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SUPERVISION AND COORDINATION
RISK MANAGEMENT
COMPLIANCE
INVESTMENT MANAGER
INVESTMENT ADVISOR
What are the activities of a ManCo?
A licensed fund Management Company, commonly referred to as “ManCo”, is a company authorised to provide investment management services to collective investment schemes. The ManCo must comply with applicable laws, regulations and the licence conditions imposed by its home country regulator. The ManCo may delegate some of its functions to third party service providers, however, it must retain overall responsibility for the performance of the delegated functions.
Supervision and delegated functions
Management Companies are allowed to delegate certain aspects of their activities to third parties. The delegation arrangements have to be monitored by the Management Company on an ongoing basis.
AQA Capital, in its role of UCITS Management Company or Alternative Investment Fund Manager, is in charge of performing initial and ongoing due diligence on each service provider being appointed. The overall objective is to be confident that what is expected from the counterparty will be achieved. The main aim of the initial due diligence is to get to know and assess the capabilities of the counterparties. On an ongoing basis, AQA Capital will perform off-site and on-site due diligence checks to continue monitoring specific and important elements of the delegation process.
AQA Capital, in its role of UCITS Management Company or Alternative Investment Fund Manager, is in charge of performing initial and ongoing due diligence on each service provider being appointed. The overall objective is to be confident that what is expected from the counterparty will be achieved. The main aim of the initial due diligence is to get to know and assess the capabilities of the counterparties. On an ongoing basis, AQA Capital will perform off-site and on-site due diligence checks to continue monitoring specific and important elements of the delegation process.
Risk modelling and reporting
AQA Capital has a well-structured, permanent and independent risk management function. This function ensures that the risks to which the collective investment schemes under management are exposed are properly identified, measured, managed, and monitored on an ongoing basis. AQA Capital’s risk management function produces regulatory reports which are compliant with EU Directives and ESMA guidelines. The risk management function will address various risks, including, market risk, counterparty risk, liquidity risk, credit risk, and operational risk.
Investment Management Oversight
Investment Management comprises of two main functions, namely risk management and portfolio management. These are considered to be the core functions of a Management Company. One of these functions may be delegated, as long as the delegation is justified by objective reasons and the remaining function continues to be performed internally by the Management Company. The delegation of risk management or portfolio management should be assigned only to third-party entities which are subject to authorisation or registration for the purposes of asset management and subject to prudential supervision. In addition, where the delegate is located in a non-EU country, there must be a co-operation agreement in place between the MFSA, as the regulator of AQA Capital, and the supervisory authority of the delegate.
Operational and Risk Mandate
AQA Capital is in charge of coordinating the operational activities related to each collective investment scheme under management. AQA Capital has a permanent Risk Management Function, which is independent of the operating units of the company, including the investment management function. The Risk Manager adopts a Risk Management Policy in respect of each collective investment scheme under management. The Risk Manager maintains the necessary internal processes and operational (including contingency) arrangements to be in a position to measure, monitor, and manage the risks of each collective investment scheme.
Financial Risk Modelling and ex-post control
AQA Capital’s internal risk management system allows the adoption of a combination of qualitative and quantitative techniques to properly implement an effective risk management framework. The Risk Manager reviews each portfolio to ensure that the investment strategy and asset allocation is being respected and shall take the necessary remedial actions if the portfolio does not reflect the pre-set strategy/ asset allocation.
The Risk Management Function is responsible for the post-trade checks, monitoring of the collective investment scheme’s investments, and liquidity management, including monitoring of cash flows and stress-testing on liquidity. The Risk Manager adopts ex-post risk adjustments as necessary.
The Risk Management Function is responsible for the post-trade checks, monitoring of the collective investment scheme’s investments, and liquidity management, including monitoring of cash flows and stress-testing on liquidity. The Risk Manager adopts ex-post risk adjustments as necessary.
Ex-ante risk model review
AQA Capital defines Key Risk Indicators (KRI) appropriate to each collective investment scheme’s strategy and implements a risk management framework for each fund within AQA’s Risk Management Policy. The Portfolio Management System is parametrized to reflect the specific limits of each single collective investment scheme. Pre-compliance checks are made on each investment decision and vetted before its implementation.
Fund Administration
The Fund Administrator is appointed by AQA Capital or the scheme to perform several services, including the preparation of the net asset value, reconciliation, pricing of the investment portfolios, payments of bills, preparation of the financial statement, and fund accounting. The Fund Administrator normally acts as the Transfer Agent, and in such function will process subscription and redemption requests and maintain the share register. In its role as a Management Company, AQA Capital performs initial due diligence on the Fund Administrator to get to know and assess its capabilities. Monitoring is performed regularly to ensure that the Fund Administrator is discharging its duties as expected.
