CMFAS M8 Types of CIS & Fund Structures question: advantage flows specifically from a corporate fund

CMFAS M8Types of CIS & Fund Structures

Which advantage flows specifically from a corporate fund having its own legal personality?

A It is exempt from the investment restrictions that apply to trust-based schemes
B It can contract, sue and be sued in its own name, with shareholders' liability limited
C Its shares must trade at a discount to NAV, which lowers the cost for new investors
D Its investors become trust beneficiaries, with a trustee holding assets in their names

Show the answer and explanation

Answer: B. It can contract, sue and be sued in its own name, with shareholders' liability limited

A corporate fund structure gives the scheme its own legal personality: it can contract, sue and be sued in its own name, and shareholders' liability is limited, which can aid cross-border distribution.

Common mistake

Overstating legal personality as an exemption from regulation or as a trust feature.

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CMFAS M8 Types of CIS & Fund Structures question: advantage flows specifically from a corporate fund

Answer: B. It can contract, sue and be sued in its own name, with shareholders' liability limited

Common mistake

Related CMFAS M8 questions

CMFAS M8 Types of CIS & Fund Structures question: advantage flows specifically from a corporate fund

Answer: B. It can contract, sue and be sued in its own name, with shareholders' liability limited

Common mistake

Related CMFAS M8 questions