(c) An Administrator of a Fund must maintain records which are sufficient to show and explain transactions in relation to each of the specific activities and functions which are being provided to each Fund, in respect of Unitholders or potential Unitholders of the Fund as appropriate. The records must be retained by the Administrator for at least 6 years from the date to which they relate and at all reasonable times, open to inspection by the Fund Manager, the Fund's auditor and the AFSA and, if requested by the AFSA, be capable of reproduction within a reasonable period not exceeding 3 days, in hard copy and in English.
8.6. Contents of an administration agreement
An administration agreement with an Administrator in respect of a Fund must:
(a) set out the functions and service standards that will be applied to the provision of the administration of the Fund; and
(b) must not permit the delegation of the activities and functions of the Administrator without the prior written consent of the Fund Manager; and
(c) require the Fund Administrator to retain any relevant work or records relating to its activities and functions where the contract is terminated either by the Fund Manager or the Administrator.
8.7. Requirements for notification
The AFSA must be notified when a Person ceases to be an Administrator or Eligible Custodian, and any Offering Materials must be updated accordingly.
9. RULES REGARDING DEALINGS IN OPEN-ENDED FUNDS AND LIQUIDITY
This chapter applies to:
(a) all Funds managed by Domestic Fund Managers; and
(b) all Exempt Funds managed by Foreign Fund Managers.
9.2. Pricing of Units of open-ended Funds
(a) A Fund Manager of an open-ended Fund must take all reasonable steps and exercise due diligence to ensure that the Units in the Fund are correctly priced in accordance with the applicable accounting procedures and the valuation policies of the Fund to ascertain an accurate single price for a Unit.
(b) The price of a Unit must be calculated in a manner that is fair and reasonable as between Unitholders.
(c) A Fund Manager must take immediate action to rectify any incorrect pricing of Units. Unless the incorrect pricing is of minimal significance, the Fund Manager must promptly inform the AFSA, and if appointed, the Eligible Custodian of the Fund, of such a rectification.
9.3. Suspension of dealings in Units
(a) A Fund Manager may, in the case of an open‐ended Fund, temporarily suspend the issue, cancellation, sale and redemption of Units («dealings in Units») in the Fund in accordance with the Constitution of the Fund where due to exceptional circumstances it is in the interest of the Unitholders in the Fund to do so.
(b) The Fund Manager may continue the suspension of dealings in Units only for so long as it reasonably believes that the suspension is in the interests of the Unitholders of the Fund.
(c) Upon any suspension of dealings in Units, the Fund Manager must notify the Unitholders of the Fund and the AFSA as soon as practicable in writing of the suspension and its reasons for doing so.
10. AUDIT, FINANCIAL AND VALUATION REQUIREMENTS
This chapter applies to:
(a) all Funds managed by Domestic Fund Managers; and
(b) all Exempt Funds managed by Foreign Fund Managers,
except that:
(і) Rule 10.4 applies to Non-Exempt Funds and Real Estate Investment Trusts only; and
(ii) Rule 10.5 applies to Non-Exempt Funds only.
A Fund Manager must ensure that each Fund that it manages prepares financial statements for each financial year of the Fund in accordance with International Financial Reporting Standards (IFRS) or US GAAP.
(a) A Fund Manager must ensure that each Fund that it manages keeps accounting records that are:
(і) sufficient to show and explain transactions undertaken by the Fund; and
(ii) capable of determining the financial position of the Fund on an on-going basis; and
(iii) record the financial position of the Fund as at its financial year end.
(b) The Accounting Records must be:
(і) retained by the Fund Manager or Fund for at least six years from the date to which they relate;
(ii) at all reasonable times, open to inspection by the AFSA and the auditor of the Fund; and
(iii) capable of reproduction, within a reasonable period not exceeding 3 business days, in hard copy and available in English.
10.4. Auditor of a Non-Exempt Fund and a Real Estate Investment Trust
(a) Every Non-Exempt Fund and Real Estate Investment Trust must appoint an external auditor to conduct an audit of the Fund's annual financial statements in accordance with the requirements of the relevant standards published by the International Auditing and Assurance Standards Board (IAASB) and to produce an auditor's report on those audited financial statements.
(b) A Fund Manager must prior to the appointment of the auditor, take reasonable steps to ensure that the auditor has the required skills, resources and experience to audit the type of Non-Exempt Fund and/or Real Estate Investment Trust for which the auditor has been appointed.
(c) A Fund Manager must notify the AFSA of the appointment, resignation or termination of an auditor of a Non-Exempt Fund or a Real Estate Investment Trust.
(d) A Non-Exempt Fund and a Real Estate Investment Trust must appoint an auditor to fill any vacancy in the office of auditor and ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as reasonably practicable.
