FAQs

Investment FAQs

What is the major difference between open ended and closed ended collective investment (funds)?

Open ended collective investment schemes are investment vehicles which offer for sale without limitation, or have outstanding securities which investors are entitled to redeem on demand, subject to any applicable notice period. A closed ended investment scheme is a scheme under which the investors are not entitled under the terms of the scheme to have their units redeemed or repurchased by, or out of funds provided by the scheme, or to sell their units on an investment exchange, at a price related to the value of the property to which they relate.

How can collective investment schemes be constituted?

Open ended schemes and closed-ended schemes may be constituted as companies, incorporated cell companies, protected cell companies, unit trusts or limited partnerships. However, the use of a limited partnership for an open-ended scheme would require further discussion with the Commission. Incorporated and Protected cell companies are similar to umbrella schemes but are incorporated as companies not as unit trusts. The assets of each cell may not be combined with the assets of another cell and must be kept legally separate.

What legislation is in place to control the establishment of collective investment schemes in Guernsey?

Open ended and closed-ended schemes must be either authorised or registered under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended ("the Law") ​and entities conducting restricted activities in connection with controlled investment business must be licensed under the Law. The Commission has made a number of rules under the Law which set out the detailed requirements to be followed by all authorised schemes and licensees.

The major rules under the Law are:-

  • The Licensees (Conduct of Business) Rules 2016 (which cover all licensees including designated managers and designated custodians of schemes);
  • The Licensees (Capital Adequacy Rules) 2010 (which cover all licensees)
  • The Collective Investment Schemes (Class A) Rules 2002 (which cover Class A schemes);
  • The Authorised Collective Investment Schemes (Class A) Rules 2008;
  • The Authorised Collective Investment Schemes (Class B) Rules 2013 (which cover Class B schemes);
  • The Collective Investment Schemes Qualifying Professional Investors (Class Q) Rules 1998 (which cover schemes designed for qualifying professional investors);
  • The Authorised Closed-Ended Investment Schemes Rules 2008 (which cover authorised closed-ended investment schemes);
  • The Registered Collective Investment Schemes Rules 2015 (which cover open and closed-ended registered schemes);
  • The Prospectus Rules 2008 (which cover registered schemes and offers to the public).

What are the major differences between an authorised collective investment scheme and a registered collective investment scheme?

Under section 8 of the Law open-ended and closed-ended schemes can apply to be authorised or registered. However, registered collective investment schemes may be offered to regulated entities in Guernsey or offered to the public by entities appropriately licensed under the Law.

Both authorised and registered schemes must appoint a local licensed designated manager (administrator). The designated manager must conduct due diligence on the promoter of an authorised or registered scheme. However, in respect of a registered scheme the designated manager is required to certify at the time of the application that it has undertaken due diligence on the promoter of the registered scheme. The Commission has established clear guidelines of the minimum criteria for the due diligence to be undertaken by the designated manager. For further details refer to the Guidance on Registered Collective Investment Schemes.

The designated manager of a scheme must also sign a declaration confirming that the disclosures in the scheme’s prospectus/offer document or equivalent meet the requirements of the Prospectus Rules 2008.

The Commission attaches great importance to these warranties. It expects applicants to be able to demonstrate that they have documentary evidence to support the warranties given, and to be able to produce that evidence immediately should the Commission request it. Failure to support a warranty by supporting documentation might be taken into account by the Commission in assessing ongoing fitness and properness under schedule 4 to the Law. Consequently, because the designated manager has to provide these warranties to the Commission we are able to declare the scheme registered within three working days of receipt.

Whilst designated managers must conduct due diligence on the promoter of an authorised scheme, it is not required to provide warranties to the Commission. Instead there is a three stage application process for authorised schemes. For further details please refer to Applications for Closed-ended Collective Investment Schemes and Applications for Open ended Collective Investment Schemes.

What are the major differences between Class A, Class B and Class Q authorised open-ended collective investment schemes?

​Class A schemes are those which meet the Commission's Collective Investment Schemes Rules 2002 and are therefore eligible for recognition by the UK Financial Services Authority for sale to the public in the United Kingdom by virtue of Guernsey's designation under section 270 of the Financial Services and Markets Act 2000.

The rules for Class B schemes incorporate a measure of flexibility, consistent with meaningful investor protection, and are applied by the Commission exercising judgement and discretion and taking into account all the facts pertaining to a particular fund application. This policy recognises that Class B schemes range from the retail fund aimed at the "general public" via institutional funds to the strictly private fund established solely as a vehicle for investment by a single institution, and that their investment objectives and risk profiles are similarly wide-ranging. Accordingly, the rules do not incorporate specific investment, borrowing and hedging restrictions. This also allows for the possibility of new products without the need to amend the Commission's regulation.

