The fund must publish a prospectus and its essential elements must be kept up-to-date. It must contain sufficient information to allow investors to make an informed judgment of the investment proposal. It must comply with the provisions of the regulations regarding disclosure to the unit holders.
The prospectus must be offered free of charge to every prospective unit holder before a contract for the acquisition of units is standard. It must be translated where required other than in English. Such translation must contain the same information and the same meaning as the prospectus submitted to the Central Bank.
The fund must not change its objective or effect a material change in investment policy as disclosed in the prospectus without the prior consent of the unit holders on a majority basis at General Meeting.
A range of information regarding the fund must be disclosed in the prospectus or equivalent constitutional document. This includes
- registered offices,
- State of establishment, place of incorporation, place where reports and documents may be obtained.
- Brief indications of the applicable tax,
- accounting dates and frequency,
- policies for determining and applying income,
- names of directors including past experience in the case of investment company.
- persons accepting responsibility for information.
- material provisions of third-party contracts including those with management company etc.,
- authorised share capital, base currency characteristics of the units. stock exchanges where the units are listed.
- description of remuneration policy
- state’s local authorities and public bodies in whose securities it intends to invest more than 20% of net assets.
It must set out the investment policy, including the quantitative parameters on the extent of leverage that may be used to include the list of stock exchanges and markets on which security or financial derivative instruments of the AIF are listed or traded
In relation to prospectus above, it shall include a list of stock exchanges on which securities or financial derivative instruments of the retail fund are listed or traded.
The position must be specifically disclosed in relation to investments in other funds, including particulars of additional funds arising by reason of such investment. It must specify techniques and instruments it will use for efficient portfolio management purpose. They must be in line with the best interests of the fund.
It must set out the methodology for calculating, valuations, methods, frequency of calculation, information concerning charges relating to the sale and purchase of units and information regarding publication of pricing on an ongoing basis.
It shall disclose the manner, amount and calculation of remuneration payable by the fund to the management company, directors of the investment company, general partners, depository etc.
Particulars of dealings, offerings and redemptions must be furnished.
Particulars of the management company or the general partners must be furnished. The names and positions in the management company of the members of the administrative management and supervisory functions; experience past and present which is relevant and details of their main activities outside the management companies must be disclosed.
Details of service providers and material provisions of contracts with the management company or investment company which may be relevant to the unit holders must be disclosed. The regulatory status must be disclosed.
The prospectus must identify and describe in a comprehensive manner, the risks applicable to investing in the particular fund. This must include, the fact that funds values may fall and rise, the desirability of consulting a stock broker or financial adviser of the contents of the prospectus, and the fact that the difference at any time between the sale and purchase price means that the investment must be regarded as a medium to long-term investment.
The prospectus must where relevant contain prominent warnings relating to the potential for above average risk arising and the suitability of the investment with the potential for above average risk, only for persons who are in a position to take such risk.
Detailed descriptions of the risks involved in efficient portfolio management, including counterparty risk, conflicts of interests must be set out.
Specific warnings are required in relation to particular types of investment including investment in gold and emerging stock market.
The prospectus must include a description of the potential conflicts of interest which could arise between fund managers, with details of how they are going to be resolved. Description of soft commission arrangements may be entered must be included.
The rule book sets out general operational requirements.
Issue and redemption prices of units must be available promptly on request by a unit holder. Units may not be issued or cancelled unless the equivalent of the net asset price is paid to the investor within a reasonable time which is specified in the prospectus.
The fund must ensure that the stock exchanges and markets included in the list contained in the prospectus meet regulatory requirements and criteria on an ongoing basis. They may amend prospectus to include additional stock exchanges only where they meet the regulatory requirements and the depository has confirmed that adequate custody arrangements are in place.
There are provisions for annual and half yearly reports. An annual report must be produced with the accounts and accounting information, which must be audited. The auditor’s report must be produced in full. The report is to contain matters required by AIMF regulations.
A half yearly report is to be published as well. The retail fund must prepare and submit to the Central Bank a set of an accounts within nine months of launch date. The first annual report must be within 18 months of incorporation published within six months. They are published and submit to the Central Bank, its annual report within six months of the end of the financial year to which it relates. The fund shall on request, supply unit holders with copies of annual and half yearly reports.
The information to be set out in the report is set out in the rulebook. It must include transactions, particulars of distributions out of capital, particulars of actions to provide protection against exchange rate risk.The fund must include information required to enable investors make an informed judgment on the development of the fund and its results. It must include
- number of units in circulation,
- net asset value per unit,
- full portfolio statement or condensed portfolio statement listing positions or exposures greater than 5% of net assets.
- statement of charges,
- changes in the composition of full portfolio during the period.
- where more than 10% of the assets are with a credit institution, details of the amounts and names.
- Investments by sub-funds or umbrella investment company in the units of other sub funds.
- description of soft commission arrangements.
- description of how financial derivative instruments, securities lending and repurchase agreements have been used during the period.
- details of investment funds into which the fund has invested. There are detailed specifics in respect of disclosures required in relation to use of financial derivative instruments.
Similar but slightly less information is required in the half yearly report.
There are a range of fund specific requirements applicable to retail AIF. A fund which invests in venture or development capital or private equity investments is subject to the following rules in addition to the general rules. It must be made clear that the fund so invests in its tile. The investments must be diversified so that no more than 30% of net assets are held in any company or group of companies.
Particulars must be specified in the prospectus of the intention to retain any degree of control and management over the underlying investments. The prospectus must contain a description of the risk involved including
- statements that above average risk is involved,
- suitability for persons able to take the risk,
- likelihood of delays in redemptions,
- recommendation that no more than 5% of investor’s portfolio be invested in a retail AIF.
The specific conflicts of interests between the fund and the management fund must be set out.