for the REIT and

an indication of any techniques and instruments or borrowing powers that may be used in the REIT’s management;


VZ

(i) for rule 7.1.7 (1) (b) (What is an eligible market?), a list of the markets through which the REIT may invest or deal in investments;

(j) any restrictions on the assets in which scheme property may be invested, including restrictions on the extent to which the REIT may invest in any type of asset and an indication of whether the restrictions are more onerous than those otherwise applying under COLL;

(k) the borrowing restrictions applying to the REIT;(l) if the REIT may invest in other schemes—the extent to which

the scheme property may be invested in units in schemes that are managed by the operator or any associate of the operator;

(m) the profile of the typical investor for whom the REIT is designed;

(n) the historical performance (if any) of the REIT;(o) if the REIT’s net asset value is likely to have high volatility

because of its portfolio composition or the portfolio management techniques that may be used—a prominent statement to that effect;

(p) a statement that any unitholder may obtain on request the information listed in COLL, rule 5.2.2 (2) (Prospectus etc to be made available).

S5.5 Distributions, accounting and reporting dates etc(1) Information about reporting, accounting and distribution, including

the following:(a) the accounting and distribution dates;(b) a description of procedures:

(i) for calculating and applying income (including how any distributable income must be paid);

(ii) relating to unclaimed distributions; and


page 61

(iii) if relevant, for calculating, paying and accounting for income equalisation;

(c) the accounting reference date and when annual and half-yearly long reports must be published;

(d) when annual and half-yearly short reports must be sent to unitholders.

(2) Details of the main taxes levied on the REIT’s income and capital, including tax (if any) deducted on distributions to unitholders.

S5.6 Characteristics of units in the REITInformation about the following:(a) if there are 2 or more classes of units in issue or available for

issue—the name of each class and the rights attached to each class so far as they differ from the rights attached to other classes;

(b) how unitholders may exercise their voting rights and what these are;

(c) if mandatory conversion of units from a class to another class may be required—in what circumstances that may be required;

(d) for a REIT that is a CIT—the fact that the nature of the right represented by units is that of a beneficial interest under a trust;

(e) documents evidencing title to units.

S5.7 OperatorThe following information about the operator:(a) its name;(b) the nature of its legal status;(c) the date and place of its incorporation;(d) the address of its registered office in the QFC;(e) if it is a subsidiary—the name of its ultimate parent entity and

the jurisdiction where the parent entity is incorporated;


VZ

(f) if the duration of its legal status is limited—when its legal status will or may cease;

(g) if it has share capital—the amount of its issued share capital and the amount paid up;

(h) a summary of its functions under COLL in relation to the REIT;

(i) a summary of the material provisions of the contracts to which it is a party in relation to the REIT that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity;

(j) a summary of any outsourcings it has entered into in relation to the REIT;

(k) the operator’s policy in relation to the operator holding units in the REIT.

S5.8 Independent entity(1) The following information about the independent entity:

(a) its name;(b) the nature of its legal status;(c) the date and place of its incorporation;(d) whether it is an authorised firm;(e) if it is an authorised firm—the address of its registered office

in the QFC;(f) if it is not an authorised firm—the following:

(i) its contact details and address for service;(ii) the regulatory regimes and legal systems (including

insolvency laws) to which it is subject;(iii) the regulatory authorisations (however described) held by

it;


page 63

(iv) its arrangements for safeguarding the scheme property and its use of agents and service providers;

(v) the obligations applying to it, and the recourse available against it by the operator, the Regulatory Authority and unitholders, under those regulatory regimes and legal systems in relation to anything done or not done by it in relation to the REIT;

(vi) whether it has submitted to the jurisdiction of the Regulatory Authority, the QFC Court or both;

(g) if it is a subsidiary—the name of its ultimate parent entity and the jurisdiction where the parent company is incorporated;

(h) if the duration of its legal status is limited—when its legal status will or may cease;

(i) if it has share capital—the amount of its issued share capital and the amount paid up;

(j) a summary of its functions under COLL in relation to the REIT;

(k) a summary of the material provisions of the contracts to which it is a party in relation to the REIT that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity;

(l) a description of its main business activity;(m) a summary of any outsourcings it has entered into in relation to

the REIT.(2) If the independent entity is not an authorised firm, a statement that

the scheme property may be held in a jurisdiction outside the QFC and that the market practices, insolvency law and legal system applying in that jurisdiction may differ from those applying in the QFC.