Investment Management
The Investment Management function is one of the main activities that can be performed either by AQA Capital internally, or else by a third party, as a delegate of AQA Capital. In the case of delegation, the appointed third party has to be an entity that is authorised for asset management and subject to supervision, otherwise, the prior approval of the Malta Financial Services Authority has to be sought. If the entity is a non-EU entity, AQA Capital shall ensure that there is a written co-operation agreement between the Malta Financial Services Authority and the supervisory authorities of the delegate. In addition, AQA Capital shall be comfortable that the Investment Manager being appointed as its delegate is subject to regulatory requirements on remuneration that are equally effective as those applicable to AQA Capital, or else contractual arrangements will be put in place to ensure that the Investment Manager undertakes to comply with EU-equivalent remuneration requirements.
Fund Distribution
As the UCITS Management Company or Alternative Investment Fund Manager, AQA Capital is responsible for the marketing of the collective investment schemes under management. AQA Capital may appoint distributors to market the funds in various jurisdictions, subject that these distributors are duly authorised to perform such function. UCITS funds and AIFs may be freely marketed in Europe because they benefit from the marketing passport. The marketing of collective investment schemes in non-EU countries requires adherence to the specific rules of each jurisdiction where the fund will be marketed.
Capital Requirements
UCITS Management Companies and AIFMs are required to hold sufficient capital at all times for the proper performance of their functions. In addition to the minimum capital requirements as set out by the UCITS and the AIFM Directives, Management Companies are required to keep additional own funds equivalent to at least a quarter of the fixed overhead requirements. Moreover, Management Companies may opt to have additional own funds appropriate to cover risks arising from professional negligence.
Physical Infrastructure
A Management Company can’t operate as a “letterbox entity”. Management Companies are required to use adequate and appropriate human and technical resources that are necessary for the proper management of the collective investment schemes. Taking into consideration proportionality principles, several activities such as compliance, risk management, portfolio management, and valuation have to be functionally and hierarchically independent from one another and from other operational functions.
AQA Capital has a growing team working from various offices across Europe. AQA Capital has internalised the portfolio management, risk management, compliance, and valuation functions to provide a holistic service and be present along the whole value chain for the launch and management of a collective investment scheme.
AQA Capital has a growing team working from various offices across Europe. AQA Capital has internalised the portfolio management, risk management, compliance, and valuation functions to provide a holistic service and be present along the whole value chain for the launch and management of a collective investment scheme.
System, Policies, and Procedures
Management Companies are required to put in place several documented policies and procedures to cover areas such as risk management, delegated arrangements, conflict of interest, due diligence processes, the conduct of business, valuation and remuneration principles, and escalation arrangements. The said policies have to be reviewed regularly in order to ensure that they are kept up to date with the regulatory developments and aligned with the operational complexity of the Management Company. The Policies and Procedures are to be themed up with appropriate systems that can assist the various teams to implement their functions properly.
Compliance
The Compliance Function is responsible for monitoring and evaluating the adequacy and effectiveness of the measures, internal rules, and procedures put in place to detect the risk of failure to comply with applicable rules, laws, and regulations. It is expected that a Management Company adopts a permanent, independent, and effective compliance function. The cost of setting up a proper compliance function can be burdensome however the cost of non-compliance is surely worse.
Depositary
A single depositary has to be appointed by an AIF or UCITS fund for all of its sub-funds. The depositary is responsible for the safekeeping of all the assets of the scheme, either through the custody of the financial asset or through the verification of ownership for other assets. The Depositary must be established in the same jurisdiction as the AIF or the UCITS fund. AQA Capital will liaise continuously with the depositary to ensure proper safekeeping, cash flow monitoring, and oversight of the schemes under management.
Regulators
Different jurisdictions adopt different regulatory requirements. It is necessary to keep abreast with new regulatory developments. Collective Investment Schemes need to ensure that all the required regulatory reporting is filed with the regulator as and when they fall due. AQA Capital has launched funds in different EU jurisdictions and during such process, it partnered with leading local service providers to ensure that the distinct regulatory requirements are adhered to.
Auditors
A collective investment scheme under UCITS or AIFM Directive is required to appoint an auditor. AQA Capital liaises with the auditors of each scheme under management to ensure that the audit financial statements are correctly prepared, issued on time, and filed as necessary.
Lawyers
Legal advisors are normally appointed by the collective investment scheme for the drawing up of the legal documentation, supporting interaction with the regulator, and providing other regulatory assistance. AQA Capital liaises with the scheme’s legal counsel during the set-up phase, and on an ongoing basis as deemed necessary.
Board Members
The Board of Directors is responsible for the general affairs of the collective investment scheme, and to oversee and monitor the implementation of the scheme’s investment and operational strategy as set by the Management Company and disclosed to investors in the scheme’s offering documentation. The Board normally delegates or relies on the performance of operational and monitoring functions of various service providers of the scheme. The Board of Directors normally meets at least every quarter.
Other Service Providers
A collective investment scheme can appoint several other service providers, including but not limited to brokers and distributors.
