Dillon Eustace Checklist H

RIAIF 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 RIAIF structured as a Unit Trust with an external 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 RIAIF Unit Trust will always have an external AIFM. A RIAIF 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 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 Contracts

1.

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 establishment and limited duration, if any), the investment objectives and policies, investment risk factors details regarding the directors of the AIFM (or the AIF Management Company where one is appointed) 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.

2.

Trust Deed

This is the constitutive document of the RIAIF which sets out the internal rules for the RIAIF and also sets out details regarding the appointment of the Trustee to the RIAIF. The Trustee will be responsible for the safekeeping and custody of the RIAIF Unit Trust’s assets. The Trust Deed will also set out details of the AIFM’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 AIF Management Company (who may also be the AIFM). The draft Trust Deed is reviewed by the Central Bank as part of the authorisation process. The comments raised by the Central Bank in respect of the draft Trust Deed must be addressed before the Central Bank clearance can be obtained.

3.

Administration Agreement

The Manager of the RIAIF will also appoint an administrator who maintains the RIAIFs 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 advisors.

4.

Investment Management Agreement

The 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 should 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 RIAIF. 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 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.

6.

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).

7.

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.

8.

Prime Brokerage Agreement (where appropriate)

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 RIAIF. 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.

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

9.

Letter of Application

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

10.

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.

11.

Investor Application Form

An application form for units in the RIAIF will need to be prepared (this is not submitted to the Central Bank for approval). The investor 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 investor application form which the legal advisers and client review.


Additional Considerations

13.

Anti-Money Laundering and Terrorist Financing Policy

The RIAIF is expected to have in place an Anti-Money Laundering and Terrorist Financing Policy (“AML Policy”) pursuant to the Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 (as amended). The entity appointed as administrator of the RIAIF will typically be responsible for carrying out the necessary 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.

14.

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.

15.

Central Bank Online Reporting System – System Administrator

The Central Bank requires the AIFM to submit financial data and other materials relevant to the RIAIF 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.

16.

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

17.

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.