Dillon Eustace Checklist D

QIAIF Unit Trust with an appointed EU domiciled Authorised AIFM

The below checklist is an overview of the documents required in order to seek approval as QIAIF structured as a Unit Trust with an external EU domiciled authorised AIFM. Further specific documentation may be required on a case-by-case basis.

Where the Fund is structured as a Unit Trust, its legal form does not permit internal management and as such, the QIAIF Unit Trust will always have an external AIFM. A QIAIF Unit Trust may also have an AIF Management Company in addition to an external AIFM (which entity would be responsible for the appointment of the external AIFM). Alternatively, the external AIFM may act as both the Manager and AIFM.

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.

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 establishment / incorporation and limited duration, if any), the investment objectives and policies, investment risk factors, details regarding the directors of the AIF Manager (which may be the directors of the AIFM where the AIFM is also the manager to the QIAIF Unit Trust) 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.

2.

Trust Deed

This is the constitutive document of the QIAIF which sets out the internal rules for the QIAIF and also sets out details regarding the appointment of the Trustee to the QIAIF. The Trustee will be responsible for the safekeeping and custody of the QIAIF Unit Trust’s assets. The Trust Deed will also set out details of the Manager’s obligations and responsibilities with regard to the Trust.

The trustee will generally provide the draft Trust Deed which is then reviewed and negotiated as required by the legal advisers in conjunction with the Manager.

3.

Administration Agreement

The Manager of the QIAIF will also appoint an administrator who maintains the QIAIFs records ad 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.

4.

Investment Management Agreement

The external AIFM may appoint an investment manager pursuant to an investment management agreement. 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. 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

5.

Distribution Agreement

The AIFM may appoint a head distributor with responsibility for the distribution, marketing and sales of shares of the QIAIF. The head distributor would 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 typically prepare the distribution agreement with input from the client.

6.

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 Trustee to appoint the prime broker as a sub-depositary.

7.

AIFM Agreement

Where the AIF Management Company is not also the AIFM, then the AIF Management Company will enter into an AIFM Agreement with the third party AIFM.

This agreement should include information regarding the services to be provided by the AIFM (e.g. portfolio management and risk management functions).

8.

Letter of Application

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

9.

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 AIF Management Company 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.

10.

Unit Application Form

An application form for units will need to be prepared (this is not submitted to the Central Bank for approval). The unit application form needs to be completed by each investor and provides the Manager 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 unit application form which the legal advisers and client review.


Additional Considerations

11.

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 – 2013 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.

12.

Auditor

An Irish 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.

13.

Central Bank Online Reporting System – System Administrator

The Central Bank requires the Managers of QIAIFs to submit financial data and other materials relevant to the QIAIF 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.

14.

Service Level Agreements

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

15.

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.