Authorised Contractual Schemes are also known as tax-transparent funds. The regime was introduced in the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013, and the FCA’s rules for the authorisation of ACSs.
The idea behind the ACS regime was to bring the UKs fund range in line with those offered in jurisdictions such as Luxembourg and Ireland. The regime puts their investors in the same position (or better) with regard to income and capital gains taxes then they would have been in if they had invested directly in the underlying fund assets. In particular, it generally enables investors to obtain their correct rates of withholding tax under applicable double tax treaties (which is not always the case if they invest in other pooled arrangements).
ACSs can be established in two legal forms: (i) as authorised co-ownership schemes, and (ii) as authorised limited partnership funds. Both these forms are available as UCITS, NURS and QIS.
ACSs were designed to be institutional funds. Direct investment in an ACS is limited to investors who either invest a minimum of £1 million or are professional institutional investors. Other investors can access an ACS through feeder funds.