aifmd surgery webinar vop and business plan

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AIFMD Surgery Webinars - VOP and Business Plan

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You can join either by VoIP or dial in by telephone

Follow call in details if you select to use Telephone audio

12/11/2013

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AIFMD Surgery Webinars - VOP and Business Plan

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Introductions and Format

Hosto Jonathan Wilson, Project Director

Panelo Derek McGibney, Managing Consultanto Bobby Johal, Managing Consultanto James Lawson, RTT Team Leadero Hector Thompson, Consultant

Please submit any questions throughout the duration of the webinar in the question panel within the GoToWebinar application


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Questions

12/11/2013

You can submit your questions using the Questions area in the GoToWebinar console

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Agenda

o Applications – The basics Timing of applications Permissions Objectives of the VOP

o Project Delivery - Being prepared for submission o Project Delivery - Being prepared for post submission o Content of a VOPo Business Plans, Content and Practical issues in demonstrating

compliance with AIFMDo Follow up Webinars


Applications – The BasicsTime Frame

o FCA Review Time: o 3 months for complete applications o 6 months for ‘incomplete’ applications

o Time Frame Optionso Identify preferred authorisation date o ‘deferral of determination’ Request deferral from now to submission

but no later than 21st July 2014)o Identify which documents will not be available for submission and

when they will likely be available. Again, at least 1 month prioro Ensure that you will have all arrangements in place by that (deferral)

date (including required submissions at least 1 month before authorisation date)

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Applications – The BasicsTime Frame

For complete applications the FCA will need to the following for all AIFs: o A copy of the instrument of incorporation of the AIF(s)o Confirmation that depository contractual arrangements are in

place for each AIF listed (and for which you intend to market in the EU)

o All information which will be made available to investors (under FUND 3.2)

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Applications – The BasicsPermission Profile

July 16, 2013

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Applications – The BasicsContent of a VOP submission pack

o Cover letter explaining main timing issues (recommended)o Variation of Permission Application Formo Regulatory Business Plano Financial Projectionso Main documents

o Fund Instruments of Incorporationo Fund Documentationo Investor Disclosures

o AIF Scheduleso Marketing Applications (UK registration, EU passports etc)


Make it easy to conclude these points by keeping responses succinct, cross referring to specific questions and supporting documentation.

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Applications – The BasicsObjectives of a VOP

o Demonstrate that:o the applicant can satisfy the AIFMDo That the applicant will be ready and able to undertake the

regulated activities applied foro That the applicant continues to satisfy the Threshold Conditionso Demonstrate that the organisation structure will satisfy AIFMD

at authorisation and that the business plan is suitable for an AIFM


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Project Delivery

MonthWork stream 1 2 3 (Nov) Dec Jan 7Project delivery assessment

Variation of Permission

Portfolio Risk management

Depositary

Capital and Operational risk

Delegation

Client disclosures

Operational procedures

Systemic reporting

Private equity disclosures

Compliance infrastructure

Training


Project Delivery – Post Submission

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MonthWork stream Jan Feb Mar Apr May Jun JulyProject delivery assessment

Variation of Permission

Portfolio Risk management

Depositary

Capital and Operational risk

Delegation

Client disclosures

Operational procedures

Systemic reporting

Private equity disclosures

Compliance infrastructure

Training


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A) Background to the business

B) Proposed business (and operating model)

•Fund Structure•Current (Potential) Customers•Regulated Activities•Capital Model

C) Organisation structure of the AIFM

D) Long term business and expansion plans

E) Appropriateness and scalability of non-financial resources

F) Governance and culture 1) General 2) Conflicts of interest

G) Systems and controls

1) Disclosure to investors and competent authorities2) Liquidity management3) Risk management 4) Leverage5) Prime brokerage6) Valuation7) Depositary Arrangements8) Marketing Arrangements

Applications – The BasicsContent of VoP – Regulatory Business Plan


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A) Background to the business

B) Proposed business (and operating model)

•Fund Structure•Current (Potential) Customers•Regulated Activities•Capital Model

C) Organisation structure of the AIFM

D) Long term business and expansion plans

E) Appropriateness and scalability of non-financial resources

F) Governance and culture 1) General 2) Conflicts of interest

G) Systems and controls

1) Disclosure to investors and competent authorities2) Liquidity management3) Risk management 4) Leverage5) Prime brokerage6) Valuation7) Depositary Arrangements8) Marketing Arrangements

Practical Issues on Content of the VOP


C. Organisational Structure of the AIFM

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F. Governance and Culture

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1. General o Governance Structures in place (Section 4 content)

o Built up from section C (Organisation)o Overight in place and Management Information

o Honesty, fairness, professionalism, independence, and acting in client and investor interest? (Question 4.2)o Can you demonstrate?o Refer to status of registered individuals o Refer to current processes

