IFM02130 - Authorised investment funds (AIFs): open-ended investment companies

Meaning of open-ended investment company - section 613 Corporation Tax Act 2010

An open-ended investment company (OEIC) is a body corporate which owns and manages investments (of various types) in order to give its members the benefit of spreading investment risk and the benefit of the management of the funds by or on behalf of the company.

The full definition is given in section 236 Financial Services and Markets Act 2000. This definition applies for tax purposes by virtue of s613, but only to companies incorporated in the UK. OEICs incorporated in the UK must be authorised by the Financial Conduct Authority (FCA). All such companies in the UK have the letters ICVC (investment company with variable capital) at the end of the company name. An OEIC must have an authorised corporate director whose role is the same as that of the fund manager for the AUT. An OEIC will also have a depositary to hold the investments on its behalf. The investors own shares in the company. The OEIC is both legal and beneficial owner of its assets.

OEICs are a form of authorised investment fund (IFM02110) and are subject to the tax rules in The Authorised Investment Fund (Tax) Regulations 2006 (SI 2006/964). “Authorised investment fund” is defined in regulation 3 and includes both OEICs and authorised investment trusts (IFM02120).