{"id":12851,"date":"2022-08-10T20:09:07","date_gmt":"2022-08-10T20:09:07","guid":{"rendered":"http:\/\/legalblog.ie\/?p=12851"},"modified":"2024-02-17T09:33:28","modified_gmt":"2024-02-17T09:33:28","slug":"qualifying-aif-2014","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/qualifying-aif-2014\/","title":{"rendered":"Qualifying AIF"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Qualifying_Investors\" title=\"Qualifying Investors\">Qualifying Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Financial_Limits\" title=\"Financial Limits\">Financial Limits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Management\" title=\"Management\">Management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Fees_Remuneration\" title=\"Fees &amp; Remuneration\">Fees &amp; Remuneration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Valuation_Redemption\" title=\"Valuation &amp; Redemption\">Valuation &amp; Redemption<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Share_Classes\" title=\"Share Classes\">Share Classes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Sub-Funds\" title=\"Sub-Funds\">Sub-Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Fund_Manager\" title=\"Fund Manager\">Fund Manager<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Central_Bank_Returns\" title=\"Central Bank Returns\">Central Bank Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/legalblog.ie\/qualifying-aif-2014\/#Prospectus_Requirements\" title=\"Prospectus Requirements\">Prospectus Requirements<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Qualifying_Investors\"><\/span>Qualifying Investors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The rules in the rulebook apply to all qualifying AIFs.\u00a0 However, the definitive rules are set out in their letter of authorisation.<\/p>\n<p>A Qualifying Investor AIF shall have a minimum subscription of \u20ac100,000 or equivalent in other currencies.\u00a0 It shall not accept subscriptions from persons for amounts of less than \u20ac100,000 for individual investors.<\/p>\n<p>It shall only accept subscriptions from an investor<\/p>\n<ul>\n<li>who is a professional client within the meaning of the Markets and Financial Instruments Directive;<\/li>\n<li>or receives an appraisal from an EU credit institution, MiFID firm or UCITS management company that the investor has the appropriate expertise, experience and knowledge to adequately understand the investment in the Qualifying Investor AIF;<\/li>\n<li>or certifies that they are an informed investor by furnishing: confirmation in writing that the investor has such knowledge of and experience in financial and business matters as would enable him to properly evaluate the merits and risks of the prospective investment or certifies that they are an informed investor by providing confirmation that the investor&#8217;s business involves, whether for its own account or on account of others, the management, acquisition or disposal of property of the same kind as the property of the Qualifying AIF.<\/li>\n<\/ul>\n<p>The fund may grant exemptions from minimum subscription requirements to the following:<\/p>\n<ul>\n<li>management company or general partner;<\/li>\n<li>investment advisor or the investment manager to the QAIF, director of the management company, or investment company;<\/li>\n<li>employee of the management company, investment company or employee of a company appointed to provide investment management or advisory services;<\/li>\n<li>an employee of the management company, investment company or general partner where the employee is directly involved in investment activities of the fund or a senior employee of the company and has experience in the provision of investment management services.<\/li>\n<\/ul>\n<p>The Qualifying Investor AIF must ensure that prospective unitholders certify in writing that they meet the minimum criteria listed above or that they are aware of the risk involved in the investment and of the fact that such investments carry the potential to lose all monies invested.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Financial_Limits\"><\/span>Financial Limits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A Qualifying Investor AIF shall not raise capital from the public through the issue of debt security.\u00a0 This does not apply to prevent the issue of notes by funds on a private basis to a lending institution to facilitate financing arrangements.<\/p>\n<p>The fund shall not grant loans or act as a guarantor in relation to a third party. \u00a0This does not prejudice its ability to acquire debt security nor to prevent it from acquiring securities which are not fully paid.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Management\"><\/span>Management<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The fund shall not have a management company or general partner or manager which acquires shares which enable it to exercise a significant issue over the management of an issuing body.\u00a0 This does not apply to investments in other investment funds.\u00a0 It does not apply where the fund is a venture capital, development capital or private equity Qualifying AIF provided the prospectus indicates its intention regarding the existence of legal and management control over the underlying investment.<\/p>\n<p>The fund shall specify, in its constitutional documents or prospectus, the maximum charge relating to the redemption and repurchase of units.\u00a0 This similarly may not be increased without the approval of a majority of members in a General Meeting.<\/p>\n<p>The limits on investments contained in the handbook and set out in the prospectus shall apply at the time of purchase of investments and continue to apply thereafter.\u00a0 If they are exceeded for reasons beyond the control of the fund or as a result of the exercise of subscription rights, the matter is to be recorded, and the fund must adopt as a priority object the remedying of that situation, taking account of the interests of the unitholder.<\/p>\n<p>The fund must comply with its constitutional document.\u00a0 It must entrust its assets to a depositary for safe keeping and this must be provided in the constitutional documents.