Historically, a substantial number of Class B schemes have been targeted at institutional investors. The Class Q Rules seek to provide a clear and concise set of requirements for the operation of professional investor funds and have been designed to encourage innovation. Accordingly, the Rules place emphasis on disclosure of risks inherent in the investment vehicle, rather than prescription, simplified document requirements, timely processing of applications and no prescribed minimum subscription requirement. Since the introduction of the Class Q Rules in 1998 fund managers in Guernsey have taken advantage of the flexibility in regulations covering qualifying professional and sophisticated investors whilst Class B schemes continue to cater for the more innovative products.

Can Guernsey collective investment schemes be marketed to the public in any other countries?

​Although local legislation varies from jurisdiction to jurisdiction, it is the Commission's experience that the majority of countries distinguish between retail funds, aimed at the general public, and wholesale funds selling investment from institutions and / or their existing clients. In the case of wholesale funds, the requirements (if any) tend to be less onerous. This link will direct you to a schedule showing regulatory authorities who have been approached by the Commission showing the outcome / status of negotiations.

 

What continuing supervision of licensees and authorised/registered schemes is undertaken by the Commission?

Who can establish collective investment schemes in Guernsey?

There is a policy of selectivity which, in the context of open or closed ended schemes, means that great weight is given to the status of the intended promoters/sponsors. Only those of the first rank are encouraged and normally a demonstrable and favourable track record in the promotion of established collective investment schemes is required.

The authorisation of intended promoters/sponsors by regulatory authorities in other jurisdictions is not, in itself, generally sufficient. Subject to the foregoing, the Commission's policy is to be as flexible as possible and consistent with meaningful investor protection. The Commission is always prepared to meet potential promoters/sponsors or their professional advisers in order to discuss matters of policy and practice regarding proposed open or closed ended schemes.

Are Guernsey collective investment schemes covered by any compensation scheme?

​The Collective Investment Schemes (Compensation of Investors) Rules 1988 (as amended) provide for compensation for investors in Class A schemes of up to £5mn in any year. Subject to this limit, the maximum compensation payable per investor is 90% of the first £50,000 and 30% of the balance of up to £100,000 (i.e. a maximum total of £60,000). To date, no call has been made on the compensation scheme.

There is no compensation scheme covering investors in Class B schemes, Class Q schemes or closed ended investment schemes.​

What should not be regarded as a collective investment scheme for Guernsey purposes (albeit legal advice should always be sought)?

The following should not usually be regarded as collective investment schemes for Guernsey purposes:          

 Joint ventures: should not generally be regarded as collective investment schemes due to the joint venture governance model which allows all of the parties day-to-day control and discretion over the business and no external capital is being raised as the joint venture parties are themselves providing the capital.  The parties raising and providing the capital are the same.

 Carried interest vehicles: should not be regarded as a collective investment scheme because they are either classified as an employee participation scheme or because the capital contribution being made by the participants is so small that they cannot be regarded as in any real sense "investors" for the purposes of the collective investment scheme definition.

 Acquisition/holding company vehicles:  may fall outside the collective investment scheme definition because the vehicle is not raising capital but is just a means of deploying capital already raised.

 Single investment vehicle: a vehicle which is established to hold only one asset should not be regarded as a collective investment scheme because there is no investment management required in relation to the vehicle nor is there a defined investment policy.

 Single investor vehicle: a vehicle which has as its beneficial owner one individual or non-collective investment scheme vehicle may not be regarded as a collective investment scheme.

 

How should the auditor’s report on a licensee’s financial statements reflect the statement of financial resources?

Rule 4.2.1(d) of the Licensees (Conduct of Business) Rules 2016 requires the auditor’s report to contain a statement of financial resources certified by the auditor confirming that the appropriate financial resources requirement is satisfied. In practice, the licensee prepares the financial statements and within that there is a schedule detailing the financial resources requirement statement as required under the relevant Rules. Auditors merely make reference to it in their audit report. In the case of licensees falling under Rule 2.2.4 of the Licensees (Capital Adequacy) Rules 2010, the opinion is driven by the directors and not the auditors.

Do I need a licence to promote collective investment schemes to the public in Guernsey?