Fund Operations
Coordination with all the parties involved is crucial to ensure that the collective investment scheme works like clockwork. AQA Capital liaises with the various parties pre- and post- launch of the fund to ensure its smooth operations.
Annual Reports
The Annual Report is one of the various documents/reports which the scheme is required to prepare. The Annual Report shall include, inter alia, a balance sheet or statement of assets and liabilities, and income and expenditure account, a report on the activities of the financial year, and a report from the Directors of the scheme. The Annual Report should be made available to the investors within a few months following the end of the financial year. AQA Capital assists the Directors and auditors of the scheme so that this report is prepared and issued on time.
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START
IS THE TARGET INVESTOR A RETAIL INVESTOR?
Yes
No
DOES THE INVESTMENT STRATEGY RESPECT UCITS ELIGIBILITY RULES AND CONCENTRATION LIMITS?
Yes
A UCITS SCHEME IS THE SOLUTION
No
FUND MAY BE LAUNCHED AS A RETAIL AIF
DOES THE INVESTMENT STRATEGY RESPECT UCITS ELIGIBILITY RULES AND CONCENTRATION LIMITS?
Yes
UCITS SCHEME OR AIF ARE BOTH VIABLE SOLUTIONS
No
AN AIF IS THE SOLUTION
DOES THE PROMOTER WANT CONTROL OVER THE GOVERNANCE OF THE FUND?
Yes
A NEW SCHEME IS REQUIRED: THE PROMOTER WILL RETAIN CONTROL BY ASSUMING THE ROLE OF THE FOUNDER SHAREHOLDER OR GENERAL PARTNER
No
THE LAUNCH OF A NEW SCHEME OR A SUB-FUND OF AN EXISTING SCHEME ARE BOTH VIABLE SOLUTIONS
DOES THE PROMOTER WANT TO MANAGE THE PORTFOLIO?
Yes
No
AQA ACTS AS MANAGEMENT COMPANY AND INVESTMENT MANAGER
DOES THE PROMOTER OPERATE VIA AN ENTITY REGULATED TO PROVIDE ASSET MANAGEMENT?
Yes
PROMOTER IS APPOINTED AS INVESTMENT MANAGER
No
IS THE PROMOTER INTERESTED TO BECOME AN OFFICIAL OF AQA?
Yes
APPOINTED AS INVESTMENT COMMITTEE MEMBER OR PORTFOLIO MANAGER OF AQA, SUBJECT TO MFSA'S DUE DILIGENCE
No
AQA ACTS AS MANAGEMENT COMPANY AND INVESTMENT MANAGER
IS THE PROMOTER AUTHORIZED TO PROVIDE ADVICE IN ITS HOME COUNTRY?
Yes
PROMOTER IS APPOINTED AS AN INVESTMENT ADVISOR
No
FUND CANNOT BE LAUNCHED
CAN THE PROMOTER ACT AS DISTRIBUTOR?
Yes
DISTRIBUTOR AGREEMENT
No
AQA ACTS AS DISTRIBUTOR
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Jurisdiction
Legislation
| UCITS Funds | |
| Applicable EU Directive | EU Directive 2009/65/EC of 13 July 2009 as amended by EU Directive 2014/91/EU of 23 July 2014, on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in Transferable Securities ("UCITS Directive"). |
| Licence Status | A UCITS fund must be authorised in accordance with the UCITS Directive. |
| Legal Structure | UCITS funds may take various legal forms including, inter alia, SICAV (investment company with variable share capital), partnership, common contractual fund, unit trust. |
| Eligible Investors | A UCITS fund may be sold to retail investors. |
| Underlying Assets | UCITS funds may only invest in liquid financial instruments, as outlined in Article 50 of the UCITS Directive. |
| Investment Restrictions | Investment strategy has to follow strict investment restrictions as outlined in the UCITS Directive. |
| Open-ended/closed-ended | UCITS funds may only be set-up as open-ended funds, and are required to offer at least bi-monthly liquidity to investors. |
| Passport | UCITS funds benefit from the EU marketing passport. They may be marketed across EEA member states through the submission of a simple notification letter to the regulator. Normally marketing may commence within 10 working days from the submission of the notification letter. |
| Third-Party Managed/Self-Managed | A UCITS fund may be managed by a management company which has been authorised as a UCITS Management Company. A UCITS fund which has been set-up as multi-fund must appoint the same UCITS management company for all its sub-funds. A UCITS fund may also be internally managed, subject to an initial share capital of EUR300,000. |
| Depositary | A single depositary is to be appointed for each UCITS fund entrusted with, inter alia, safekeeping of the assets of the UCITS fund, cashflow monitoring and oversight duties. The Depositary needs to be established in the same jurisdiction as the UCITS fund. A UCITS fund which has been set-up as multi-fund must appoint the same depositary for all its sub-funds. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The UCITS fund has to appoint an auditor. |
| Valuation of assets | The valuation of the assets is performed on every dealing day. |
| Time to Market | The time to market of a UCITS fund will primarily depend on the jurisdiction where it is established. Normally the launch of a UCITS fund may take a number of months. |
| Minimum Investment Amount | N/A |
| Alternative Investment Funds | |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it ("AIFMD"). |
| Licence Status | AIFs do not necessary require a licence. This depends on the type of AIF and the jurisdiction where the AIF will be established. |
| Legal Structure | Alternative Investment Funds ("AIFs") may take various legal forms including, inter alia, investment company with variable share capital, investment company with fixed share capital, partnership, common contractual fund, unit trust. |
| Eligible Investors | AIFs are commonly subscribed for by Professional Clients. The AIFMD allows the marketing of AIFs to retail investors subject to the specific requirements put in place in each jurisdiction where the AIF is marketed to retail investors. |
| Underlying Assets | There are generally no restrictions in relation to the type of assets in which an AIF may invest. These may include listed and non-listed financial instruments, as well as non-financial assets, such as precious metals, works of art and real estate. |