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Fees_Remuneration\"><\/span>Fees &amp; Remuneration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The fund must ensure that the calculation of performance fees is verified by a depositary or competent person appointed by the Manager and approved by the depositary.<\/p>\n<p>The Fund shall specify, in its constitutional documents, the maximum annual fee charged by the manager or management company.\u00a0 It may not be increased without approval on the basis of a majority of persons at a members\u2019 meeting. In the event of an increase in the fee, unitholders must be entitled to redeem their units prior to the implementation of the increase.<\/p>\n<p>It must prescribe the remuneration and expenditure which the manager etc. is empowered to charge to the fund and the method of calculation of such remuneration.\u00a0 The fund must not replace the depository without the consent of the Bank. \u00a0The procedure for replacement must be specified in the constitutional documents.\u00a0 There are special provisions in relation to subscription, redemption and distribution of assets in specie rather than in cash.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Valuation_Redemption\"><\/span>Valuation &amp; Redemption<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The fund shall specify in its constitutional documents the rules for the valuation of assets.\u00a0 Assets shall only be purchased and sold at prices which are in conformity with the rules in the constitutional documents.\u00a0 The fund shall, in its constitutional documents, establish conditions for the creation and cancellation of units or for contributions and withdrawal of contributions.<\/p>\n<p>The fund shall only issue or sell its units at a price arrived at by dividing the net asset value of the fund by the number of units outstanding; such price may be increased by duties and charges.\u00a0 The fund shall only redeem or purchase its units at a price arrived at by dividing the net asset value of the fund by the number of units outstanding.\u00a0 Such price may be decreased by duties and charges.<\/p>\n<p>Where a fund is an open-ended fund, it shall provide redemption facilities at least once a quarter.\u00a0 It will redeem, when requested, at least 10% of its net assets on a monthly basis or 25% on a quarterly basis.\u00a0 It shall not impose a redemption fee of more than 5% of net asset value per unit.<\/p>\n<p>Funds which offer redemption and settlement on less than a quarterly basis or provide a period of more than 90 days between dealing deadlines and payment of redemption are not subject to any regulatory parameters in terms of dealing frequency, minimum redemption quotas or timeframe for settlements, provided they classify themselves as open-ended Qualifying Investor AIFs with limited liquidity.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Share_Classes\"><\/span>Share Classes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There are provisions applicable to the creation of share classes within a fund or an umbrella.\u00a0 The constitutional documents must provide for the creation of the share classes.\u00a0 Each qualifying fund or sub-fund must consist of a single common pool of assets.\u00a0 Assets may not be allocated to individual share classes.\u00a0 The capital gains or losses or income arising from the pool must be distributed or accrue equally to each shareholder relative to their participation in the fund.<\/p>\n<p>Unitholders in a share class must be treated equally.\u00a0 Where there is more than one share class, the unitholders of different classes must be treated fairly.<\/p>\n<p>Share classes may be established, which may be differentiated on the basis of subscription procedures, distribution policies, charging structure, hedging policies and other criteria.<\/p>\n<p>A fund may allocate assets, including derivatives, to individual share classes where the arrangement is not made for the purpose of pursuing a separate investment objective by the share class, does not result in a share class operating de facto as a separate fund, or is not created to circumvent requirements above.<\/p>\n<p>The fund is to distribute or accrue capital gains or losses or income or losses from the each class for each unitholder relative to their participation in the share class.\u00a0 There must be a prominent disclosure in the prospectus of the ability to establish such share classes and attendant risks.\u00a0 There must be clear authority.\u00a0 There must be an unambiguous valuation and allocation provision.<\/p>\n<p>To the extent possible under the investment fund legislation and law, the constitutional document is to contain provisions aimed at achieving segregation of liability between the share classes and share classes participating in the common fund.\u00a0 Where this is not possible, this must be prominently disclosed in the prospectus. \u00a0The arrangements must be fully prescribed and disclosed in the constitutional documents and prospectus.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Sub-Funds\"><\/span>Sub-Funds<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>An umbrella fund must obtain Central Bank approval for each sub-fund.\u00a0 It must ensure that each fund complies with the requirements to which it is subject.<\/p>\n<p>The constitutional document must provide that assets of each sub-fund belonged exclusively to the fund and shall not be used to discharge liabilities of other funds.\u00a0 There are provisions in relation to management fees charged, where there are investments in the sub-fund of the umbrella.\u00a0 There must be no double charging of certain categories of fees, including annual management fees.<\/p>\n<p>There are provisions for the establishment of a subsidiary.\u00a0 Prior Central Bank approval is required.\u00a0 It must be wholly owned and the fund directors must form a majority of the board.\u00a0 \u00a0The subsidiary must not be a fund or an issuing body.<\/p>\n<p>The fund may only enter transactions with a management company, depositary, delegates or their group companies, where they are negotiated at arm\u2019s length.\u00a0 They must be in the best interests of the unit holder.\u00a0 Transactions permitted must be at a valuation by a person approved by the depositary, executed on best terms on an organised exchange or where the above is not practical, on terms which the depositary and the fund, in the case of transactions involving the depositary, is satisfied conform with the above principles.