The promotion of controlled investments (as defined in the POI Law) is a restricted activity and requires a licence if carried on in or from within the Bailiwick, unless one of the statutory exemptions applies. 

A firm with a main place of business in a country or territory that has been designated for the purposes of section 29(1)(c) of the POI Law* promoting collective investment schemes (as described in category 1 and category 2 of Schedule 1 to the POI Law) to the public in the Bailiwick of Guernsey does not require a licence provided that the following requirements are met:

(a)    The firm does not have a permanent place of Business within the Bailiwick;

(b)    The firm is an entity established in a country or territory designated for the purposes of section 29(1)(c) and has provided evidence that it is recognised as a national of that Designated Country or Territory;

(c)    The collective investment scheme falls within the categories specified in the Designated Countries & Territories Regulations that make designations in respect of section 29(1)(c);

(d)    The promotion is carried out in accordance with the laws of that Designated Country or Territory;

(e)    Prior notice is given to the Commission by completion of a Form EX and submission of the requisite documentation (here); and  

(f)     The Commission has issued confirmation of the exemption.

An overseas promoter does not require a POI licence if it engages the services of a person licensed to carry on promotion in Guernsey (the POI licensee) and the POI licensee carries out the promotion in Guernsey on the overseas promoter’s behalf, provided that the overseas promoter enters into the service contract with the POI licensee outside of the Bailiwick. 

Where restricted activities are conducted by a firm without a base in the Bailiwick of Guernsey at the initiation of the client, i.e. on a reverse solicitation basis, then a licence is not required. 

Promotion of collective investment schemes to regulated entities in the Bailiwick of Guernsey may be exempt from licensing in certain circumstances – for further details please see the FAQ below.

Promotion of collective investment schemes under any other circumstances in, or from within, the Bailiwick of Guernsey will require a licence under the POI Law.  Please contact the Commission or seek legal advice if you are unsure of your position.

The Commission reminds firms that, in addition to the direct penalties for unlicensed promotion set out in the POI Law, any contract with an investor which is entered into in the course of carrying on controlled investment business (as defined in the POI Law) in contravention of the POI Law may be unenforceable, and the investor may be entitled to a return of any subscription monies paid.

*The designations for the purposes of section 29(1)(c) of the POI Law are contained in the Investor Protection (Designated Countries and Territories) Regulations, 1989; the Investor Protection (Designated Countries and Territories) (Republic of Ireland) Regulations, 1992; and the Investor Protection (Designated Countries and Territories) (Amendment) (AIFMD) Regulations, 2015.  Copies of these can be found at www.guernseylegalresources.gg.

 

Do I need a licence to promote services to the public or to an entity regulated in Guernsey?

The promotion of services is not a restricted activity under the POI Law and does not require a POI licence.

Do I need a licence to promote controlled investments, including collective investment schemes to the public in Guernsey?

The promotion of controlled investments (as defined in the POI Law) is a restricted activity and requires a licence if carried on in or from within the Bailiwick, unless one of the statutory exemptions applies. 

An overseas promoter does not require a POI licence if it engages the services of a person licensed to carry on promotion in Guernsey (the POI licensee) and the POI licensee carries out the promotion in Guernsey on the overseas promoter’s behalf, provided that the overseas promoter enters into the service contract with the POI licensee outside of the Bailiwick.

Where restricted activities are conducted by a firm without a base in the Bailiwick of Guernsey at the initiation of the client, i.e. on a reverse solicitation basis, then a licence is not required.

Promotion of controlled investments to regulated entities in the Bailiwick of Guernsey may be exempt from licensing in certain circumstances – for further details please see the FAQ below.

Promotion of controlled investments under any other circumstances in, or from within, the Bailiwick of Guernsey will require a licence under the POI Law.  Please contact the Commission or seek legal advice if you are unsure of your position.

The Commission reminds firms that, in addition to the direct penalties for unlicensed promotion set out in the POI Law, any contract with an investor which is entered into in the course of carrying on controlled investment business (as defined in the POI Law) in contravention of the POI Law may be unenforceable, and the investor may be entitled to a return of any subscription monies paid.

Do I need a licence to promote controlled investments to an entity regulated in Guernsey?

The promotion of controlled investments (as defined in the POI Law) is a restricted activity and requires a licence if carried on in or from within the Bailiwick, unless one of the statutory exemptions applies. 

