Template:Nutshell AIFMD 21(11): Difference between revisions

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{{aifmdprov|21(11)}}. The {{aifmdprov|depositary}} may delegate its custody functions described in paragraph {{aifmdprov|21(8)}} (but not its other functions), on the following conditions: <br />
{{aifmdprov|21(11)}}. The {{aifmdprov|depositary}} may delegate its paragraph {{aifmdprov|21(8)}} custody functions (but not its other functions), as long as: <br />
 
:(a) it isn’t trying to avoid its [[AIFMD]] obligations;
:(a) it shouldn’t be trying to avoiding its obligations under {{tag|AIFMD}};
:(b) it has an {{aifmdprov|objective reason}} for doing so;
:(b) it must have an {{aifmdprov|objective reason}} for doing so;
:(c) it has exercised all due skill, care and [[due dilly|diligence]] in selecting its [[delegate]], and must continuously monitors that {{aifmdprov|third party}};
:(c) it must have exercised all due skill, care and [[due dilly|diligence]] on the {{aifmdprov|third party}} to whom it delegates, and must continuously monitor that {{aifmdprov|third party}}’s performance;
:(d) it ensures the [[delegate]] meets the following conditions:  
:(d) it must ensure the {{aifmdprov|third party}} meets the following conditions:  
::(i) it is sophisticated enough to properly look after the {{aifmdprov|AIF}}’s assets;
::(i) it sophisticated enough to properly look after the {{aifmdprov|AIF}}’s assets;
::(ii) it is effectively regulated, capitalised, supervised  and audited to holds [[Financial instrument - AIFMD Provision|financial instruments]] in [[custody]];
::(ii) where it holds financial instruments in [[custody]], is effectively regulated, capitalised, supervised  and audited;
::(iii) it segregates the {{aifmdprov|AIF}}’s assets from its own and from those of the {{aifmdprov|depositary}} so they can be clearly identified as belonging to clients of the {{aifmdprov|depositary}};
::(iii) it segregates the {{aifmdprov|AIF}}’s assets from its own assets and from the {{aifmdprov|depositary}}’s assets so that they can be clearly identified as belonging to clients of the {{aifmdprov|depositary}};
::(iv) it does not use the assets without the {{aifmdprov|AIF}}’s prior consent and prior notification to the {{aifmdprov|depositary}}; and
::(iv) it does not use the assets without the {{aifmdprov|AIF}}’s prior consent and prior notification to the {{aifmdprov|depositary}}; and
::(v) it complies with paragraphs {{aifmdprov|21(8)}} and {{aifmdprov|21(10)}}.  
::(v) it complies with paragraphs {{aifmdprov|21(8)}} and {{aifmdprov|21(10)}}.  
Where assets have to be held in a jurisdiction where no local entities are effectively regulated, capitalised, supervised and audited, the {{aifmdprov|depositary}} may appoint a local entity which isn’t, but only as long as there are no local entities that satisfy the delegation requirements, and:  
Where assets have to be held in a jurisdiction where no local entities are effectively regulated, capitalised, supervised and audited, the {{aifmdprov|depositary}} may appoint a local entity which isn’t, but only as long as there are no local entities that satisfy the delegation requirements, and:  
:(a) the {{aifmdprov|depositary}} informs {{aifmdprov|AIF}} investors must that such a delegation is required, and why, before they invest; and
:(a) the {{aifmdprov|depositary}} informs {{aifmdprov|AIF}} investors must that such a delegation is required, and why, before they invest; and
:(b) the {{aifmdprov|AIF}} instructs the {{aifmdprov|depositary}} to delegate the custody of such [[financial instruments]] to such a local entity.  
:(b) the {{aifmdprov|AIF}} instructs the {{aifmdprov|depositary}} to delegate the custody of such [[financial instruments]] to such a local entity.  
The {{aifmdprov|third party}} may sub-delegate these functions, subject to the same requirements ''[[mutatis mutandis]]''. Use of a securities settlement system does not count as delegation of custody functions. <br>
The {{aifmdprov|third party}} may sub-delegate these functions, subject to the same requirements ''[[mutatis mutandis]]''. Use of a securities settlement system does not count as delegation of custody functions. <br>

Latest revision as of 13:30, 14 August 2024

21(11). The depositary may delegate its paragraph 21(8) custody functions (but not its other functions), as long as:

(a) it isn’t trying to avoid its AIFMD obligations;
(b) it has an objective reason for doing so;
(c) it has exercised all due skill, care and diligence in selecting its delegate, and must continuously monitors that third party;
(d) it ensures the delegate meets the following conditions:
(i) it is sophisticated enough to properly look after the AIF’s assets;
(ii) it is effectively regulated, capitalised, supervised and audited to holds financial instruments in custody;
(iii) it segregates the AIF’s assets from its own and from those of the depositary so they can be clearly identified as belonging to clients of the depositary;
(iv) it does not use the assets without the AIF’s prior consent and prior notification to the depositary; and
(v) it complies with paragraphs 21(8) and 21(10).

Where assets have to be held in a jurisdiction where no local entities are effectively regulated, capitalised, supervised and audited, the depositary may appoint a local entity which isn’t, but only as long as there are no local entities that satisfy the delegation requirements, and:

(a) the depositary informs AIF investors must that such a delegation is required, and why, before they invest; and
(b) the AIF instructs the depositary to delegate the custody of such financial instruments to such a local entity.

The third party may sub-delegate these functions, subject to the same requirements mutatis mutandis. Use of a securities settlement system does not count as delegation of custody functions.

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