Safekeeping duties regarding ownership verification and record keeping - AIFMD Provision

AIFMD Anatomy™ Go Premium {{{2}}} In a Nutshell™ Section DR90: 90 Safekeeping duties regarding ownership verification and record keeping 1. An AIFM must keep the depositary updated with all relevant information the depositary needs to comply with its obligations under Art. 21(8)(b), and ensure that the depositary is provided with all relevant information by third parties. 2. To comply with Art. 21(8)(b) , a depositary must at least: (a) have ready access to all relevant information it needs to perform its ownership verification and record-keeping duties, including relevant information to be provided to the depositary by third parties; (b) possess sufficient and reliable information for it to be satisfied of the AIF’s ownership right or of the ownership right of the AIFM acting on behalf of the AIF over the assets; (c) maintain a record of those assets for which it is satisfied that the AIF or the AIFM acting on behalf of the AIF holds the ownership. In this regard the depositary must: (i) register in its record, in the name of the AIF, assets, including their respective notional amounts, for which it is satisfied that the AIF or the AIFM acting on behalf of the AIF holds the ownership; (ii) be able to provide at any time a comprehensive and up-to-date inventory of the AIF’s assets, including their respective notional amounts. For paragraph 2(c)(ii), the depositary must ensure there are procedures in place so that registered assets cannot be assigned, transferred, exchanged or delivered without its knowledge and it must have ready access to documentary evidence of each transaction and position from the relevant third party. The AIFM must ensure the relevant third party promptly provides the depositary with certificates or other documentary evidence whenever there is a sale or acquisition of assets or a corporate action resulting in the issue of financial instruments and at least once a year. 3. In any event, a depositary must ensure that the AIFM has and implements appropriate procedures to verify that the assets acquired by the AIF it manages are appropriately registered in the name of the AIF or the AIFM on its behalf, and to check the consistency between the positions in the AIFMs records and the assets for which the depositary is satisfied that the AIF holds the ownership. The AIFM must ensure that all instructions and relevant information related to the AIF’s assets are sent to the depositary, so that the depositary can perform its own verification or reconciliation procedure. 4. A depositary must set up and implement an escalation procedure for situations where an anomaly is detected including notification of the AIFM and of the competent authorities if the situation cannot be clarified or corrected. 5. A depositary’s safe-keeping duties referred to in paragraphs 1 to 4 apply on a look-through basis to underlying assets held by financial or legal structures established by the AIF or by the AIFM acting on behalf of the AIF for the purposes of investing in the underlying assets and which are controlled directly or indirectly by the AIF or by the AIFM acting on behalf of the AIF. The requirement referred to in the first subparagraph must not apply to fund of funds structures and master-feeder structures where the underlying funds have a depositary which provides ownership verification and record-keeping functions for this fund’s assets. view template Full text This is an unoffical transcription, may be wrong, buggered up, out of date etc. You should Google the original. view template Directive 2011/61/EU (EUR Lex) | Implementing regulation 231/2013 (EUR Lex) Navigation directive - 21 (depositary) | 21(4) (conflict management) | 21(8) (custody function) | 21(11) (custody delegation) | 21(12) (liability for loss of assets) | 21(13) (discharge of liability on delegation) | 21(14) (discharge of liability for Non-EU subcustodians) | 36 (depo-lite) | 36(1) implementing regulation DR20 (Due diligence when appointing counterparties and prime brokers) | DR76 (objective reason) | DR89 (Safekeeping duties with regard to assets held in custody) | DR91 (reporting obligations for prime brokers) | DR98 (due diligence) | DR99 (segregation obligation) | DR100 (Loss of custody asset) | Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.