(e) A Non-Exempt Fund and a Real Estate Investment Trust must take reasonable steps to ensure that the auditor and the relevant audit staff of the auditor are independent of, and not subject to, any conflict of interest with respect to the Fund Manager or any other service provider to the Fund.
(f) A Fund Manager must notify the AFSA if it or any Non-Exempt Fund or Real Estate Investment Trust that it manages becomes aware, or has reason to believe, that the auditor or the relevant audit staff of the auditor of the relevant Non-Exempt Fund or Real Estate Investment Trust are no longer independent of the Fund Manager or any other service provider to the Non-Exempt Fund or Real Estate Investment Trust, or have a conflict of interest which may affect their judgement in respect of the Non-Exempt Fund or Real Estate Investment Trust.
(g) A Fund Manager must take reasonable steps to ensure that it and its employees:
(і) provide any information to the Non-Exempt Fund's or Real Estate Investment Trust's auditor that the auditor reasonably requires, or is entitled to receive as auditor;
(ii) give the auditor right of access at all reasonable times to relevant records and information within its possession regarding the Fund and allow the auditor to make copies of those records and information;
(iii) do not interfere with the auditor's ability to discharge its duties in respect of the Non-Exempt Fund or Real Estate Investment Trust;
(iv) report to the auditor any matter which may significantly affect the financial position of the Non-Exempt Fund or Real Estate Investment Trust; and
(v) provide such other assistance as the auditor may reasonably request it to provide.
(h) A Fund Manager must, in writing, require any Person to whom the Fund Manager has delegated or outsourced any functions to co‐operate with the Non-Exempt Fund's or Real Estate Investment Trust's auditor in accordance with the provisions specified in (g).
10.5. Periodic Reports of Non-Exempt Funds
(a) Each Non-Exempt Fund must produce an annual report and interim report in respect of each of its accounting periods.
(b) An annual report must be produced within four months after the end of each annual accounting period for the Non-Exempt Fund.
(c) An interim report within one month after the end of each interim accounting period for the Non-Exempt Fund.
(d) Each annual and interim report of a Non-Exempt Fund must:
(і) be available free of charge to the Non-Exempt Fund's Unitholders;
(ii) be available in English; and
(iii) be sent to the AFSA.
(e) The annual and interim report for a Non-Exempt Fund must be clear, complete and true and contain information for the relevant period and must include:
(і) the name of the Non-Exempt Fund, its investment objective and investment policy;
(ii) a brief assessment of the Non-Exempt Fund's risk profile;
(iii) a review of the Non-Exempt Fund's investment activities and investment performance during the period;
(iv) sufficient information to enable Unitholders to form a view on where the Non-Exempt Fund's property is invested at the end of the period and the extent to which that has changed over the period; and
(v) any other significant information which would reasonably enable Unitholders to make an informed judgment on the activities of the Non-Exempt Fund during the period and the results of those activities at the end of the reporting period.
(f) An annual report of a Non-Exempt Fund must contain:
(і) the full audited financial statements of the Fund for the annual accounting period; and
(ii) the auditor's report on the financial statements; and
(iii) a report of the Fund Manager containing the following information:
(A) a review of the Non-Exempt Fund's investment activities during the period to which the report relates; and
(B) particulars of any significant change to the Non-Exempt Fund since the date of the last report; and
(C) any other information which would enable Unitholders to make an informed judgment on the development of the activities of the Non-Exempt Fund during the relevant period and the results of those activities as at the end of that period; and
(D) for a Non-Exempt Fund which invests a substantial proportion of its assets in other Funds, a statement as to the maximum proportion of management fees charged to the Non-Exempt Fund itself and to other Funds in which that Fund invests.
10.6. Valuation of Fund property
(a) A Fund must have comprehensive and well documented valuation policies and procedures in place to ensure the production of timely and accurate valuation of the Fund and Units of the Fund.
(b) A Fund Manager must ensure that the investment portfolio of each Fund managed by that Fund Manager is valued at regular intervals as appropriate to the nature of the Fund, market practice and investor expectations, and in accordance with the valuation procedures set out in the Fund's Constitution or Offering Materials, except where such valuation is suspended in any circumstances that are set out in the Fund's Constitution or Offering Materials.
(c) A Fund Manager must ensure that as soon as practicable after each valuation point for each Fund it manages, the Fund notifies Unitholders of the value per Unit of the Fund.
(d) Where required by these Rules, a Fund Manager must appoint an independent third party valuer which is expert in valuing the type of investments held by the Fund to value the Fund's investments.
