FUND 10 Operating on a cross-border basis

1. (1)

   This chapter applies to the following types of firm in relation to the activities in (2):

   1. (a)

      a full-scope UK AIFM;

   2. (b)

      [deleted]

   3. (c)

      a small non-UK AIFM; and

   4. (d)

      an above-threshold non-UK AIFM.

2. (2)

   The activities to which this chapter relates are the management and marketing on a cross-border basis, into or from the UK of:

   1. (a)

      a UK AIF; and

   2. (b)

      a non-UK AIF.

   3. (c)

      [deleted]

The purpose of this chapter is to provide guidance on the requirements that apply to the types of firm set out in FUND 10.1.1 G when operating on a cross-border basis into or from the UK.

1. (1)

   There are specific provisions for third country AIFs and AIFMs (ie, in relation to non-UK AIFs and non-UK AIFMs) and the marketing of a UK AIF or a non-UK AIF that is a feeder AIF, the master AIF of which is managed by a non-UK AIFM or is a non-UK AIF.

2. (2)

   A UK AIFM is allowed to manage a non-UK AIF from the UK.

3. (3)

   In addition, the UK allows the marketing by the following types of AIFM in the UK:

   1. (a)

      a full-scope UK AIFM of:

      1. (i)

         a UK AIF that is a feeder AIF, the master AIF of which is managed by a non-UK AIFM or is a non-UK AIF and;

      2. (ii)

         a non-UK AIF;

   2. (b)

      [deleted]

   3. (c)

      a non-UK AIFM of:

      1. (i)

         a UK AIF; and

      2. (ii)

         a non-UK AIF.

      3. (iii)

         [deleted]

This section applies to a full-scope UK AIFM of a non-UK AIF that is not marketed in the UK to UK investors.

A full-scope UK AIFM may manage a non-UK AIF subject to the satisfaction of certain conditions. If the AIF is not marketed, these conditions are that:

1. (1)

   the AIFM complies with the full requirements of FUND, other rules in the Handbook which, when made, implemented AIFMD, the AIFMD level 2 regulation, the AIFMD UK regulation in respect of that AIF, except FUND 3.3 (Annual reporting) and FUND 3.11 (Depositaries), the AIFMD BTS and any other binding technical standards made in connection with the UK AIFM regime; and

2. (2)

   (in accordance with regulation 33 of the AIFMD UK regulation) appropriate cooperation arrangements are in place between the FCA and the supervisory authorities of the country where the non-UK AIF is established in order to ensure an efficient exchange of information that allows FCA to carry out its duties in accordance with FUND, other rules in the Handbook which, when made, implemented AIFMD, the AIFMD level 2 regulation and the UK AIFMD regulation.

As a result, a full-scope UK AIFM of a non-UK AIF that is not marketed is required to comply with:

1. (1)

   all of FUND 3 with the exception of FUND 3.3 (Annual report of an AIF), FUND 3.11 (Depositaries) and FUND 3.12 (Marketing in the UK); and

2. (2)

   such other provisions of the FCA Handbook as are applicable to a full-scope UK AIFM.

If a full-scope UK AIFM wishes to market in the UK a  non-UK AIF that it manages, the AIFM must comply with the relevant requirements, as explained in FUND 10.5.3 G to FUND 10.5.5 G (Marketing of third country AIFs managed by full-scope UK AIFMs).

This section applies to the following types of AIFM that intend to market an AIF in the UK:

1. (1)

   a full-scope UK AIFM of:

   1. (a)

      a feeder AIF that is a UK AIF, the master AIF of which is managed by a non-UK AIFM or is a non-UK AIF; and

   2. (b)

      a non-UK AIF;

2. (2)

   [deleted]

3. (3)

   [deleted]

4. (4)

   an above-threshold non-UK AIFM of:

   1. (a)

      a UK AIF; and

   2. (b)

      [deleted]

   3. (c)

      a non-UK AIF.