| Investment Restrictions | The AIFMD does not impose any investment restrictions. Yet some regulators do impose investment restriction, such as concentration limits. |
| Open-ended/closed-ended | An AIF may be set-up as closed-ended or open-ended. |
| Passport | AIFs benefit from the EU marketing passport. They may be marketed across EEA member states to Professional Investors through the submission of a simple notification letter to the regulator. Normally marketing may commence within 20 working days from the submission of the notification letter. |
| Third-Party Managed/Self-Managed | AIFs may be managed by a management company which has been authorised as an Alternative Investment Fund Manager. An AIF which has been set-up as multi-fund must appoint the same Alternative Investment Fund Manager for all of its sub-funds. An AIF may also be internally managed, subject to an initial share capital of at least EUR300,000, and the attainment of an appropriate licence. |
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in Italy. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The AIF has to appoint an auditor. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets has to be performed at least once every year. |
| Time to Market | The time to market of an AIF will primarily depend on the jurisdiction where it is established, and whether it will be licensed or not. A licensed AIF normally takes a number of months to launch. |
| Minimum Investment Amount | Albeit the AIFMD does not impose any minimum investment amounts, the jurisdiction where the AIF is established may impose certain requirements. |
| MALTA NAIF | Notified Alternative Investment Funds |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it ("AIFMD"). |
| Licence Status |
Not Licensed. A NAIF is included the List of Notified AIFs
held by the MFSA. The NAIF regime relies on the AIFMs'
regulatory status and good standing, and thus, the onus of
ensuring AIFMD compliance shifts on the AIFM.
The NAIF regime is not available for the following
collective investment schemes:
-CISs which are not managed by an EEA AIFM;
-Self-Managed CISs
-CISs which are not marketed and sold exclusively to
professional and/or qualifying investors
-CISs which engage in 'Loan Origination'
|
| Legal Structure | NAIFs may take various legal forms including, inter alia, SICAV (investment company with variable share capital), INVCO (investment company with fixed share capital), partnership, common contractual fund, unit trust. |
| Eligible Investors | NAIFs may only be sold to Professional Investors as defined by MiFID and Qualifying Investors in terms of the MFSA Rules. |
| Underlying Assets | There are generally no restrictions in relation to the type of assets in which an NAIF may invest. These may include listed and non-listed financial instruments, as well as non-financial assets, such as precious metals and real estate. NAIFs must not engage in Loan Origination. |
| Investment Restrictions | The NAIF regime does not impose any particular investment restrictions. |
| Open-ended/closed-ended | A NAIF may be set-up as closed-ended or open-ended. |
| Passport | NAIFs benefit from the EU marketing passport. They may be marketed across EEA member states to Professional Investors through the submission of a simple notification letter to the regulator. Normally marketing may commence within 20 working days from the submission of the notification letter. |
| Third-Party Managed/Self-Managed | The NAIF has to appoint an duly authorised Alternative Investment Fund Manager. A NAIF cannot be established as a self-managed fund. |
| Depositary | A single depositary is to be appointed for each NAIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in Malta. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The NAIF has to appoint an auditor. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets has to be performed at least once every year. |
| Time to Market | The NAIF is included in the List of Notified AIFs within ten [10] working days from the submission of a complete notification pack to the Malta Financial Services Authority. |
| Minimum Investment Amount | If the NAIF is sold to Qualifying Investors, the minimum investment amount is of EUR100,000. No minimum investment amount is applied where the NAIF is sold to Professional Investors. |
| Irish QIAIF | Qualified Alternative Investment Funds |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it ("AIFMD"). |
| Licence Status | The QIAIF is regulated by the Central Bank of Ireland. |
| Legal Structure | QIAIFs may be established as an investment company organised as a public limited company, a unit trust, a common contractual fund, or an investment limited partnership. |
| Eligible Investors | QIAIFs can only be marketed to qualifying investors who meet the initial minimum subscription requirement of €100,000 and who satisfy the "Qualifying Investor" criteria of the Irish AIF Rulebook (which includes professional clients within the meaning defined in the MIFID; investors who have appropriate expertise, experience and knowledge to adequately understand the investment, or investors who certify that they are informed investors). |
| Underlying Assets | There are generally no restrictions in relation to the type of assets in which a QIAIF may invest in. |
| Investment Restrictions | There are no diversification requirements; however, a QIAIF established as an investment company must comply with the aim of risk spreading as per the requirements of Part XIII of the Companies Act 1990. No borrowing or leverage restrictions (other than for loan origination funds), and as long as the prospectus specifies the extent to which borrowing and leverage may be used. |
| Open-ended/closed-ended | A QIAIF may be set-up as closed-ended or open-ended. |
