• FUNDS A1.1 FUNDS A1.1 Application

      • FUNDS A1.1.1

        (1) This Appendix (APP 1) applies to a Fund Manager and, if appointed, the Trustee in relation to every:
        (a) Delegation Agreement; and
        (b) Outsourcing Agreement.
        made or entered into pursuant to these Rules.
        (2) This Appendix does not apply to a Qualified Investor Fund.

    • FUNDS A1.2 FUNDS A1.2 Mandatory provisions

      • FUNDS A1.2.1 FUNDS A1.2.1

        (1) A Fund Manager or Trustee must ensure that any agreement specified in Rule A1.1.1(1):
        (a) sets out the functions or activities and service standards that will be applied to the carrying out of such functions or activities;
        (b) provides that the Service Provider cannot in turn delegate any activities delegated to it, or outsource any functions outsourced to it, without prior approval of the Fund Manager or Trustee as applicable;
        (c) requires the Service Provider to:
        (i) maintain records to show and explain transactions in relation to each activity or function performed in relation to the Fund;
        (ii) maintain such records in a manner to enable the Fund Manager or Trustee to prepare accounts in compliance with these Rules and any other applicable legislation;
        (iii) retain the records for at least six years from the date to which they relate;
        (iv) keep the records, at all reasonable times, open to inspection by the Regulator, the Fund's Auditor and any Person providing the oversight function for the Fund; and
        (v) ensure that the records are, if requested by the Regulator, capable of reproduction within a reasonable period not exceeding 3 days, in hard copy and in English.
        (2) A Fund Manager or Trustee must ensure that a Delegation Agreement contains an undertaking by the Service Provider to:
        (a) comply with any Regulator Rules applicable to the activity; and
        (b) disclose to the Regulator and to the Fund Manager or Trustee, as the case may be, any material information that it would disclose to its Financial Services Regulator, if relevant, in relation to the conduct of the activity.
        (3) A Fund Manager or Trustee must maintain records of all agreements, and any instructions given to a Service Provider under the terms of an agreement, for at least six years.

        • Guidance

          1. Other Rules may also impact on the contents of a Delegation Agreement or Outsourcing Agreement. For instance, consideration should be given to GEN Rules 3.3.31 and 3.3.32 and accompanying Guidance.
          2. Without limiting the application of any Rules, the Regulator expects that any agreement relating to a material delegation would include as a minimum:
          a. unambiguous descriptions and definitions of the activities or functions to be provided by the Service Provider and the duties of both parties;
          b. an agreed standard between the parties or resources and services supported as necessary by performance measures in accordance with the applicable Rules;
          c. the requirement for regular detailed reporting to a specified frequency from the Service Provider in respect of its duties and activities;
          d. provisions relating to the reporting of relevant events such as technological changes or error reporting and, in particular, any event which undermines the ability of the Service Provider to fulfil its duties; and
          e. the requirement for an annual review (at a minimum) of the performance of the Service Provider.

    • FUNDS A1.3 FUNDS A1.3 Provisions relating to Eligible Custodians

      • FUNDS A1.3.1

        (1) A Fund Manager or Trustee must ensure that a Delegation Agreement in relation to Providing Custody will:
        (a) require that the title of any account of the Eligible Custodian to hold Fund Property sufficiently distinguishes that account from any account containing Investments belonging to the Eligible Custodian, and is in the form requested by the Fund Manager or Trustee;
        (b) require that the Fund's Investments will only be credited and withdrawn in accordance with the instructions of the Fund Manager or Trustee;
        (c) require, subject to (2), that the Eligible Custodian will hold the Fund's Investments separately from assets belonging to the Eligible Custodian;
        (d) set out the arrangements for recording and registering the Funds, claiming and receiving dividends and other entitlements and interest and the giving and receiving of instructions;
        (e) require the Eligible Custodian to deliver a statement to the Fund Manager or Trustee (including the frequency of such statement), which details the Fund's Investments deposited to the account;
        (f) require, subject to (2), that all the Investments standing to the credit of the account are held by the Eligible Custodian as the agent of the Fund Manager or the Trustee and the Eligible Custodian is not entitled to combine the account with any other account or to exercise any charge, mortgage, lien, right of set-off or counterclaim against Investments in that account in respect of any sum owed to the Eligible Custodian on any other account of the Fund Manager, Trustee or any other Person; and
        (g) detail the extent of liability of the Eligible Custodian in the event of default.
        (2) Neither the Fund Manager nor the Trustee is required to meet the requirements in (1)(c) and (f), where either the Eligible Custodian or any other Person acting as the prime broker of the Fund does so in compliance with the requirements in Rule 12.3.9.

    • FUNDS A1.4 FUNDS A1.4 Provisions relating to Acting as the Administrator of a Collective Investment Fund

      • FUNDS A1.4.1

        A Fund Manager or Trustee must ensure that a Delegation Agreement in relation to Acting as the Administrator of a Collective Investment Fund requires that the Service Provider must not hold or control monies or assets belonging to third parties in connection with such administration except in the following circumstances:

        (a) holding cheques to the order of a Fund's bank account, provided such cheques are securely held for a maximum of three business days prior to being deposited into the relevant Fund's bank account or returned to the drawer of the cheque; or
        (b) where the Service Provider has control over bank accounts kept for the purposes of the Fund, the accounts must be conducted strictly in accordance with the Fund Manager's instructions and any agreed mandate with the bank.