Dillon Eustace Checklist C

QIAIF ICAV with an appointed EU domiciled authorised AIFM

The below checklist is an overview of the documents required in order to seek approval as QIAIF with an external EU domiciled authorised AIFM which is established as An Irish Collective Asset-Management Vehicle (“ICAV”). Further specific documentation may be required on a case-by-case basis.

The below list of documents, does not incorporate any of the documents required to be prepared by the external AIFM and it is assumed for the purposes of this checklist that the external authorised AIFM has been duly approved to act as such by the relevant regulatory authority (for example the Central Bank of Ireland where the AIFM is Irish domiciled or the FCA where the AIFM is UK domiciled). Details regarding the documentation required to establish an Irish domiciled authorised AIFM may be found at this [LINK].

QIAIF Application

The documentation required for the QIAIF application is as follows:

Material Contracts

1.

Central Bank Application Form for Registration as an ICAV

To obtain registration as an ICAV it is necessary to submit an application form to the Central Bank together with the Instrument of Incorporation of the ICAV (see point 2 below). A copy of the ICAV registration form may be located on the Central Bank website.

2.

Instrument of Incorporation

This is the constitutional document of the QIAIF which sets out the internal rules for the QIAIF. The instrument of incorporation of the QIAIF must be sufficiently wide to operate in accordance with AIFMD and the conditions imposed by the Central Bank.

3.

Prospectus

A QIAIF must publish a prospectus which must be dated and the essential elements of which must be kept up to date. The prospectus must contain sufficient information to enable investors to make an informed judgement of the proposed investment. The Central Bank prescribes the minimum content requirements of the prospectus. Such requirements include, but are not limited to, disclosure on specific information in relation to the QIAIF itself (name, form in law, registered/head office, date of Registration and limited duration, if any), the investment objectives and policies, investment risk factors details regarding the directors and their experience, the material provisions of material contracts with the service providers and a description of fees and charges and other applicable expenses.

Dillon Eustace as legal advisers prepare the prospectus with input from the client and the various service providers.

4.

Depositary Agreement

The QIAIF is required to appoint a single depositary which is responsible for custody and/or oversight of assets. As the AIFM is responsible for ensuring a Depositary is appointed pursuant to AIFMD, the AIFM is often a party to the Depositary Agreement. The depositary must meet eligibility requirements pursuant to AIFMD. The depositary will provide the draft depositary agreement which is then reviewed and negotiated as required by the legal advisers.

5.

Administration Agreement

The QIAIF will also appoint an administrator who maintains the QIAIFs records and carries out other functions such as calculating the net asset value of the QIAIF and preparation of the periodic reports. The administrator will provide the draft administration agreement which is then reviewed and negotiated as required by the legal advisors.

6.

AIFM Agreement

The QIAIF will appoint an entity authorised to act as an AIFM pursuant to an AIFM agreement which should include information regarding the services to be provided by the AIFM (e.g. portfolio management and risk management functions). The AIFM will provide the draft AIFM agreement which is then reviewed and negotiated as required by the legal advisors.

7.

Investment Management Agreement

The external AIFM may appoint an investment manager pursuant to an investment management agreement (the QIAIF may also be a party to this agreement in circumstances where the Investment Manager’s fees will be discharged from the assets of the QIAIF) to provide certain investment or risk management services. The investment manager must be an entity which has been approved to act as investment manager for Irish regulated collective investment schemes by the Central Bank. Generally, for an Irish entity to act as investment manager to an Irish regulated fund, it needs to be regulated under appropriate legislation (such as AIFMD, UCITS, MiFID or equivalent) to act as investment manager. The Central Bank will also approve investment managers from jurisdictions which it considers to be of equivalent status. It is important to note that an AIFM cannot delegate the performance of investment management functions to an extent that exceeds by a substantial margin the investment management functions performed by the AIFM itself.

Dillon Eustace as legal advisers prepare the investment management agreement with input from the client.

8.

Distribution Agreement

The AIFM may appoint a head distributor with responsibility for the distribution, marketing and sales of shares of the QIAIF (the QIAIF may also be a party to this agreement in circumstances where the Distributor’s fees will be discharged from the assets of the QIAIF). The head distributor would the typically be authorised to appoint sub-distributors in jurisdictions in which the AIFM is authorised to market the shares of the QIAIF. It is often the case that the investment manager may also be appointed as head distributor.

Dillon Eustace as legal advisers prepare the distribution agreement with input from the client.

9.

Prime Brokerage Agreement (where appointed)

The AIFM may choose to appoint a prime broker to provide services such as clearing and custody facilities, intraday credit to facilitate foreign exchange payments and securities transactions, margin credit to finance purchases of equity securities and securities lending to support the short positions of the QIAIF. The prime broker will provide the draft prime brokerage agreement which is then reviewed and negotiated as required by the legal advisers. It is typically also necessary for the QIAIF’s depositary to appoint the prime broker as a sub-depositary.

10.

Letter of Application

The Central Bank requires a QIAIF to submit a standard letter of application seeking authorisation. Dillon Eustace as legal advisers prepare the letter of application.

