Section 356 | Meaning of “mutual fund”

(1)In section 355 “mutual fund” means arrangements with respect to property of any description (including money) that meet conditions A, B and C.

(2)Subsection (1) is subject—

(a)to the exceptions made by or under sections 357 and 359, and

(b)to sections 360 and 361.

(3)Condition A is that the purpose or effect of the arrangements is to enable the participants—

(a)to participate in the acquisition, holding, management or disposal of the property, or

(b)to receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.

(4)Condition B is that the participants do not have day-to-day control of the management of the property.

(5)For the purposes of condition B a participant does not have day-to-day control of the management of property by virtue of having a right to be consulted or to give directions.

(6)Condition C is that, under the terms of the arrangements, a reasonable investor participating in the arrangements would expect to be able to realise all or part of an investment in the arrangements on a basis calculated entirely, or almost entirely, by reference to—

(a)the net asset value of the property that is the subject of the arrangements, or

(b)an index of any description.

(7)The Treasury may by regulations amend condition C.

(8)Regulations under subsection (7) may only be made if a draft of the statutory instrument containing the regulations has been laid before and approved by a resolution of the House of Commons.