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Kinetic partners aifmd valuation and reporting issues - 26 nov 2014


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AIFMD Valuation and Reporting

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Kinetic partners aifmd valuation and reporting issues - 26 nov 2014

  1. 1. 1 1 AIFMD Valuation and Reporting issues Winter 2014
  2. 2. 2 2 A global firm: built on servicing client needs Since 2005, we have provided service to over 1300 firms in the UK, US and HK. Connected with financial services 170 people Award winning 1300 clients Est. 2005 8 global offices in key centres
  3. 3. 3 3 Where we operate
  4. 4. 4 4 Our services Audit & assurance Corporate recovery Forensic services Consulting Regulatory compliance Due diligence Risk consulting & monitoring Tax services connected. focused. expert.
  5. 5. 5 5 A definition of the valuation function • Valuing the portfolio assets of an AIF • The exercise of subjective judgement (where necessary) on the valuation of individual assets and liabilities • Multiple parties can be involved in particular stages of the process • The final determination of an individual portfolio’s assets value is considered to be undertaking the ‘valuation function’
  6. 6. 6 6 Undertaking the valuation function The following entities can undertake the value function: • The AIFM, provided that the valuation task is functionally independent from the portfolio management and the remuneration policy ensures conflicts are managed • An External Valuer, provided that the entity is independent from the AIF, the AIFM or any other persons with close links to the AIF or AIFM
  7. 7. 7 7 Valuation Responsibility • The AIFM is ultimately responsible for the valuation of each of the AIF’s assets irrespective of the appointment of External Valuers • The AIFM’s liability towards the AIF and its investors is not affected by the fact that the AIFM has appointed an External Valuer
  8. 8. 8 8 When is it functionally independent? When will an AIFM valuation function be considered to be functionally independent from portfolio management? When those involved in the valuation: • Are not supervised by those responsible for the performance of the portfolio management function of the AIFM • Are not engaged in the performance activities of the portfolio management function • Are compensated in accordance with the achievement of the objectives linked to that function, independently from the performance of the portfolio management function.
  9. 9. 9 9 Who may appoint an External Valuer? • Either the AIFM or AIF can appoint an External Valuer, to one or more of the AIF’s assets. • Notwithstanding the AIF appointing the External Valuer, the AIFM remains liable to the AIF and its investors for the valuation of each and every asset of the AIF.
  10. 10. Annex IV Reporting © Kinetic Partners LLP 2010
  11. 11. 11 11 Background to Annex IV reporting obligation • Obligation derived from Article 24 AIFMD • To provide greater transparency in relation to alternative investment funds • Aims to protect and enhance the integrity of the financial system • Reporting on both AIFM and AIFs
  12. 12. 12 12 What type of Firms must make Annex IV reports? • Authorised EEA AIFMs • Non-EEA AIFMs which manage and market EEA or non-EEA AIFs in the EEA • Small Registered or Authorised AIFMs which qualify for exemption under Article 3 of the AIFMD as managing AIFs below the €100m/€500m thresholds
  13. 13. 13 13 When will the first report be due? • Reporting commences after: • Date of authorisation as an AIFM for Full Scope EEA AIFMs or Small Authorised AIFMs • Date of notification of marketing an AIF in an EEA state for non-EEA AIFMs • Date of registration for Small Registered AIFMs • Reporting starts on first day of following quarter and ends at end of first relevant period • Reporting periods aligned with calendar year
  14. 14. 14 14 Annex IV report contents • Article 24(1) – information about the AIFM and the main instruments traded and important concentrations • Article 24 (2) – detailed information for each AIF managed/marketed • Article 24 (4) – applicable to firms employing leverage on a substantial basis
  15. 15. 15 15 What should Firms be doing now? • Establish what their reporting obligation is • Identify what information they need to collate/obtain • Ensure they understand guidance on reporting • Establish the process of reporting at relevant NCAs – if in UK check GABRIEL shows correct reporting schedule • Ensure adequate processes and controls are implemented at the firm • Undertake testing of processes and controls
  16. 16. Any questions? © Kinetic Partners LLP 2010
  17. 17. 17 17 Contact us London One London Wall Floor 10 London EC2Y 5HB United Kingdom t: +44 20 7862 0700 Dublin Iveagh Court Floor 5 Block D Harcourt Road Dublin 2 Ireland t: +353 1 475 0520 Geneva 30 Quai Gustave-Ador Genève CH-1207 Switzerland t: +41 22 715 2840 Luxembourg 65 rue d’Eich L-1461 Luxembourg t: +352 26 10 88 06 20 Grand Cayman The Harbour Centre 42 North Church St Grand Cayman KY1-1004 Cayman Islands t: +1 345 623 9900 New York 675 Third Avenue Floor 21 New York NY 10017 United States t: +1 212 661 2200 Hong Kong Unit 4103, 41/F Tower Two, Lippo Centre 89 Queensway Hong Kong t: +852 3470 9003 Channel Islands 13 Broad Street St Helier Jersey JE2 3RR Channel Islands t: +44 1534 603 130