11.

Central Bank Application Forms

The Central Bank has an application form relevant to each of the various agreements above. There is also an application form which provides an overview of the QIAIF to the Central Bank and confirms the details within the application are correct and consistent with the legislation and Central Bank requirements. This particular application form must be signed by both the QIAIF and the depositary. These applications forms must be completed and submitted to the Central Bank. Certain letters of confirmation may also be required as part of the application process. Dillon Eustace as legal advisers prepare the Central Bank application forms with input from the client as necessary.

12.

Share Application Form

A share application form will need to be prepared (this is not submitted to the Central Bank for approval). The share application form needs to be completed by each investor and provides the QIAIF with the necessary details on the investor together with certain representations, confirmations and indemnities in respect of the investment. The administrator will often provide a standard draft share application form which the legal advisers and client review.


Additional Considerations

13.

Anti-Money Laundering and Terrorist Financing Policy

The QIAIF is a ‘designated person’ pursuant to the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 (as amended) and as such is required to put in place its own Anti-Money Laundering and Terrorist Financing Policy (“AML Policy”). The entity appointed as administrator of the QIAIF will typically be responsible for carrying out the necessary anti-money laundering procedures for and on behalf of the QIAIF. The QIAIF’s AML Policy therefore needs to be consistent with the administrator’s policy.

14.

Money Laundering Reporting Officer

The Central Bank expects a money laundering reporting officer (“MLRO”) to be appointed for a QIAIF. The MLRO is responsible for receiving, assessing and passing to the relevant authorities any reports of suspicions of possible money laundering with respect to the investors in the QIAIF. The MLRO should be provided with direct access to the Board of Directors of the QIAIF and to the administrator in order to effectively carry out its duties.

A letter of appointment in respect of the MLRO should be put in place with the QIAIF.

15.

Individual Questionnaires

The Central Bank will need to approve each individual that it is proposed will act as a director of the QIAIF or any other individual who is in a position to exercise significant influence over the management of the QIAIF. As part of the approval process an individual questionnaire must be completed by each director or other relevant individual of the QIAIF and submitted to the Central Bank. The individual questionnaire is a comprehensive document and requires a high level of detail in respect of each director such as career history, directorships and qualifications, business interests and references. This individual questionnaire is completed on-line and a copy may be obtained on the Central Bank website.

Dillon Eustace can provide guidance on this application process

16.

Fitness and Probity/Director Letter of Appointments

Pursuant to the Central Bank’s Fitness and Probity Standards (the “F&P Standards”), a director of a QIAIF is prescribed as a pre-approved controlled function (“PCF”). Accordingly, in addition to the fact that each director needs to complete and submit an individual questionnaire to the Central Bank (as described above), the QIAIF must also satisfy itself that the director is fit and proper for the role. It is therefore necessary for the QIAIF to carry out due diligence checks on the director and to seek certain confirmations within a letter appointing the director. Dillon Eustace, as legal advisors, assist in the compilation of the due diligence checks and the letters of appointment.

The fitness and probity documentation must be maintained by the QIAIF in readily accessible form so that the Central Bank can inspect it upon request.

17.

Board Operating Procedures

The Directors may put in place a document setting out a formal schedule of matters specifically reserved to the Board of the QIAIF for decision. It may also incorporate details of the ICAV’s Anti-Money Laundering and Conflicts of Interest Policies.

This document is used to assist the QIAIF in adopting and complying with the Corporate Governance Code for Collective Investment Schemes and Management Companies issued by the Irish Funds Industry Association (the “Code”).

An extract of sample Board Operating Procedures may be accessed via this [LINK].

18.

Secretary

Each QIAIF structured as an ICAV is required to have a secretary. The secretary is typically responsible for completion and filing of certain statutory forms with the Central Bank, convening meetings of the board of directors and maintaining the minutes of board meetings.

A letter of appointment should be in place between the QIAIF and the secretary.

19.

Auditor

An auditor will need to be appointed to the QIAIF. The QIAIF is required to produce annual audited accounts.

An engagement letter with the Auditor will generally be put in place outlining the range and scope of services to be provided by the Auditor along with details of the fees which will be imposed.

20.

Central Bank Online Reporting System – System Administrator

The Central Bank requires QIAIFs to submit financial data and other materials at specified intervals. The information is used as a way of monitoring the operations of the QIAIF and its compliance with the relevant requirements. The information is submitted via the Central Bank’s Online Reporting System (“ONR”). A System Administrator with respect to the ONR is required to be appointed.

21.

Service Level Agreements

Service level agreements with certain of the service providers, including the investment manager, the administrator and the depositary, may need to be put in place detailing matters such as operating procedures and key performance indicators

22.

Other Agreements

It may be necessary for the QIAIF to make other appointments in order to meet its regulatory requirements. For example, it may be necessary to enter into a FATCA Services Agreement.

Any additional agreements which are required for an individual QIAIF can be reviewed and negotiated in conjunction with your legal advisor.