§ Mr. CarringtonTo ask the Chancellor of the Exchequer what progress has been made on legislation to introduce open-ended investment companies. [24218]
§ Mrs. Angela KnightFollowing consultations in the second half of 1995, the Treasury is nearing completion of a review of the draft regulations under the European Communities Act 1972, which will permit open-ended investment companies—OEICs—to be set up in Great Britain. The Northern Ireland Department of Economic Development will prepare separate regulations, also under the ECA, to permit OEICs to be set up in Northern Ireland. The Securities and Investments Board is studying parallel responses to its draft product regulations published in October 1995. Responses to the consultations, which have been encouraging and constructive, have raised a number of important issues.
In reviewing the Treasury's draft ECA regulations, my firm intention has been to maximise flexibility where possible without reducing the level of protection for investors. During the consultations, there was great interest in the corporate structure of the British open-ended investment company. After careful consideration, I have decided to allow greater flexibility than initially proposed. The revised regulations will require a minimum of one director. This will enable an oeic either to appoint a single director—provided that the director is a corporate body authorised under the Financial Services Act 1986—or to appoint more than one director. Promoters of OEICs will therefore be able to choose the structure most appropriate to their particular circumstances. The product regulations to be introduced by SIB will be relevant to the powers and duties of directors.
The interests of an OEIC's shareholders will also be protected by a fully independent depositary—also authorised under the Financial Services Act. The OEIC's annual general meeting will enhance accountability to its shareholders.
I am also considering a number of minor and technical amendments to the draft ECA regulations. The aim where possible is to increase flexibility, backed up by greater emphasis on disclosure. The draft ECA regulations will be laid before Parliament in draft when revision of the text is complete, probably in the early summer. I believe that this initiative will give the UK fund management industry new opportunities to compete in international 776W markets. At the same time, UK investors will gain access to a modern flexible vehicle for pooled investment, with opportunities for access to expertise and economies of scale with the same high standards of investor protection that currently apply to authorised unit trusts.