VZ

S5.9 Investment adviser and independent valuer(1) If an investment adviser is retained in relation to the business of the

REIT:(a) the adviser’s name;(b) whether the adviser is an authorised firm;(c) if it conducts a significant activity other than providing

services to the REIT as an investment adviser—what the significant activity is; and

(d) a summary of the material provisions of the contracts to which the adviser is a party in relation to the REIT that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity.

(2) The following information about the standing independent valuer:(a) the valuer’s name; (b) a summary of the material provisions of the contracts to which

the valuer is a party in relation to the REIT that may be relevant to unitholders, including provisions (if any) relating to remuneration, remuneration sharing, termination, compensation on termination, and indemnity.

S5.10 AuditorThe name and address of the auditor of the REIT.

S5.11 Relationships with other partiesThe relevant details of the following:(a) the names of each member (however described) of the

governing body of the operator, the independent entity or, for a CIC, the CIC;

(b) the business activities of each person named under paragraph (a) if these activities are of significance to the REIT’s business;


page 65

(c) if any person named under paragraph (a) is a corporation in a group of which any other corporation member (however described) of the governing body is a member—that fact;

(d) if an investment adviser retained in relation to the REIT’s business is a corporation in a group of which any corporation member (however described) of the governing body of the operator, the independent entity or, for a CIC, the CIC is also a member—that fact;

(e) if an investment adviser retained in relation to the business of the REIT has the operator’s authority to make decisions for the operator—that fact and a description of the matters in relation to which it has authority;

(f) what functions (if any) the operator or independent entity has outsourced and to whom;

(g) in what capacity (if any) the operator acts in relation to any other schemes and the name of each of those schemes.



(2) How and when unitholders can obtain information about their holdings of units and substantial holders of units.

S5.13 Payments out of scheme property(1) In relation to each type of payment from the scheme property,

details of the following:(a) who the payment is made to;(b) what the payment is for;(c) if available, the rate or amount;(d) if the rate or amount is not available—how it must be

calculated and accrued;(e) when must it be paid;


VZ

(f) if a performance fee is taken—a plain English statement of the maximum amount or percentage of the scheme property that the performance fee might represent in an annual accounting period together with examples of the operation of the performance fee.

(2) How notice must be given to unitholders of the operator’s intention to do any of the following:(a) introduce a new category of remuneration for its services;(b) increase the basis of any current charge;(c) change the basis of the treatment of a payment from the capital

property.(3) A table substantially in the form of table S5.13 illustrating the effect

of charges and expenses, together with the notes and statements following the table.

Table S5.13 Charges and expenses for the REIT

One-off charges taken before or after you investEntry charge [insert percentage]%1

Exit charge [insert percentage]%1

This is the maximum that might be taken out of your money [insert as applicable before it is invested or before the proceeds of your investment are paid out].

Charges taken from the REIT over a yearOngoing charges [insert percentage]%2

Charges taken from the REIT under certain specific conditionsPerformance fees [insert percentage]% a year of any returns the REIT achieves above [insert name of benchmark].

Note 1 The percentages shown in the entry and exit charges are the maximum figures. In some cases you might pay less.


page 67

Note 2 The percentage for the ongoing charges is based on expenses for the year ending [insert year]. This figure may vary from year to year. Ongoing charges excludes: performance fees portfolio transaction costs, other than entry and exit charges

incurred when buying or selling units in another collective investment scheme.

Statements about charges and expensesThe charges you pay are used to pay the costs of running the scheme, including the costs of marketing and distributing it. These charges reduce the potential growth, and rate of return, of your investment.

(4) For a REIT that holds an immovable through an intermediate holding vehicle or vehicles—a warning that the timing of distributions of income may depend on the law of the jurisdiction where the vehicle or vehicles are established.

S5.14 Allocation of paymentsIf, in accordance with COLL, any income expense payments may be treated as a capital expense:(a) that fact; (b) the operator’s policy for treating any income expense as a

capital expense; and(c) a statement that this policy may result in capital erosion or

constrain capital growth.

S5.15 Valuation and pricing(1) A provision stating that there must be only a single forward price for

any unit calculated from time to time by reference to a particular valuation point.

(2) Details of the following:(a) how frequently, and at what times of the day, the scheme

property must be regularly valued to calculate the price at which units in the REIT may be issued, and a description of


VZ

any circumstances in which the scheme property may be specially valued;

(b) how the value of the scheme property must be calculated in relation to each purpose for which it must be valued;

(c) how the price of units in each class must be calculated;(d) where, and at what frequency, the most recent prices must be

published.

