Dillon Eustace RIAIF Checklist G

RIAIF ICAV with appointed EU Domiciled authorised AIFM

The below checklist is an overview of the documents required in order to seek approval as a RIAIF with an external 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].

RIAIF Application

The documentation required for the RIAIF application is as follows:

Material Documents

1

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

3.

Prospectus

A RIAIF 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 RIAIF 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. For a RIAIF authorisation, the Central Bank will review the draft Prospectus as part of the authorisation process. Any comments raised by the Central Bank in respect of the Prospectus must be addressed before the Central Bank clearance can be received.

4.

Depositary Agreement

The RIAIF 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. The draft depositary agreement is reviewed by the Central Bank as part of the authorisation process. The comments raised by the Central Bank in respect of the draft depositary agreement must be addressed before the Central Bank clearance can be obtained.

5.

AIFM Agreement

The RIAIF will appoint an AIFM pursuant to an AIFM Agreement. The AIFM Agreement will outline the services to be provided to the RIAIF (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 advisers.

6.

Administration Agreement

It is also necessary to appoint an administrator who maintains the AIFM’s records and carries out other functions such as calculating the net asset value of the RIAIF 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 advisers.

7.

Investment Management Agreement

The external AIFM may appoint an investment manager pursuant to an investment management agreement to assist in certain investment management activities. 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 managers functions performed by the AIFM itself. The investment manager must be a regulated 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 regulated investment managers from jurisdictions which it considers to be of equivalent status.

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

8.

Distribution Agreement

The external AIFM may appoint a head distributor with responsibility for the distribution, marketing and sales of shares of the RIAIF. The head distributor would the typically be authorised by the AIFM to appoint sub-distributors in jurisdictions in which the AIFM is authorised to market the shares of the RIAIF. It is often the case that the investment manager may also be appointed as head distributor.

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

9.

Prime Brokerage Agreement (where appointed)

The external 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 AIFM. 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 RIAIF’s depositary to appoint the prime broker as a sub-depositary.

It should be noted that due to limits on leverage and borrowings applicable to RAIAFs, many of the functions normally associated with prime brokers may be limited.

10.

Letter of Application

The Central Bank requires a RIAIF to submit a standard letter of application seeking authorisation. Dillon Eustace as legal advisers prepare the letter of application which will be reviewed by the Central Bank in advance of clearance.

11.

Risk Management Process

It is necessary to provide details of the risk management process vis-à-vis FDI activity for the AIFM to the Central Bank as part of the authorisation process.

12.

Central Bank Application Forms

The Central Bank has an application form relevant to the Prospectus and each of the various agreements above. There is also an application form which provides an overview of the RIAIF to the Central Bank. These application forms must be completed and submitted to the Central Bank. The application forms relevant to the Prospectus, the Depositary Agreement and the application form which provides an overview of the RIAIF to the Central Bank are filed during the review process. 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.

13.

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 RIAIF 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:

14.

Anti-Money Laundering and Terrorist Financing Policy

The RIAIF 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 RIAIF will typically be responsible for carrying out the necessary operational anti-money laundering procedures for and on behalf of the RIAIF. The RIAIF’s AML Policy therefore needs to be consistent with the administrator’s policy.

15.

Money Laundering Reporting Officer

The Central Bank expects a money laundering reporting officer (“MLRO”) to be appointed for a RIAIF. 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 RIAIF. The MLRO should be provided with direct access to the Board of Directors of the RIAIF 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 RIAIF.

16.

Individual Questionnaires

The Central Bank will need to approve each individual that it is proposed will act as a director of the RIAIF and any other individual who is in a position to exercise significant influence over the management of the RIAIF. As part of the approval process an individual questionnaire must be completed by each director of the RIAIF 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

17.

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 RIAIF is prescribed as a pre-approved controlled function (“PCF”). Accordingly, in addition to the fact each director needs to complete and submit an individual questionnaire to the Central Bank (as described above), the RIAIF must also satisfy itself that the director is fit and proper for the role. It is therefore necessary for the RIAIF to carry out due diligence checks on the director and to seek certain written confirmations from 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 RIAIF in readily accessible form so that the Central Bank can inspect it upon request.

18.

Company Secretary

Each RIAIF 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 RIAIF and the secretary.

19.

Auditor

An Irish auditor will need to be appointed to the RIAIF. The RIAIF 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 RIAIFs to submit financial data and other materials at specified intervals. The information is used as a way of monitoring the operations of the RIAIF 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 RIAIF 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 RIAIF can be reviewed and negotiated in conjunction with your legal advisor.