Investment and Administrative Services Agreement for UK Plan

[Guest Edward McElroy]

I am reviewing an investment and administrative services agreement with Fidelity for a UK plan. The agreement provides that if any participants become US or Canadian residents, Fidelity will not accept investment direction from them; it will require direction from the trustee, Fidelity will not send prospectuses to the US or Canadian residents and if US or Canadian residents subsequently become plan participants, the plan may not mention the Funds to these individuals and the percentage of US and Canadian residents can not exceed 5% of total plan participants. Does anybody have any idea what this is about? Thanks. Ed

[mbozek]

This looks like a matter which arises under UK securities laws-- self direction is only available to investors subject to UK securities laws, i.e., UK citizens. Since US citizens are not parties to whom self direction is available under UK law the plan sponsor wll require direction from the trustee. The 5% requirement may also be a provision under the UK securities laws - if more than 5% of the investors are US/Can citizens, the plan is a foreign plan not subject to UK securites law-- therefore self direction would not be available for any participant.

You need to talk to fidelity (since their attys have reviewed the applicable laws) or consult with a securities atty knowledgeable in UK law.