| Passport | QIAIFs which designate an EU AIFM authorised under the AIFMD are eligible for an EU passport. They may be marketed across EEA member states to Professional Investors through the submission of a simple notification letter to the regulator. Normally marketing may commence within 20 working days from the submission of the notification letter. |
| Third-Party Managed/Self-Managed | A QIAIF is required to designate an alternative investment fund manager or alternatively be structured as a self-managed QIAIF. Internally managed QIAIFs must have an initial share capital of at least €300,000. |
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in Ireland. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The QIAIF has to appoint an auditor. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. Net asset value (NAV) per share must be calculated at least annually, and in the case of an open-ended fund the NAV must be calculated in line with the fund's policy on redemption. Open-ended QIAIFs must provide redemption facilities at least quarterly although QIAIFs with limited liquidity arrangements may provide redemption facilities on a less frequent basis. |
| Time to Market | Capable of being authorised within 24 hours of a single filing of documentation with the Central Bank of Ireland (subject to certain prerequisites such as authorisation of the AIFM where applicable and pre-approval of service providers by the Central Bank of Ireland). |
| Minimum Investment Amount | Under Central Bank rules, QIAIFs are subject to a minimum initial subscription requirement of EUR 100,000 (or equivalent in other currencies) per investor, with a higher EUR 500,000 figure applicable to QIAIFs seeking to disapply certain rules in respect of investment in underlying collective schemes. |
| Luxembourg RAIF | Reserved Alternative Investment Funds |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers, including any implementing regulations issued under it (“AIFMD”). |
| Licence Status | The RAIF is not subject to the CSSF product approval. |
| Legal Structure |
RAIF may be constituted in various legal forms, including:
-Fonds commun de placement (FCP) – ie. common contractual fund;
-société d'investissement à capital variable (SICAV) ie. open-ended investment company with variable share capital
-société d'investissement à capital fixe(SICAF) ie. closed-ended investment company with fixed share capital
|
| Eligible Investors | “Well-informed” investors that are able to adequately assess the risks associated with an investment in such a vehicle. These are defined as institutional investors, professional investors and investors who have confirmed in writing that they adhere to the “well-informed” investor status, and who either invest a minimum of EUR 100,000 in the RAIF or have been assessed by a credit institution, investment firm or management company which certifies the investor’s expertise, experience and knowledge in adequately appraising an investment in the RAIF. |
| Underlying Assets | The RAIF may invest in any kind of assets which may be legally acquired. Any type of investment strategy is permitted. |
| Investment Restrictions | Generally no restrictions apply for a RAIF, provided that the AIFM aims to spread the investment risks. As a general rule, the RAIF must respect a 30% diversification limit. |
| Open-ended/closed-ended | A RAIF may be set-up as closed-ended or open-ended. |
| Passport | RAIFs benefit from the EU marketing passport. They may be marketed across EEA member states to Professional Investors through the submission of a simple notification letter to the regulator. Normally marketing may commence within 20 working days from the submission of the notification letter |
| Third-Party Managed/Self-Managed | A RAIF must appoint an authorised external AIFM. A RAIF which has been set up as a multi-fun must appoint the same AIFM for all its sub-funds. A RAIF cannot be established as a self-managed fund. |
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in the same jurisdiction as the RAIF. A RAIF which has been set up as a multi-fund must appoint the same depositary for all its sub-funds. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. The Fund Administrator must be established in Luxembourg. |
| Auditor | RAIFs must appoint an auditor established in Luxembourg. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets is performed on every dealing day, at least once every year. |
| Time to Market | The RAIF does not require the prior approval or notification of the CSSF. Once all the necessary documents are drawn up and agreements with service providers are reached, the RAIF requires incorporation by notarial deed (an appointment with a notary can generally be obtained within a few days). |
| Minimum Investment Amount | In case of investors who have adhered to the status of well-informed investors, the minimum investment amount is of EUR 100,000. The net assets of a RAIF may not be less than €1,250,000. This minimum must be reached within a period of 24 months. |
| Italian AIFs | Italian Alternative Investment Funds |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it ("AIFMD"). The AIFMD was implemented in Italy with d.lgs 44/2014. In view that the Directive concerns only the managers of alternative investment funds, the alternative investment funds are regulated via national law, and this falls within the remit of Banca D'Italia and CONSOB. |
| Licence Status | According to Italian law, an EU AIFM is allowed to set-up and manage an Italian AIF provided that it has completed the passport procedure for the activity of an AIFM in Italy. In order to set up an AIF, the AIFM must draft the AIF's incorporation documents (in the form of bylaws for SICAFs/SICAVs and regulation for the Contractual AIF); draft the AIF's Offering Documentation and sign agreements with the service providers, particularly with the depositary bank and the Auditor. |