2. Conflicts of Interest (Question 4.3)o Confirm that policy is in place and operationalo Provide limited description of operation of policy


G. Systems and Control

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1) Disclosure to investors and competent authoritieso Adequate and effective AIFM systems and controls to ensure

appropriate disclosures are made…o set out in FUND 3.2.2R (prior disclosures);o 3.2.3R (depositary liability discharge disclosures); o 3.2.5R (liquidity profile & arrangement, risk management

systems); o 3.2.6R (leverage disclosures); o 3.3 (annual report);o 3.4 (reporting obligations).



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3) Risk managemento Can you demonstrate that the risk management function is

functionally and hierarchically separated from the operating units, including the portfolio management function?

o Have you made provision for specific safeguards against conflicts of interest that facilitate independent performance of risk management activities?

o Can you satisfy FUND 3.7 requirements and demonstrate consistent effectiveness?



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5) Prime brokerage (if applicable)o Have you ensured the Appointment / Intended Appointment of

a prime brokerage firm?o Have established adequate and effective systems and controls

that will ensure the exercise of due skill, care and diligence in the selection and appointment of a prime brokerage firm?

o Has there been the formalisation of terms in a contract?o Does the contract allow for transfer and reuse of the AIF’s assets

compliant with the AIF’s fund document?o Does it provide for the depositary to be informed of these

arrangements?



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7) Depositary Arrangementso Full scope UK AIFM of UK and EEA AIFs must ensure that a single

depository is appointed for each AIFo Full scope UK AIFM of non-EEA AIFs being marketed in the UK must

ensure that one or more entities are appointed to carry out the functions of;o Oversighto Custodyo Cash Management

o Firms need to determine who is going to do each of these activities and negotiate with services providers.

o No depositary required for sub-threshold but their may be custody requirements and firms will be subject to local requirements if they wish to market under NPPR. © Copyright 12/11/2013


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7) Depositary Arrangements



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o FCA expects that the AIFM has performed due diligenceo This is a high level requirement that has not been detailed in the directiveo The Applicant has to make sure the depositary is appropriateo The FCA also requires:

o Identity of the depositary;o the type of service;

o full scope;o PE depositary (FUND 3.11.12R); o Non-EEA AIFS depositary marketed in the UK (established in UK or

offshore).o consent to contact the depositary

7) Depositary Arrangements


o Full UK/EEA AIFM wishing to market UK/EEA AIF2 different forms :o Notification of intention to market in the UK (for professional and retail investors)o Passporting for EU AIFs (professional investors)

Information requested: Annex III and IV of the directiveo A notification letter with a programme of operations identifying the AIFs o The AIF rules or instruments of incorporationo Identity of the depositary o Controls implemented to prevent the AIF from being marketed to retail investorso Additional information if marketing to retail: authorised fund or recognised scheme? Prospectus

or marketing under COBS 4.12?o Note: New procedures for dealing with NMPI


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8) Marketing


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Full Scope UK AIFM wishing to market a non EEA AIF, (or feeder AIFs that are UK AIFs or EEA AIFs where the master AIF is a managed by a non-EEA AIFM or is a non-EEA AIF) To professional or retail investors- Notify the FCA using the National Private Placement Regime (NPPR) – Article 36 form

Full scope Third country AIFM wishing to market whether UK, EEA or non-EEA AIF- Notify the FCA using the NPPR Regime – Article 42 form- Notification in respect of major holdings and control acquired after the date of marketing

notification

Sub-threshold UK AIFM wishing to market AIFs to investors in other EEA do not have right to passport - Firm needs to consult the national law of each EEA state

Sub-threshold non EEA AIFM wishing to market UK, EEA, non-EEA AIF- Notify the FCA using the NPPR - Small Third Country form

8) Marketing



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NPPR notifications require information on:o Core details of the AIF(s)o Any delegationo Independent valuation agent / Independent transfer agento Prime brokero Independent auditorso Other entities marketing the AIF in the UK o Custody (Art. 42 and Small Third Country forms)o Category of assets (Small Third Country form)o Use of leverage or borrowing (Small Third Country form)

8) Marketing


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Questions

12/11/2013

You can submit your questions using the Questions area in the GoToWebinar console

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AIFMD Surgery Webinars

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Risk management – 26th November 2013 – 2pm GMTRegistration details coming soon!

DepositariesAnnex IVRemunerationMarketing

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aifmd surgery webinar vop and business plan

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