SCHEDULE 1: CONTENT REQUIREMENTS FOR CONSTITUTION
The Constitution of a Non-Exempt Fund must contain all of the information specified below:
(a) the name of the Fund;
(b) the Fund Manager’s name and its principal place of business;
(c) a statement that the Fund is a Domestic Fund, the Constitution of which is governed by the laws of the AIFC;
(d) the legal form of the Fund and whether it is open- or closed-ended;
(e) a statement to the effect that:
(і) the Fund Manager is responsible for all operations concerning the Fund and may from time to time delegate activities or outsource functions, but not the responsibility for conducting those activities and functions, to another Person in accordance with these Rules; and
(ii) the Fund Property is entrusted to the Fund Manager and the Fund Manager remains responsible for the property even when an Eligible Custodian holds the legal title to the Fund Property;
(f) if the duration of the Fund is limited, the length of such duration;
(g) a statement that fees, charges and other expenses of the Fund may be taken out of Fund Property and the basis for determination of the amount of such fees, charges and other expenses;
(h) the maximum and minimum sizes of the Fund's capital, if any;
(і) a statement that a Unitholder is not liable:
(і) for the debts of the Fund, unless the applicable legislation prescribes otherwise and, if so, those circumstances;
(ii) to make any further payment after he has paid the price of his Units and that no further liability can be imposed on him in respect of the Units he holds;
(j) information on the investment objectives of the Fund, including:
(і) whether the aim of the Fund is to spread investment risks and, if a Property Fund, whether the Fund invests in a single property;
(ii) the types of Investments or assets in which it and (where applicable) each Sub-Fund may invest; and
(iii) if the Fund is a specialist class of Fund, the class of Fund;
(k) details of any investment, borrowing or stock lending restrictions or, in the event that there are no such restrictions, a statement to that effect;
(l) a statement specifying:
(і) the classes of Units which the Fund may issue; and
(ii) the rights attaching to Units of each class (including any provisions for the expression in two or more denominations of such rights);
(m) details as to:
(і) the provisions relating to any restrictions on the right to redeem Units in any class; and
(ii) the circumstances in which the issue of the Units of any particular class may be limited;
(n) details of who is carrying out the calculation, transfer, allocation and distribution of income for any class of Unit issued and outstanding during the accounting period;
(o) information regarding the provision for the payment of income, if any, and the date on which such distribution shall be made;
(p) a statement specifying the base currency of the Fund;
(q) details of the procedures for the convening of meetings and the procedures relating to resolutions, voting and the voting rights of Unitholders;
(r) details of oversight arrangements;
(s) details as to:
(і) the grounds under which the Fund Manager may initiate a suspension of the Fund and any associated procedures; and
(ii) the methodology for determining the rights of Unitholders to participate in the Fund Property on winding up;
(t) details of the manner in which amendments to the Constitution may be made;
(u) a statement that nothing in the Constitution has the effect of exempting the Fund Manager from any liability to Unitholders imposed under AIFC law and the Rules; and
(v) details of those matters which enable the Fund, Fund Manager or any Person providing the oversight function of the Fund to obtain any privilege or power conferred by the Rules which is not otherwise provided for in the Constitution.
SCHEDULE 2: RECOGNISED JURISDICTIONS
(a) The AFSA will consider eligibility criteria when determining the assessment of a Recognised Jurisdiction, namely whether:
(і) the jurisdiction is listed as a Non-Compliant Country or Territory by the Financial Action Task Force;
(ii) the jurisdiction complies with OECD standards for the exchange of tax information, including adherence to multilateral agreements in respect of the exchange of information;
(iii) the jurisdiction's financial services regulatory regime achieves broadly similar outcomes to that of the AFSA; and
(iv) the jurisdiction has appropriate co-operation arrangements in place with the AFSA to ensure co-operation including the exchange of information between regulatory authorities.
(b) The AFSA will publish on its website a list of Recognised Jurisdictions that it considers as having met the eligibility criteria in (a).
(c) The AFSA may determine that a jurisdiction no longer satisfies one or more of the eligibility criteria in (a), and that jurisdiction will cease to be a Recognised Jurisdiction and may be removed accordingly from the list of Recognised Jurisdictions on the AFSA's website.
SCHEDULE 3: ACCEPTABILITY ASSESSMENT
The AFSA will consider whether a non-AIFC jurisdiction is acceptable by assessing the following factors, after the Foreign Fund Manager has submitted documentation:
(a) containing a comparative analysis of its jurisdiction's regulatory regime in relation to Funds and Fund Managers compared with that of the AFSA;
(b) that identifies any gaps between the home state and the AFSA's fund management and regulatory regimes; and
(c) demonstrates the controls intended to remedy any gaps identified in order to satisfy the AFSA's regulatory requirements.