| Legal Structure |
An Italian AIF may be established in one of the following
forms:
-Contractual Fund (the fund does not have a separate legal
personality)
-SICAF (closed-ended fund with fixed share capital)
-SICAV (open-ended fund with variable share capital)
|
| Eligible Investors | AIFs are commonly subscribed for by Professional Clients. The AIFMD allows the marketing of AIFs to retail investors subject to the specific requirements put in place in each jurisdiction where the retail AIF is marketed. In Italy, the decision to market to retail investors has an impact on the set-up and on the marketing process (e.g. in case of marketing to retail investors, the offering documentation must be approved by CONSOB and drafted in accordance with Regulation 1129/2017/EU). In addition, art-35-decies TUF states that if the AIF's shares are marketed to retail investors the scheme cannot issue different classes of shares within the same sub-fund. |
| Underlying Assets | There are generally no restrictions in relation to the type of assets in which an AIF may invest, and these may include listed and non-listed financial instruments, immovable property, loans and works of arts. |
| Investment Restrictions | The AIFMD does not impose any investment restrictions. Yet some regulators do impose investment restriction, such as concentration limits. |
| Open-ended/closed-ended | Italian Loan Funds, Private Equity funds and Real Estate AIFs have to be set- up as closed ended funds. |
| Passport | AIFs benefit from the EU marketing passport. They may be marketed across EEA member states to Professional Investors through the submission of a simple notification letter to the regulator. Normally marketing may commence within 20 working days from the submission of the notification letter. |
| Third-Party Managed/Self-Managed |
If the Italian AIF is established as SICAF or SICAV, it can
be set-up either as a third party managed or self-managed
scheme. A contractual fund has to be third-party managed.
The main differences between an Italian self-managed and
third-party managed AIF revolve mainly around:
-the minimum share capital (a third party managed AIF is of
€50,000, whereas a self-managed scheme has an initial
share capital requirement of €1,000,000);
-the authorisation process by Banca D'Italia; and
-self-managed AIFs are subject to more rigorous
requirements (similar to those of an AIFM).
|
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in the same jurisdiction as the AIF. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The AIF has to appoint an auditor. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets has to be performed at least once every year. |
| Time to Market | An Italian AIF normally takes a number of months to launch. |
| Minimum Investment Amount | N/A |
| Retail Alternative Investment Funds | |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it ("AIFMD"). |
| Licence Status | Retail AIFs are subject to regulatory requirements applicable in the home member state where it is established and also in the host member state/s where the fund will be marketed. |
| Legal Structure | Alternative Investment Funds ("AIFs") may take various legal forms, for example investment company with variable share capital, partnership, common contractual fund, unit trust. |
| Eligible Investors | The AIFMD allows the marketing of AIFs to retail investors subject to the specific requirements put in place in each jurisdiction where the AIF is marketed to retail investors. |
| Underlying Assets | Each jurisdiction where the Retail AIF is established and where it will be marketed may impose different requirements. |
| Investment Restrictions | Each jurisdiction where the Retail AIF is established and where it will be marketed may impose different investment restrictions. |
| Open-ended/closed-ended | Each jurisdiction where the Retail AIF is established and where it will be marketed may impose different requirements. |
| Passport | Retail AIFs do not benefit from the automatic marketing passport. |
| Third-Party Managed/Self-Managed | AIFs may be managed by a management company which has been authorised as an Alternative Investment Fund Manager. An AIF which has been set-up as multi-fund must appoint the same Alternative Investment Fund Manager for all of its sub-funds. An AIF may also be internally managed, subject to an initial share capital of at least EUR300,000, and the attainment of an appropriate licence. |
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary needs to be established in the same jurisdiction as the AIF. |
| Fund Administrator | A Fund Administrator is normally appointed to provide the services of, inter alia, net asset valuations, fund accounting and transfer agency. |
| Auditor | The AIF has to appoint an auditor. |
| Valuation of assets | The valuation of the assets may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets is carried out on every dealing day. |
| Time to Market | The launch of a Retail AIF may take a number of months because a Retail AIF will most likely require authorisation from the home member state where it is established and also from the host member state/s where the fund will be marketed. |
| Minimum Investment Amount | Each jurisdiction where the Retail AIF is established and where it will be marketed may impose different requirements. |
| Liechtenstein AIFs | Liechtenstein Alternative Investment Funds |
| Applicable EU Directive | European Union Directive 2011/61/EU on Alternative Investment Fund Managers , including any implementing regulations issued under it (“AIFMD”), as transposed into local Law (AIFMG & AIFMV). |