Marketing in the UK only of the types of AIF set out in FUND 10.5.1 G is permitted subject to certain conditions (see Part 6 (Marketing) of the AIFMD UK regulation). In accordance with these provisions, an AIFM of the type set out in FUND 10.5.1 G may market an AIF in the UK providing it has notified the FCA of its intention to market, it meets the relevant conditions in the AIFMD UK regulation and the FCA has not suspended or revoked the AIFM's entitlement to market the AIF. The AIFM is entitled to market the AIF as soon as a notification containing all of the required information has been sent to the FCA.

In accordance with regulation 57 of the AIFMD UK regulation, a full-scope UK AIFM may market the following types of AIF in the UK by submitting a notification to the FCA in the form in FUND 10 Annex 1 D:

1. (1)

   a feeder AIF that is a UK AIF the master AIF of which is managed by a non-UK AIFM or is a non-UK AIF; and

2. (2)

   a non-UK AIF.

To allow the AIFM to comply with regulation 57(4), the notification includes a statement from the AIFM confirming that the following conditions are met:

1. (1)

   subject to (2), the AIFM complies with the requirements of FUND, other rules in the Handbook which, when made, implemented AIFMD, the AIFMD level 2 regulation, the AIFMD UK regulation, the AIFMD BTS and any other binding technical standards made in connection with the UK AIFM regime in respect of that AIF;

2. (2)

   the AIFM is not required to comply with the requirements of FUND 3.11 (Depositaries) provided the AIFM:

   1. (a)

      ensures that one or more entities, other than the AIFM, are appointed to carry out the duties in FUND 3.11.20R to 3.11.23R and 3.11.25R; and

   2. (b)

      informs the FCA about the identity of each entity;

3. (3)

   appropriate cooperation arrangements for the purpose of systemic risk oversight and in line with international standards are in place between the FCA and the supervisory authorities of the relevant third country to ensure an efficient exchange of information that enables the FCA to carry out its duties in accordance with FUND, other rules in the Handbook which, when made, implemented AIFMD, the AIFMD level 2 regulation and the AIFMD UK regulation, the AIFMD BTS and any other binding technical standards made in connection with the UK AIFM regime; and

4. (4)

   the country where the non-UK AIF is established is not listed as a Non-Cooperative Country and Territory by the Financial Action Task Force (FATF).

1. (1)

   As a result of marketing an AIF in the UK, a full-scope UK AIFM is required to comply with:

   1. (a)

      all of FUND 3, except certain sections of FUND 3.11 (Depositaries) (as set out in FUND 3.11.33R (AIFM of a non-UK AIF)) and (Marketing in the UK); and

   2. (b)

      such other provisions of the FCA Handbook that apply to a full-scope UK AIFM of a UK AIF.

2. (2)

   A full-scope UK AIFM managing a non-UK AIF that is not marketed should note that the rules it needs to comply with will change in relation to that AIF as a result of the AIF being marketed (see FUND 10.4.3 G for details of the rules that apply to a full-scope UK AIFM managing, a non-UK AIF that is not marketed). In particular, an AIFM will be subject to the annual report requirements in FUND 3.3 (Annual report of an AIF) and some of the depositary provisions in FUND 3.11 (Depositaries) (as set out in FUND 3.11.33 R (AIFM of a non-UK AIF)).

In accordance with regulation 58 (Marketing of AIFs managed by small third country AIFMs) of the AIFMD UK regulation, a small non-UK AIFM may market an AIF in the UK managed by it by submitting a notification to the FCA in the form set out in FUND 10 Annex 1 D.

To allow the AIFM to comply with the requirements of regulation 58(2), the notification includes a statement from the AIFM confirming that the following conditions are met:

1. (1)

   the AIFM is the person responsible for complying with the implementing provisions relating to the marketing of the AIF (as explained in FUND 10.5.8 G); and

2. (2)

   the AIFM is a small non-UK AIFM.

As a result of marketing an AIF in the UK, a small non-UK AIFM is required to provide the FCA with information on:

1. (1)

   the main instruments in which the AIFM trades; and

2. (2)

   the principal exposures and most important concentrations of the AIFs it manages.

   in accordance with SUP 16.18 (AIFMD reporting).

In accordance with regulation 59 of the AIFMD UK regulation, an above-threshold non-UK AIFM may market a UK AIF or a non-UK AIF in the UK managed by it by submitting a notification to the FCA in the form in FUND 10 Annex 1 D.