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Fund_Manager\"><\/span>Fund Manager<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A fund must have an authorised fund manager.\u00a0 It shall not alter its name or constitutional documents without the prior Central Bank approval.\u00a0 It shall give prior notification of amendments, including prospectus, constitutional documents or material agreements entered with a third party.\u00a0 \u00a0The Central Bank may object and the amendments objected to shall not be made.\u00a0 The fund is to notify the Central Bank of any material breach of investment fund legislation or requirements imposed by the Central Bank.<\/p>\n<p>Departures from the office of directors, partners etc. and reason for departure must be notified to the Central Bank.<\/p>\n<p>In the case of a qualifying AIF, which is an investment fund, where the director wishes to resign and the fund must form a view as to the impact of the resignation on the Management Company having regard to its current and prospective financial state of the funds under its arrangement.\u00a0 In the event that the Board or the Chairman forms the view that the situation is one which could create concern on the part of the Central Bank, it is to state this to the Central Bank.<\/p>\n<p>Where a Qualifying Investor AIF is an investment company, it shall ensure that it does not have investors in common with the Board of Directors or its depositary.\u00a0 It must have a minimum of two directors who are Irish residents.\u00a0 It shall ensure that each of its directors is required to disclose to the Board any concurrent directorships they hold.<\/p>\n<p>Where the fund temporarily suspends the calculation of the net asset value or repurchase or redemption of units, it must inform the Central Bank of any event within the working day on which the suspension took place.<\/p>\n<p>There must be approved procedures for the replacement of the depositary, manager, management company, general party and certain other key third parties. In the case of the depositary, the fund must ensure that the Central Bank receives confirmation from both the retiring and new depositary that they are satisfied with the transfer of assets.<\/p>\n<p>A Qualifying Investor AIF may only terminate the appointment of a depositary on the appointment of a successor depositary or upon revocation of authorisation as such.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Central_Bank_Returns\"><\/span>Central Bank Returns<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The fund must submit monthly returns to the Statistics Division of the Central Bank using an online reporting system.\u00a0 There was specified information which must be included in the return, including fund type, gross or net asset value, number of units, net asset value per unit, payments received and made for issues and redemptions and repurchases, profit and loss, investment management fees accrued and other expenses accrued in the period.<\/p>\n<p>The fund must undertake a quarterly Survey of Collective Investment Undertakings returns to the Statistics Division of the Central Bank within ten days of the end of each quarter.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Prospectus_Requirements\"><\/span>Prospectus Requirements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The requirements in respect of prospectuses are broadly similar to those in respect of Retail AIF.\u00a0 See the separate chapter in this regard.<\/p>\n<p>The fund must publish a prospectus, which must be dated, and the essential elements must be kept up to date.\u00a0 It must contain sufficient information for investors to make an informed judgment of the investment proposed.\u00a0 The prospectus must be available free of charge to every prospective unitholder before a contract is entered into.<\/p>\n<p>The fund shall comply with the terms of the prospectus.\u00a0 It shall not change its investment objectives or effect a material change in its investment policies, as disclosed in the prospectus, without the consent or approval of all unitholders or a majority of votes cast at the General Meeting.<\/p>\n<p>The minimum information to be disclosed in the prospectus sent out in the regulations. \u00a0This includes the following:<\/p>\n<ul>\n<li>name,<\/li>\n<li>legal format;<\/li>\n<li>date of establishment;<\/li>\n<li>place where the constitutional document and reports etc., may be obtained;<\/li>\n<li>brief indications of the relevant tax system;<\/li>\n<li>accounting dates and frequencies;<\/li>\n<li>persons responsible for information;<\/li>\n<li>rules for determining and applying information; names of key directors and officers;<\/li>\n<li>material provision of contracts with third parties;<\/li>\n<li>authorised share capital;<\/li>\n<li>base currency;<\/li>\n<li>the main characteristics and type of the units and, in particular, the rights attached to them, whether the provision of securities or certificates provides evidence of title; whether there is a register, characteristics and indication of denominations; an indication of voting unitholders\u2019 rights; provisions regarding winding up.<\/li>\n<\/ul>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-12851\" data-postid=\"12851\" class=\"themify_builder_content themify_builder_content-12851 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Qualifying Investors The rules in the rulebook apply to all qualifying AIFs.\u00a0 However, the definitive rules are set out in their letter of authorisation. A Qualifying Investor AIF shall have a minimum subscription of \u20ac100,000 or equivalent in other currencies.\u00a0 It shall not accept subscriptions from persons for amounts of less than \u20ac100,000 for individual [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[167],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12851"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12851"}],"version-history":[{"count":5,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12851\/revisions"}],"predecessor-version":[{"id":31900,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12851\/revisions\/31900"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}