Q&As

Are property investment arrangements collective investment schemes?

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Published by a LexisNexis Financial Services expert
Published on: 29 November 2013
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This Q&A outlines key issues to bear in mind when considering whether property investment arrangements constitute a collective investment scheme (CIS).

What is a CIS and do property investment schemes fall within the definition?

A collective investment scheme (CIS) is defined in section 235 of the Financial Services and Markets Act 2000. Broadly speaking, a CIS is any arrangement:

  1. •

    which enables participants to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property,

  2. •

    where participants do not have day-to-day control over the management of the property, and

  3. •

    where either the contributions and profits or income are pooled, or the property is managed as a whole by or on behalf of the scheme operator, or both.

Whether or not a property investment arrangement is a CIS depends on its individual structure and the facts surrounding it. If the arrangement meets the conditions set out below and is not exempt, then its operation and promotion will likely come under Financial Conduct Authority (FCA) regulation.

If

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Investment definition
What does Investment mean?

An investment will typically mean any type of property or interest held within the territory of the host state. This will often extend far beyond 'obvious' property, such as real estate or shares in a local company, to (depending upon the circumstances) other interests such as rights under a contract, intellectual property rights and private loans. As with the concept of 'investor,' in the modern commercial world what does and does not qualify as investment can be a complex question. The definition of 'investment' will vary between BITs.

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