To allow the AIFM to comply with the requirements of regulation 59(2), the notification includes a statement from the AIFM confirming that the following conditions are met:

1. (1)

   the AIFM is the person responsible for complying with the implementing provisions relating to the marketing of the AIF (see FUND 10.5.11 G);

2. (2)

   the AIFM complies with the requirements of FUND 3.2 (Investor information), 3.3 (Annual report of an AIF), and 3.4 (Reporting obligations to the FCA) in so far as such provisions are relevant to the AIFM and the AIF to be marketed;

3. (3)

   if applicable, the AIFM complies with Part 5 (AIFs which acquire control of non-listed companies and issuers) of the AIFMD UK regulation in relation to the AIF to be marketed;

4. (4)

   appropriate cooperation arrangements for the purpose of systemic risk oversight and in line with international standards are in place between:

   1. (a)

      the FCA and, if applicable, the competent authorities of the other country where the AIF is established; and

   2. (b)

      the supervisory authorities of the country where the non-UK AIFM is established and, if applicable, of the country where the non-UK AIF is established,

   to ensure an efficient exchange of information that enables the FCA to carry out its duties in accordance with AIFMD; and

5. (5)

   the third country where the non-UK AIF is established is not listed as a Non-Cooperative Country and Territory by the Financial Action Task Force (FATF).

As a result of marketing an AIF in the UK, an above-threshold non-UK AIFM is required to comply with:

1. (1)

   the requirements that apply to a full-scope UK AIFM in FUND 3.2 (Investor information), FUND 3.3 (Annual report of an AIF) and FUND 3.4 (Reporting obligations to the FCA) in so far as such provisions are relevant to the AIFM and the AIF; and

2. (2)

   if applicable, Part 5 (AIFs which acquire control of non-listed companies and issuers) of the AIFMD UK regulation.

1. (1)
   1. (a)

      A provision of FUND 3.2 (Investor Information), FUND 3.3 (Annual report of the AIF) or FUND 3.4 (Reporting obligations to the FCA) will not be relevant to an above-threshold non-UK AIFM and the AIF it markets, if it relates to another provision to which the AIFM is not subject.

   2. (b)

      For example, the AIFM does not need to comply with FUND 3.2.2R (5) because it is not subject to the professional negligence requirements in IPRU(INV) 11.3.11G (Professional negligence).

2. (2)
   1. (a)

      However, the AIFM should comply with the substance of the provisions of FUND 3.2 (Investor Information), FUND 3.3 (Annual report of the AIF) or FUND 3.4 (Reporting obligations to the FCA) to the extent that these are relevant to the AIFM and the AIF.

   2. (b)

      For example:

      1. (i)

         the AIFM should make the latest net asset value of the AIF or latest market price of the unit or share of the AIF available to investors before they invest, but it does not need to do so in line with FUND 3.9 (Valuation), because it is not subject to these provisions; and

      2. (ii)

         the AIFM should include information in its annual report in relation to the remuneration paid by the AIFM to its staff as set out in FUND 3.3.5R (5) and FUND 3.3.5R (6), but it does not need to do so in line with the requirements in SYSC 19B, because it is not subject to those provisions.

3. (3)

   An AIFM should comply with the provisions in FUND 3.3 (Annual report of the AIF) in relation to the first financial year end date of the AIF following the AIFM's notification to the FCA of its intention to market the AIF in the UK.

An above-threshold non-EEA AIFM should report on a quarterly basis to the FCA the information in FUND 3.4.2R, FUND 3.4.3R and (if applicable) FUND 3.4.5R for each AIF that is not marketed in the UK if:

1. (1)

   that AIF is a master AIF managed by the AIFM;

2. (2)

   the AIFM markets the feeder AIF of that master AIF in the UK; and

3. (3)

   the AIFM is subject to quarterly reporting under article 110 of the AIFMD level 2 regulation (see SUP 16.18.4EU) for the feeder AIF.

Further guidance on marketing an AIF can be found in PERG 8.37 (AIFMD marketing).

The manufacturer of an AIF which is made available to retail investors in the United Kingdom will need to prepare a product summary in accordance with the requirements in DISC.