S5.16 DealingDetails of the following:(a) the dealing days, and times on a dealing day, when the operator

must receive instructions to issue units;(b) the procedures for:

(i) the issue of units; and(ii) the settlement of transactions;

(c) for a prospectus available during the initial offer period:(i) the initial offer period;

(ii) the initial price of a unit (in the base currency); (iii) the arrangements for issuing units during the initial offer

period, including the operator’s intentions on investing the subscriptions received during the initial offer period;

(iv) the circumstances when the initial offer must end; (v) whether units may be issued in a currency other than the

base currency; and(vi) any other relevant details of the initial offer;

(d) details of the minimum number, percentage or value of each class of unit in the REIT that:(i) any single person may hold; and

(ii) may be the subject of any single transaction of issue or sale;


page 69

(e) whether certificates may be issued in relation to registered units;

(f) if relevant, the circumstances in which the operator may arrange for, and the procedure for, the issue of units otherwise than for cash;

(g) the exchange or exchanges on which units in the REIT are or will be listed or dealt.

S5.17 Disclosure about transactions with affected personsThe following information about any transaction with an affected person:(a) any beneficial interests of the affected person, and any changes

to those interests, in the REIT;(b) any conflict of interest involving the affected person;(c) the measures to identify, manage and monitor conflicts of

interest involving the affected person.Note If the operator operates more than 1 scheme and a transaction involves 2

or more of them, the transaction is taken to be a transaction with an affected person for each scheme, see rule 12.6.10 (5).

S5.18 Disclosure about competing business of affected persons

(1) If an affected person has an interest in a business that competes, or is likely to compete, with the REIT (whether directly or indirectly), the following information and statements:(a) the business and its management;(b) the nature, scope and size of the business; (c) how the business competes, or is likely to compete, with the

REIT. (2) If relevant, the following must be included in the disclosure:

(a) a statement from the affected person that:(i) it is capable of performing its duty to the REIT

independently of the business; and


VZ

(ii) it will perform its duty independently and in the best interests of the REIT and the unitholders;

(b) a statement that the REIT may acquire any of the business or assets of the affected person.

Note For the obligation of the operator to notify unitholders of any significant change to the information required to be disclosed under this rule, see rule 12.6.12.

S5.19 Disclosure about sale of immovable by affected personsIf an affected person has, for the purpose of the establishment of the REIT, agreed to sell an immovable to the REIT, the following information and statements:(a) the results of the valuation made by an independent valuer; (b) the price to be paid for the immovable; (c) the terms of the transaction.

S5.20 Disclosure about custodianship by operator and transactions of operator with affected persons

(1) If the operator itself acts as custodian of an immovable, the following information and statements:(a) a statement that the operator acts as custodian of the

immovable;(b) a description of the risks that may arise as a result of it acting

as custodian;(c) a description of the systems and controls that it has in place to

ensure that the immovable is properly segregated and protected.

(2) If the operator has approval to enter into transactions with affected persons for the acquisition or sale of immovables in Qatar without obtaining prior unitholder approval in each case, a statement of that fact.


page 71

S5.21 DilutionDetails of what is meant by dilution, including:(a) a statement explaining:

(i) that is not possible to predict accurately whether dilution is likely to happen;

(ii) that a dilution adjustment is required to reduce the effect of dilution; and

(iii) the operator’s policy in relation to requiring a dilution levy together with an explanation of how this policy may affect the future growth of the REIT; and

(b) a statement of the following:(i) the operator’s policy in deciding when to require a

dilution levy, including the operator’s policy on large deals;

(ii) the estimated rate or amount of any dilution levy or dilution adjustment based on historical data or future projections;

(iii) the likelihood that the operator may require a dilution levy or make a dilution adjustment and the basis (historical or projected) on which the statement is made.

S5.22 Issue chargesIf relevant, a statement authorising the operator to make an issue charge and specifying the basis for, and current amount or rate of, the charge.

S5.23 Meeting of unitholdersDetails of the following:(a) the procedures for calling meetings of unitholders;(b) resolutions and voting at meetings of unitholders;(c) voting rights of unitholders;(d) the matters that require the approval of unitholders;


VZ

(e) for a CIC—whether annual general meetings must be held.

