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Liability for delegation - UCITS V Provision: Difference between revisions
Liability for delegation - UCITS V Provision (view source)
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{{ucits5anat|24}} | {{ucits5anat|24}}''Comare with Art {{aifmdprov|21(12)}} of [[AIFMD]]''. <br> | ||
Not pretty, | Not pretty, if you are a {{ucits5prov|depositary}}, and that means not pretty if you are a delegate either. Since the {{ucits5prov|depositary}} can’t discharge its safekeeping liability when delegating it even by means of full assumption of liability by the delegate (as is possible under AIFMD {{aifmdprov|21(12)}}), [[delegate]]s should expect to be asked to provide eye-watering [[indemnities]] to the depositary should they lose assets they are looking after on the {{ucits5prov|depositary}}’s behalf. | ||
Seeing as a [[prime broker]] can’t generally [[rehypothecate]] UCITS assets<ref>See Art {{ucits5prov|22(7)}}</ref>, it kind of makes you wonder why a [[prime broker]] would want to hold the assets in the first place. | |||
{{External event beyond its reasonable control}} | |||
===Careful=== | |||
Note that the prohibition on excluding or limiting liability for delegated obligations under UCITS Art {{ucits5prov|24(2)}} is limited specifically to those functions it has delegated under Art {{ucits5prov|22a}} - so when giving your [[indemnities]] and so on, be assiduous not to [[indemnify]] liabilities ''wider'' than those covered by [[22a - UCITS Provision|Art 22a]] that the {{ucits5prov|depositary}} could, if it wanted to, contract out of. | |||
Recital 27: | Recital 27: | ||
:Where the {{ucits5prov|depositary}} delegates custody tasks and the financial instruments held in custody by a third party are lost, the {{ucits5prov|depositary}} should be liable. In the case of loss of an instrument held in custody, a {{ucits5prov|depositary}} should return a financial instrument of an identical type or the corresponding amount, even if the loss occurred with a third party to which the custody has been delegated. The {{ucits5prov|depositary}} should be discharged of that liability only where it is able to prove that the loss resulted from an external event beyond its reasonable control and with consequences that were unavoidable despite all reasonable efforts to the contrary. In that context, a {{ucits5prov|depositary}} should not be able to rely on internal situations such as a fraudulent act by an employee to discharge itself of liability. '''''No discharge of liability, be it regulatory or contractual, should be possible in the case of loss of assets by the {{ucits5prov|depositary}} or a third party to which the custody has been [[delegate]]d.'' | :Where the {{ucits5prov|depositary}} delegates custody tasks and the financial instruments held in custody by a third party are lost, the {{ucits5prov|depositary}} should be liable. In the case of loss of an instrument held in custody, a {{ucits5prov|depositary}} should return a financial instrument of an identical type or the corresponding amount, even if the loss occurred with a third party to which the custody has been delegated. The {{ucits5prov|depositary}} should be discharged of that liability only where it is able to prove that the loss resulted from an external event beyond its reasonable control and with consequences that were unavoidable despite all reasonable efforts to the contrary. In that context, a {{ucits5prov|depositary}} should not be able to rely on internal situations such as a fraudulent act by an employee to discharge itself of liability. '''''No discharge of liability, be it regulatory or contractual, should be possible in the case of loss of assets by the {{ucits5prov|depositary}} or a third party to which the custody has been [[delegate]]d.'' | ||
{{sa}} | |||
*Art {{aifmdprov|21(12)}} of [[AIFMD]] | |||
*[[Delegation]] under {{t|AIFMD}}. | |||
{{ref}} | |||