A firm with a main place of business in one of the countries or territories designated for the purposes of section 29(1)(cc) of the POI Law* promoting controlled investments (as described in category 1 and category 2 of Schedule 1 to the POI Law) to certain licensed entities in the Bailiwick of Guernsey does not require a licence provided that the following requirements are met:

(a)          The firm does not have a permanent place of Business within the Bailiwick;

(b)          The firm is an entity established in a country or territory listed in the first column of the Schedule to the Investor Protection (Designated Countries and Territories) (Bailiwick of Guernsey) Regulations, 2017;

(c)          The promotion is carried out in accordance with the laws of that Designated Country or Territory;

(d)          The promotion is only carried out to these licensed entities are persons licensed to carry on business under any of the following laws:

(i)           the POI Law;

(ii)          the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000;

(iii)         the Banking Supervision (Bailiwick of Guernsey) Law, 1994;

(iv)         the Insurance Business (Bailiwick of Guernsey) Law, 2002, or

(v)          the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002. 

(e)          Written notice of the date from which the firm intends to carry out the promotional activity is given to the Commission by completion of the following webpage form; (here)

An overseas promoter does not require a POI licence if it engages the services of a person licensed to carry on promotion in Guernsey (the POI licensee) and the POI licensee carries out the promotion in Guernsey on the overseas promoter’s behalf, provided that the overseas promoter enters into the service contract with the POI licensee outside of the Bailiwick.

Where restricted activities are conducted by a firm without a base in the Bailiwick of Guernsey at the initiation of the client, i.e. on a reverse-solicitation basis, then neither a licence nor a notification is required.

*The regulations setting out the Designated Countries and Territories for the purposes of s29(1)(cc) of the POI Law are set out in the Investor Protection (Designated Countries and Territories) (Bailiwick of Guernsey) Regulations, 2017.  A copy of these regulations can be found at www.guernseylegalresources.gg 

What is the Commission’s view on marketing campaigns originating from outside the jurisdiction?

The definition of promotion in the POI Law is as follows:

(a)    advertising,

(b)    issuing a prospectus, application form or proposal form,

(c)    circulating or making available promotional material.

To be a restricted activity (requiring a licence or exemption) the promotion must be carried on in or from within the Bailiwick of Guernsey. 

Ultimately interpretation of the law is a matter for the Courts and not the Commission however, it is the Commission’s view that marketing campaigns that do not originate from within the Bailiwick and do not specifically target Bailiwick residents (but might include the Bailiwick as part of a wider population) are unlikely to constitute a restricted activity.  Please contact the Commission or seek legal advice if you are unsure of your position.

What is the position of overseas firms who have previously relied on the Commission’s Guidance Notes issued in 2000 and 2001?

The Commission recognises that the 2000 Guidance Note on the Promotion of Investments under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, and 2001 Protection of Investors (Bailiwick of Guernsey) Law, 1987 Promotional Activities Policy Guidance issued by the Commission created a legitimate expectation for firms that promotion of controlled investments by overseas firms to licensed entities did not require a licence.  Therefore, the Commission has no intention of taking action against firms who reasonably acted in reliance on those Guidance Notes.

The Guidance Notes have now been removed from the Commission’s website and should not be relied upon.

What is the process to change the parties to a registered collective investment scheme?

A change to a designated person of a registered collective investment scheme requires a formal variation of the scheme’s registration. Please refer to the guidance here.

A change to the name or address of one of the following parties to the scheme must be notified to the Commission immediately:

  • Designated administrator
  • Designated custodian
  • Directors
  • Secretary
  • General partner and directors of managing general partner
  • Trustee of a unit trust and director of a trustee
  • Auditors
  • Legal advisers
  • Principal bankers

The notification to investors of any of the above changes must be registered by the Commission before it can be circulated to investors.

Where appropriate, the notification to the Commission should include a warranty by the designated administrator that they are content that the disclosures in the notification meet the requirements of the Prospectus Rules 2018.

Private Investment Fund FAQs

What application forms are required?

Typically, only a single form is required to be submitted. There are three different application forms, one for each application route. In the case of a Route 1 PIF, the Application Form combines the application form for the PIF and the Licensed Manager.  For Routes 2 and 3, there is no requirement to appoint a manager which is licensed under the POI Law. However, if one is to be appointed to a scheme applying under Routes 2 or 3, then an additional application form will be required. Further details of the application process can be found here.

 

What fees are required to be submitted with the Form PIF?

