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CHAPTER IIU.K. GENERAL PROVISIONS

SECTION 1U.K.Calculation of assets under managementF1...

Article 2U.K.Calculation of the total value of assets under management

1.In order to qualify for the exemption provided for in [F2Article 51ZF of, and paragraph 2 of Schedule 8 to, the Regulated Activities Order 2001] an AIFM shall:

(a)identify all AIFs for which it is appointed as the external AIFM or the AIF for which it is the AIFM, where the legal form of the AIF permits internal management, in accordance with [F3regulation 4(3) of the AIFM Regulations 2013];

(b)identify for each managed AIF the portfolio of assets and determine in accordance with the valuation rules laid down in the law of the country where the AIF is established and, as the case may be, or in the AIF rules or instruments of incorporation the corresponding value of assets under management, including all assets acquired through use of leverage;

(c)aggregate the determined values of assets under management for all AIFs managed and compare the resulting total value of assets under management to the relevant threshold laid down in [F4regulation 9(1) of the AIFM Regulations 2013].

2.For the purposes of paragraph 1, undertakings for collective investment in transferable securities (UCITS) for which the AIFM acts as the [F5management company (as defined in section 237(2) of FSMA)] shall not be included in the calculation.

For the purposes of paragraph 1, AIFs managed by the AIFM for which the AIFM has delegated functions in accordance with [F6section 3.10 of the Investment Funds sourcebook] shall be included in the calculation. However, portfolios of AIFs that the AIFM is managing under delegation shall be excluded from the calculation.

3.For the purpose of calculating the total value of assets under management, each derivative instrument position, including any derivative embedded in transferable securities shall be converted into its equivalent position in the underlying assets of that derivative using the conversion methodologies set out in Article 10. The absolute value of that equivalent position shall then be used for the calculation of the total value of assets under management.

4.Where an AIF invests in other AIFs managed by the same externally appointed AIFM, that investment may be excluded from the calculation of the AIFM’s assets under management.

5.Where one compartment within an internally or externally managed AIF invests in another compartment of that AIF, that investment may be excluded from the calculation of the AIFMs assets under management.

6.The total value of assets under management shall be calculated in accordance with paragraphs 1 to 4 at least annually and using the latest available asset values. The latest available asset value for each AIF shall be produced during the 12 months preceding the date of the calculation of the threshold in accordance with the first sentence of this paragraph. The AIFM shall determine a threshold calculation date and apply it in a consistent manner. Any subsequent change to the date chosen must be justified to the [F7FCA]. In selecting the threshold calculation date, the AIFM shall take into account the time and frequency of the valuation of the assets under management.

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Article 3U.K.Ongoing monitoring of assets under management

AIFMs shall establish, implement and apply procedures to monitor on an ongoing basis the total value of assets under management. Monitoring shall reflect an up-to-date overview of the assets under management and shall include the observation of subscription and redemption activity or, where applicable, capital draw downs, capital distributions and the value of the assets invested in for each AIF.

The proximity of the total value of assets under management to the threshold set in [F8regulation 9(1) of the AIFM Regulations 2013] and the anticipated subscription and redemption activity shall be taken into account in order to assess the need for more frequent calculations of the total value of assets under management.

Textual Amendments

Article 4U.K.Occasional breach of the threshold

1.The AIFM shall assess situations where the total value of assets under management exceeds the relevant threshold in order to determine whether or not they are of a temporary nature.

2.Where the total value of assets under management exceeds the relevant threshold and the AIFM considers that the situation is not of a temporary nature, the AIFM shall notify the [F9FCA] without delay stating that the situation is considered not to be of a temporary nature and shall seek authorisation within 30 calendar days in accordance with [F10sections 55A and 55U of FSMA].

3.Where the total value of assets under management exceeds the relevant threshold and the AIFM considers that the situation is of a temporary nature, the AIFM shall notify the [F11FCA] without delay, stating that the situation is considered to be of a temporary nature. The notification shall include supporting information to justify the AIFM’s assessment of the temporary nature of the situation, including a description of the situation and an explanation of the reasons for considering it temporary.

4.A situation shall not be considered of a temporary nature if it is likely to continue for a period in excess of three months.

5.Three months after the date on which the total value of assets under management exceeds the relevant threshold the AIFM shall recalculate the total value of assets under management in order to demonstrate that it is below the relevant threshold or demonstrate to the [F12FCA] that the situation which resulted in the assets under management exceeding the threshold has been resolved and an application for authorisation of the AIFM is not required.

Textual Amendments

Article 5U.K.Information to be provided as part of registration

1.As part of the requirement in [F13regulation 11(1) of the AIFM Regulations 2013], AIFMs shall communicate to the [F14FCA] the total value of assets under management calculated in accordance with the procedure set out in Article 2.

2.As part of the requirement in [F15regulation 11(1) of the AIFM Regulations 2013] AIFMs shall provide for each AIF the offering document or a relevant extract from the offering document or a general description of the investment strategy. The relevant extract from the offering document and the description of the investment strategy shall include at least the following information:

(a)the main categories of assets in which the AIF may invest;

(b)any industrial, geographic or other market sectors or specific classes of assets which are the focus of the investment strategy;

(c)a description of the AIF’s borrowing or leverage policy.

3.Information to be provided by the AIFM under [F16regulation 21 of the AIFM Regulations 2013] is listed in Article 110(1) of this Regulation. It shall be provided in accordance with the pro-forma reporting template as set out in the Annex IV.

F174.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.The information required for registration purposes shall be updated and provided on an annual basis. For reasons relating to the exercise of their powers under [F18FSMA], the [F19FCA] may require an AIFM to provide the information referred to in [F20regulations 11 and 21 of the AIFM Regulations 2013] on a more frequent basis.

Textual Amendments

Textual Amendments