CIR 12A.1 CIR 12A.1 Meeting the conditions to be classified as a Qualified Investor Fund
CIR 12A.1 Guidance1. Article 16(2) of the Law provides that a
Domestic Fundmay be constituted as a Qualified Investor Fundonly if it satisfies all of the conditions in Article 16(5). Article 16(5) provides that a Qualified Investor Fundmust:a. have its Unitsoffered to persons only by way of Private Placement;b. have only Unitholderseach of whom meets the criteria to be classified as a Professional Client; andc. have an initial subscription to be paid by a person to become a Unitholderin the Fundof at least US$500,000.2. The definition of "Professional Client" is set out in Rule 18.104.22.168. Generally a firm will not be able to undertake mass marketing activities relating to Unitsof Qualified Investor Fundsbecause such marketing would not meet the Private Placementrequirement, and would be likely to amount to a public offer, which can only be made in respect of a Unitof a Public Fund.
CIR 12A.1.1(1) A
Fundmay be classified as a Qualified Investor Fundonly if it fulfils the conditions in Article 16(5) of the Law at the inception of the Fundand on an on-going basis.(2) A Fund Managermust ensure that a Fundwhich is or is intended to be established and operated as a Qualified Investor Fundmeets the conditions in Article 16(5) of the Law both at the inception of the Fundand on an on-going basis.(3) For the purposes of (2), where a Fund Managermakes arrangements with other Authorised Firmsor Personsin other jurisdictions to Offerto issue or sell the Unitsof a Qualified Investor Fund, then it must take reasonable steps to ensure that those Authorised Firmsor other Persons do not Offerto issue or sell the Unitsin a manner that would result in a breach of the conditions in Article 16(5) of the Law.(4) As soon as a Fund Managerbecomes aware that a Qualified Investor Fundit manages no longer meets or is likely not to meet the conditions in Article 16(5) of the Law, it must immediately:(a) commence proceedings relating to the winding up of the Fund, or alternatively, take necessary steps to have the Fundreconstituted as an Exempt Fundor registered as a Public Fund; and(b) notify the DFSAof that fact and the measures it has taken and proposes to take under (a).[Added] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]