| Licence Status | AIFs set up in Liechtenstein are licensed by the Liechtenstein Financial Market Authority (FMA). |
| Legal Structure |
AIFs set up in Liechtenstein may take various legal forms, including:
-SICAV (investment company with variable share capital)
-Partnership
-Common Contractual Fund
-Unit Trust
-SICAF (investment company with fixed share capital)
|
| Eligible Investors | AIFs are commonly subscribed for by Professional Clients. The AIFMD allows the marketing of AIFs to retail investors subject to the specific requirements put in place in each jurisdiction where the AIF is marketed to retail investors. |
| Underlying Assets | There are generally no restrictions in relation to the type of assets in which an AIF may invest. |
| Investment Restrictions | AIFs structured in Liechtenstein are not subject to any investment restrictions. |
| Open-ended/closed-ended | An AIF may be set-up as closed-ended or open-ended. |
| Passport | AIFs set up in Liechtenstein under the applicable transposed EU Directive benefit from the EU marketing passport. They may be marketed across EU & EEA member states to Professional Investors after obtaining a licence to do so, issued by the FMA. Normally marketing of AIFs may commence within 20 working days from the submission of the passport notification letter. |
| Third-Party Managed/Self-Managed | AIFs may be managed by a management company which has been authorised as an AIFM. An AIF which has been set-up as multi-fund must appoint the same AIFM for all its sub-funds. AIFs may also be internally managed, subject to stringent regulatory approval and the fulfilment of certain criteria, including an initial share capital of at least EUR 300,000. |
| Depositary | A single depositary is to be appointed for each AIF entrusted with, inter alia, safekeeping of the assets of the fund, cashflow monitoring and oversight duties. The Depositary must be established in the same jurisdiction as the AIF. An AIF which has been set up as a multi-fund must appoint the same depositary for all its sub-funds. |
| Fund Administrator | The fund administration of AIFs, including net asset valuation, fund accounting, and transfer agency, may be delegated to an authorised Fund Administrator. |
| Auditor | AIFs set up in Liechtenstein must appoint an auditor established in Liechtenstein. |
| Valuation of assets | The valuation of the assets of an AIF may be done either internally by the AIFM or by an independent External Valuer. The valuation of the assets of an AIF is performed at least once every year. |
| Time to Market | The time to market of an AIF established in Liechtenstein will normally take around 2-3 months. |
| Minimum Investment Amount | There are no imposed minimum investment requirements for AIFs established in Liechtenstein. |
Organizational tree
Founder Shareholder
General Partner
The initial share capital of a third party managed collective investment scheme set up as an investment company is of EUR50,000. Within 30 days after the authorization by the Italian regulatory authority, the founding shareholders must set up the company and pay in the minimum share capital. Founder shareholders must meet specific requirements set by the Italian Regulator, namely good reputation, correctness of their business relations and sound financial situation.
The initial share capital of a collective investment scheme set up as an investment company must be subscribed for by at least two shareholders, who are usually the promoters of the scheme itself. These founder shares may be subscribed for by both natural and legal persons. The founder shareholders of Malta funds may retain certain voting rights in the scheme, including the right to nominate the Directors. They however do not carry a right to participate in the assets of the scheme upon a winding up, other than for any remaining surplus after payment of all amounts due to creditors and investors. The holders of the founder shares of Maltese licensed funds are subject to due diligence assessment by the MFSA.
The initial share capital of a collective investment scheme set up as an investment company is normally subscribed for by at least two founder shareholders, who are usually the promoters of the scheme itself. These founder shares may be subscribed for by both natural and legal persons. There is no minimum capital with which the scheme may be incorporated. Founder shareholders are not subject to a due diligence assessment by the Central Bank of Ireland.
It is common for Luxembourgish schemes to be set up in the form of a corporate partnership, between at least two partners – the General Partner and the Limited Partner/s. The General Partner is a legal entity, separate from the scheme, and is responsible for the management of the scheme, and is jointly or severally liable for all liabilities which cannot be met out of the assets of the scheme. The shares of the General Partner are normally held by the promoters, such that they can keep control of the collective investment scheme. On the other hand, the Limited Partners of the collective investment scheme are the investors.
The initial share capital of a third party managed collective investment scheme set up as an investment company is of EUR50,000. Within 30 days after the authorization by the Italian regulatory authority, the founding shareholders must set up the company and pay in the minimum share capital. Founder shareholders must meet specific requirements set by the Italian Regulator, namely good reputation, correctness of their business relations and sound financial situation.
The promoters of a collective investment scheme which is set up as an investment company would normally subscribe for the founder shares, in order to retain control over the governance of the fund.
