IFM17100 | Genuine Diversity of Ownership (GDO): Introduction

What is a genuine diversity of ownership (GDO) condition?

The purpose of a GDO condition is to prevent funds that are only open to a small number of investors (such as members of a family or companies in common ownership) benefitting from the tax advantages provided by the relevant regime.

GDO conditions are to be found at Regulation 9A of Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964), regulations 75 and 76 of Offshore Funds (Tax) Regulations 2009 (SI 2009/3001) and paragraph 15 of Schedule 7A, Finance Act 2003. Each are drafted in similar terms.

One or more of those GDO conditions are incorporated by reference, with or without modification, across a range of tax regimes, as explained at IFM17200. Except where expressly stated, this manual section applies equally to all regimes where a GDO condition is used.

There are three conditions (Conditions A, B and C) which a fund must normally meet in order to satisfy the relevant GDO condition. Conditions A, B and C are explained in detail at IFM17300+. In broad terms, the purpose of the conditions is to identify funds which are set up and managed to enable a diverse range of investors to benefit from the expertise of the investment manager and from the economy of scale that comes from pooling funds.