For all application routes, a fee for the Private Investment Fund is required (this is the Application Fee for a Collective Investment Scheme). For Route 1 applications, a fee for the Licensed Manager is also required (this is the Application Fee for either a Principal Manager of authorised or registered open-ended collective investment schemes or a Manager of authorised or registered closed-ended collective investment schemes). For Route 2 or 3 applications, there is no requirement to appoint a manager which is licensed under the POI Law.  However, if one is to be appointed to a scheme applying under Routes 2 or 3, and it is not already licensed, then this entity will also be subject to a new licence application fee.

The current fees may be found here. Annual fees apply to the Private Investment Fund and a Licensed Manager, where one is appointed, and at the point of licensing/registration these fees are pro-rated.

For a Route 1 PIF, what is the Commission’s expectation when the Licensed Manager completes the declaration on the ability of the investors to assume loss?

The philosophy of the Route 1 PIF is a close relationship between investors and management; therefore, it is not an unreasonable representation for the Licensed Manager to make. If the Licensed Manager is not willing to complete the declaration then clearly the Private Investment Fund is not the product for them.

The Commission is not prescriptive as to how the Licensed Manager satisfies itself as to the ability of the investors to sustain loss.  The Commission would accept the use of a form of declaration from the investor to the Manager providing this was not the sole due diligence performed. Nor has the Commission stipulated a minimum subscription amount as this also would not in our view be a strong determinant in demonstrating the ability of an investor to sustain loss. See the next FAQ for further examples of how the declaration may be satisfied.

As stated above the Commission expects the relationship to be sufficiently close to allow for other measures to be used by the Licensed Manager to affirm that the investors could suffer loss. The Commission, whilst not imposing rules on the Licensed Manager of the Private Investment Fund, sees its role as one of substance in the discharging of corporate governance. The philosophy is that the manager through its relationship with the promoter, will have a relationship with the investors. The Commission acknowledges that the burden on the manager to affirm an investor's ability to sustain loss can only fall at the time the subscription is made.

The Commission will treat any failures in the process leading to the signing of such declaration extremely seriously.

It is not the intention of the Commission for this requirement to apply to the Designated Administrator of a PIF which is applying via Route 1. It is difficult to see how a Designated Administrator can have this relationship at the outset, and therefore the regime does not anticipate it being able to fulfil this role. Hence the requirement is placed on the Licensed Manager of Route 1 PIF applicants.

Examples of how the Route 1 PIF Licensed Manager’s declaration on the ability of the investors to assume loss may be satisfied.

  • Investor has a genuine close relationship with the promoter/manager through previous deals.
  • Complete an investor log/memorandum/assessment form to consider some or all of the following information:

Personal information (name, address, occupation etc.);

an explanation of the relationship between the manager/promoter and the investor;

the investor’s background, including how they amassed their wealth, details of financial standing e.g. details of annual income, net worth, their experiences as an investor including details of similar investments, the overall value of their portfolio and the value of their liquid net assets;

a description of the investor’s size and their governance regime (if corporate entity or equivalent);

how liquid is the investment;

information about the investor’s attitude to risk and their capacity for loss.

  • Minimum subscription be set at a level that would deter investors not able to sustain potential losses should they occur.
  • A prospectus issued in which the investment strategy and risks are clearly defined, which investors acknowledge, by way of a declaration, that they have read and understand when they subscribe to the fund.

 The investor log/memorandum/ assessment form could be supported by a variety of documents obtained from the investor or from public sources which may include:

  • A copy of their latest tax return;
  • If investing through a corporate vehicle or equivalent a copy of the latest audited accounts;
  • A certificate from their accountant as to their net worth;
  • A certificate from their accountant as to the proportion of their net worth that is going to be invested;
  • Any certificate provided in the last 12 months under the regulatory requirements of their jurisdiction of residence or domicile as to their status as an investor (i.e. as a professional or sophisticated investor).

For a Route 1 PIF, what restricted activities will the Licensed Manager require?

Upon application via the submission of the Application Form PIF Route 1, the Licensed Manager will be licensed at least for the restricted activity of Management and any other restricted activity to be determined by the applicants. Any additional restricted activities should be detailed on the Application Form PIF Route 1.

How many investors can there be in a Private Investment Fund?

Route 1 PIF – the PIF should contain no more than 50 legal or natural persons holding an ultimate economic interest in the private investment fund, save in the instance where the investment is made by an investment manager acting as agent for investors in a collective investment scheme or equivalent, pension holders in an occupational pension scheme, or government funds – whether local or sovereign.

Route 2 PIF – the PIF should contain no more than 50 legal or natural persons holding an ultimate economic interest in the private investment fund. The number of offers of units for subscription, sale or exchange must not exceed 200. This is not intended to capture pre-marketing material.

