Companies Act 2014 section 1406

Requirements to be complied with by, and other matters respecting, an umbrella fund to which section 1405(1) applies

Section 1406 sets out the disclosure obligations and protective mechanisms that apply to umbrella funds which have elected for segregated liability between their sub-funds under section 1405.

• An umbrella fund with segregated liability must include the words "An umbrella fund with segregated liability between sub-funds" on all letterheads and written agreements, and must disclose this status before entering any oral contract with a third party.
• Failure to comply with these disclosure requirements is a category 3 offence for the umbrella fund and any officer in default.
• Every contract entered into by such an umbrella fund carries implied terms preventing any counterparty from seeking recourse to a sub-fund's assets to satisfy a liability that was not incurred on behalf of that sub-fund, and requiring repayment or trust arrangements if this protection is breached.
• Where a sub-fund's assets are wrongly used to discharge another sub-fund's liability and cannot otherwise be restored, the directors must certify the loss and transfer assets from the liable sub-fund to compensate the affected sub-fund, in priority to all other claims.