S5.24 General informationDetails of the following:(a) the REIT’s accounting standard;(b) the address in the QFC where copies of the constitutional

document, any amending or supplemental instrument, and the most recent annual and half-yearly reports, may be inspected and copies may be obtained;

(c) how any notice or other document must or may be served on unitholders;

(d) the extent to which and the circumstances in which:(i) the REIT is liable to pay or incur tax on any appreciation

in the value of the scheme property or on the income derived from the scheme property; and

(ii) deductions by way of withholding tax may be made from distributions of income to unitholders;

(e) any possible fees or expenses not otherwise mentioned in this Schedule, distinguishing between those to be paid by a unitholder and those to be paid out of the scheme property;

(f) if applicable, the names and addresses of any banker, lawyer, registrar, and any other person, conducting any significant activities in relation to the REIT.

S5.25 Mandatory statement about prospectusThe following statement prominently displayed on the first page (not including any cover page) of the prospectus:‘This prospectus relates to a collective investment scheme established in the Qatar Financial Centre and registered by the Qatar Financial Centre Regulatory Authority (the Regulatory Authority) as a real estate investment trust.The Regulatory Authority is not responsible for reviewing or verifying this prospectus or any related documents. The Regulatory


page 73

Authority has not approved this prospectus or any related documents nor has the Regulatory Authority taken any steps to verify the statements, information or provisions in the prospectus or any related documents. The Regulatory Authority takes no responsibility for the accuracy of statements, information or provisions in this prospectus or any related documents.Returns from units go down as well as up and you may also lose all or part of your investment.Past performance of units is not a reliable indicator of future performance.Prospective purchasers of the units offered should conduct their own due diligence and consider seeking independent legal and financial advice before deciding to invest in the scheme.’

S5.26 Other additional informationThe following information:(a) if there is any arrangement intended to result in a particular

capital or income return from a holding of units in the REIT or any investment objective of giving protection to the capital value of, or income return from, such a holding:(i) details of the arrangement or protection;

(ii) for any related guarantee—sufficient details of the guarantor and the guarantee to enable a fair assessment of the value of the guarantee;

(iii) a description of the risks that could affect achieving the return or protection; and

(iv) details of the arrangements by which the operator must give the unitholders notice of any action required by the unitholders to obtain the benefit of any related guarantee;

(b) whether notice has been given to unitholders of the operator’s intention to propose a change to the REIT and, if so, particulars of the notice;


VZ

(c) any other matter that the Regulatory Authority directs the operator to state in the prospectus.

Explanatory noteThis amendment inserts a new schedule setting out the requirements for the prospectus of a REIT.

[1.56] Additional amendmentsFrom the following provisions, omit “may not” insert “must not” rule 3.1.6 rule 3.2.3 heading rule 3.2.3 (1) rule 6.2.7 (2) rule 6.2.9 (2) rule 7.4.9 (8) rule 10.3.1 (1), note 3

Explanatory noteThese amendments clarify the mandatory nature of each provision.

[1.57] Glossary, definition of intermediate holding vehicle(including note)substituteintermediate holding vehicle, for a QFC scheme, means an entity (other than a scheme) if the purpose of the entity is to enable the holding of immovables for the scheme.

Explanatory noteThis amendment and the next 3 update and insert definitions.

[1.58] Glossary, definition of property fund (including notes)substituteproperty fund—a QFC scheme, or a subscheme of a QFC umbrella scheme, is a property fund if the scheme or subscheme is dedicated to investments in immovables and in securities issued by corporations whose main activities are investing in, dealing in, developing or redeveloping immovables.


page 75

[1.59] Glossary, definition of standing independent valuer (including note)substitutestanding independent valuer, of a QFC scheme, means the person who is appointed under these rules as the standing independent valuer for the scheme.

[1.60] Glossaryinsert the following definitionsjoint ownership arrangement, in relation to an immovable, means an arrangement for the joint ownership of the immovable under rule 12.3.2.listed unit means a unit that is listed in the Qatar Stock Exchange or in any other regulated exchange.QCSD means the Qatar Central Securities Depository.QFC approved auditor means a person:(a) who is approved by the QFC Authority to act as an auditor; and(b) whose name is entered in the register of auditors maintained by

the QFC Companies Registration Office.QFC retail property fund means a QFC retail scheme that is a property fund.real estate investment trust (or REIT) has the meaning given by rule 12.6.2 (2).REIT means real estate investment trust.


VZ

collective investment schemes (property funds and ...€¦ · web viewcollective investment...

Documents