Function or template is not child of stylesheet

xsl:function and xsl:template declaration can only appear as top-level elements (a child element of an xsl:stylesheet). Declaring them in other nodes is a syntax error.

Incorrect:

  <xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="2.0" id="style1">
    <xsl:output encoding="UTF-8" method="xml"/>
    <xsl:template match="/objects/o/o[1]/o[1]">
      <xsl:function name="my:factorial" as="xs:integer">
        <!-- function body -->
      </xsl:function>
    </xsl:template>
  </xsl:stylesheet>

Correct:

  <xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="2.0" id="style1">
    <xsl:output encoding="UTF-8" method="xml"/>
    <xsl:template match="/objects/o/o[1]/o[1]">
        <!-- template body -->
    </xsl:template>
     <xsl:function name="my:factorial" as="xs:integer">
       <!-- function body -->
     </xsl:function>
  </xsl:stylesheet>