Route 3 PIF – there is no restriction on the total number of investors, although this number will be constrained by the relevant family relationship.

Can the Private Investment Fund be open-ended?

Yes.

However, for a Route 1 PIF excepting a period of one year commencing from the date of first subscription, there is a "rolling test" applied on a continuous basis. In the previous twelve months, the Private Investment Fund can add no more than 30 new ultimate investors. This test must be applied and evidenced by the Licensed Manager of the Private Investment Fund. The Manager shall keep a record of such tests. For the avoidance of doubt at all times the maximum number of investors allowed is 50 as defined in FAQ 6 above.

For a Route 2 PIF the number of offers of units for subscription, sale or exchange must not exceed 200 and the number of investors must be no more than 50 persons.

Is there a minimum subscription?

No, there is no minimum subscription requirement.

Do the AML/CFT obligations apply to the Private Investment Fund Regime?

Yes. The Private Investment Fund itself is not a Financial Services Business (FSB) so either the Licensed Manager or the Designated Administrator acting for the PIF will be responsible for ensuring the obligations under the AML/CFT regulations and handbook are adhered to. Where a Licensed Manager is appointed it will be considered an FSB and will be required to have a MLRO and MLCO appointed to it and will be required to produce a Business Risk Assessment.

Can the Private Investment Fund be legally structured as a Protected Cell Company or a Incorporated Cell Company?

Yes, a Private Investment Fund may be legally structured as either a Protected Cell Company or an Incorporated Cell Company, as alternatives to a Limited Company, a Limited Partnership or a Limited Liability Partnership.

In the case of either a Protected Cell Company or a Incorporated Cell Company, for Route 1 and Route 2, the relevant investor restrictions shall apply to each individual cell.

Investment in each Route 3 PIF is restricted to a single family relationship irrespective of the structure of the fund vehicle.

What are the requirements in respect of new declarations for each new cell, sub-fund or share class of a PIF?

In the case of a Route 1 PIF the Licensed Manager is required to provide a new declaration for each new cell, sub-fund or share class of the PIF, whether open-ended or closed-ended.

For all PIF Routes it will not be necessary for the Designated Administrator to give a new declaration in respect of each new cell/sub-fund/share class, as their original declaration relates to the fund. The Designated Administrator will, however, be obliged to notify the Commission if they are no longer satisfied that the Licensed Manager (promoter) is fit and proper. This obligation applies at all times throughout the life of the PIF.

In the case of open-ended PIFs, for all Routes, the relevant fee should also be submitted in respect of each new cell, sub-fund or share class.

Class B FAQs

The Class B Rules FAQs arises from the introduction of The Authorised Collective Investment Schemes (Class B) Rules, 2013 (the Class B Rules) with effect from 2 January 2014

The Commission has received enquiries regarding the application of derogations granted under The Collective Investment Schemes (Class B) Rules 1990 (“Class B Rules 1990”).

The Commission proposes that the same approach be taken as that used in respect of derogations of The Licensees (Conduct of Business) Rules, 2009 and the Licensees (Capital Adequacy) Rules, 2010.  Therefore, the Commission requests that designated managers and designated custodians/trustees of Class B collective investment schemes assess whether or not they still require derogations granted under the Class B Rules 1990.   Should a derogation still be required, then a request, including the rationale,  must be made to the Commission to derogate or modify the application of the Class B Rules 2013 by no later than 2 January 2015.  This is the same period as set out in the transitional provisions in Rule 10.02(2) of the Class B Rules. 

For the avoidance of doubt, the Commission considers that the existing derogations granted under the Class B Rules 1990 will remain in place until the earlier of the following two dates:

1)      The date that a derogation is granted pursuant to the Class B Rules 2013; or

2)      2 January 2015.

It is considered that the revised derogation requests could be dealt with at the same time as submitting to the Commission the updated scheme particulars to comply with the schedule to the Class B Rules 2013.   Updated scheme particulars and derogation requests pursuant to the Class B Rules 2013 can be submitted by e-mail to [email protected]

Do Rules 2.08(9) and 2.08(10) also cover administration and/or custodian fees (if the administrator and/or custodian is in the same group as the principal manager or adviser)?

​No.  Rules 2.08(9) and 2.08(10) are intended to cover management or advisory charges, however described and prescribed, in order to prevent double-charging thereon by those who are making, or advising on, investment decisions.  The exception to this is in respect of feeder fund structures, as described at Rule 2.08(11) – in which case the fee structure should be fully disclosed.