Open-ended Investment Company - History

History

While historically, unit trusts were favoured legal vehicles for investment, in the 1990s it was felt that the UK government should allow a corporate form that could repurchase its own shares without the standard restrictions in the Companies Act. The Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996 first introduced the OEIC, on 11 November 1996 and in force on 6 January 1997. They were enacted under the European Communities Act 1972 section 2(1) and were therefore known as the "ECA Regulations". The Securities and Investment Board (predecessor to the FSA) regulations, the Financial Services (Open-Ended Investment Companies) Regulations 1997 were approved by the SIB Board on 16 January 1997 and came into effect as from that date. The first commercial OEIC was launched by Threadneedle Asset Management in 1997.

These regulations only allow investment in transferable securities (e.g., listed securities, other collective investment schemes, or certificates of deposit). This ensured that ICVCs fell within the scope of the Undertakings for Collective Investment in Transferable Securities Directives (UCITS).

With the advent of the a single regulator, the FSA, the previous regulations were replaced by the Open-Ended Investment Companies Regulations 2001 under the Financial Services and Markets Act 2000 section 262. These changes brought the formation of ICVCs under control of the FSA and removed the automatic inclusion of an ICVC under the UCITS directive allowing scope for non-UCITS investments (e.g., money market funds, property funds and funds of funds). The changes ensure a level playing field for unit trusts and ICVCs.