Board of Directors
The Board is responsible for the general affairs of the scheme, including the appointment of the service providers. Albeit there is no law provision on this matter, a wider board is usually appreciated by the Italian regulator and it is expected that a Board is made up of at least three members, including independent members. Whereas there is also no requirement to have the member of the Board resident in Italy, the regulator expects the members to be available in Italy. The Board is expected to meet on a quarterly basis.
The Board is responsible for the general affairs of the scheme, including the appointment of the service providers. In order to adhere to the Maltese regulatory requirements, the Board should (i) be composed of not less than three members, (ii) one of the Directors has to be resident in Malta and (iii) one of the Directors has to be independent. The Board is to meet at least on a quarterly basis, and the majority of the meetings are to be held in Malta. Directors of regulated Maltese funds are subject to a due diligence assessment by the Malta Financial Services Authority.
The Board is responsible for the general affairs of the scheme, including the appointment of the service providers. In order to adhere to Irish regulatory requirements and for good corporate governance, the Board should be composed of at least three members. The Central Bank of Ireland requires two members of the Board to be resident in Ireland. These members normally take the role of the independent Directors. The promoter may then appoint other Board members of his choice. Board members of Irish funds are subject to the prior approval of Central Bank of Ireland.
The directors of an investment fund must be of sufficiently good repute and be sufficiently experienced, including in relation to the type of investment fund and its investment policy. To that end, the directors shall be understood as those persons who under the law and the articles of incorporation represent the investment fund or who effectively determine the conduct of the activity of the investment fund. Whilst there is no legal or regulatory requirement to have local directors in Luxembourg, it has become market practice to have at least one local director appointed.
The Board is responsible for the general affairs of the scheme, including the appointment of the service providers. Albeit there is no law provision on this matter, a wider board is usually appreciated by the Italian regulator and it is expected that a Board is made up of at least three members, including independent members. Whereas there is also no requirement to have the member of the Board resident in Italy, the regulator expects the members to be available in Italy. The Board is expected to meet on a quarterly basis.
The Board is responsible for the general affairs of the collective investment scheme, including the appointment of service providers. In general, according to the Liechtenstein Person’s and Company’s Act, each legal entity must appoint a board of directors consisting of at least one individual or legal entity. However, companies limited by shares, having a share capital of at least one million Swiss Francs, must have a board consisting of at least three members.
Depositary
The duty of the depositary is to provide safekeeping, oversight, and cash monitoring. It is mandatory for a depositary to be established in the same jurisdiction of the fund
Management Company
The ManCo of the fund shall perform the day to day portfolio management and/or risk management, and may delegate other functions, such as fund administration, marketing and distribution
Administrator
In most cases the ManCo delegates the fund administration functions (i.e. NAV calculations, fund accounting services, transfer agent and registrar) to a third party fund administrator authorized to provide such services
Distributor
A distributor may be appointed by the management company to offer, recommend or sell units in the collective investment scheme. The distributor may be subject to authorisation or registration in its home jurisdiction or in the jurisdiction where the units of the collective investment scheme will be distributed.
A distributor may be appointed by the management company to offer, recommend or sell units in the collective investment scheme. The distributor may be subject to authorisation or registration in its home jurisdiction or in the jurisdiction where the units of the collective investment scheme will be distributed.
Investment Manager
The management company may delegate the day-to-day portfolio management function to an undertaking which is authorised for the purpose of asset management. Where the delegation is conferred on a third-country undertaking, there needs to be a co-operation agreement between the supervisory authority of the management company and the supervisory authority of the asset manager.
The management company may delegate the day-to-day portfolio management function to an undertaking which is authorised for the purpose of asset management. Where the delegation is conferred on a third-country undertaking, there needs to be a co-operation agreement between the supervisory authority of the management company and the supervisory authority of the asset manager.
Investment Advisor
The management company or the investment manager may appoint investment advisors, responsible for the provision of investment advice. The investment advisor does not have any discretion with respect to the investment and re-investment of the assets of the fund
The management company or the investment manager may appoint investment advisors, responsible for the provision of investment advice. The investment advisor does not have any discretion with respect to the investment and re-investment of the assets of the fund.
Portfolio Manager
The promoter may be involved in the day-to-day portfolio management function of the collective investment scheme in the role of portfolio manager with AQA Capital. The appointment of a portfolio manager is subject to the fitness, properness, and competence assessment of the MFSA. The promoter may also sit as Investment Committee member with AQA Capital. An Investment Committee member may need to pass the fitness, properness, and competence assessment of the MFSA.
The promoter may be involved in the day-to-day portfolio management function of the collective investment scheme in the role of portfolio manager with AQA Capital. The appointment of a portfolio manager is subject to the fitness, properness, and competence assessment of the MFSA. The promoter may also sit as Investment Committee member with AQA Capital. An Investment Committee member may need to pass the fitness, properness, and competence assessment of the MFSA.
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