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CIR 8.12 Guidance

1. This section sets out the general requirements that apply to a Fund Manager, or where appointed the Trustee, of a Domestic Fund where it delegates or outsources any Financial Service activity or function to another Person. Such a Person is defined as a "Service Provider" for the purposes of this module.
2. Under Article 24 of the Law and Article 24 of the Investment Trust Law 2006, a Fund Manager or where appointed the Trustee of a Fund respectively may, subject to any restriction in the Constitution of the Domestic Fund and any provisions of the Rules, delegate any of its Financial Service activities or outsource any of its functions to a Service Provider, which may be located in or outside the DIFC.
3. Fund Managers of Domestic Funds structured as an Investment Company or Investment Partnership are required under CIR Rule 8.2.2(2) to delegate the activity of Providing Custody to an Eligible Custodian. This obligation does not apply where there are adequate alternative arrangements. This chapter sets out the circumstances in which the obligation under CIR Rule 8.2.2(2) does not apply.
4. A Fund Manager or Trustee 'outsources' a function relating to the operation of the Fund where the function, whether or not relating to a Financial Service activity, is contracted to be performed by a Service Provider. Where the extent of any such function or functions is such that they effectively constitute the carrying on of a Financial Service activity, the DFSA will consider this to comprise a 'delegation' of the Financial Service.
5. If the Fund Manager or the Trustee delegates any activities or outsources any functions, the Fund Manager or the Trustee remains liable to the Unitholders for any acts or omissions of the Service Provider as if they were the acts or omissions of the Fund Manager or Trustee.
6. The Rules permitting the use of a Service Provider do not relieve the Fund Manager or the Trustee from their obligations, including any restrictions on delegation or outsourcing arising from the Fund's Constitution or Prospectus.
7. Rules GEN 5.3.21 and GEN 5.3.22 also govern outsourcing of functions and activities by an Authorised Firm. Those Rules are not disapplied by this section.
Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]