FUND 1.3 Types of fund manager

Types of fund manager within the scope of European legislation

FUND 1.3.1G

The UK regulatory regime provides that an undertaking which manages an AIF or UCITS in the UK and is within the scope of AIFMD or the UCITS Directive must fall into one or both of the following categories:

  1. (1)

    an AIFM; or

  2. (2)

    a UCITS management company.

Types of fund manager outside the scope of European legislation

FUND 1.3.2G

An authorised person that operates a collective investment scheme in the UK and falls entirely outside the scope of AIFMD or the UCITS Directive will be a residual CIS operator.

AIFMs

FUND 1.3.3G

An AIFM with a Part 4A permission of managing an AIF will be a UK AIFM and must fall into at least one of the following categories:

  1. (1)

    a full-scope UK AIFM;

  2. (2)

    a small authorised UK AIFM of an authorised AIF; and

  3. (3)

    a small authorised UK AIFM of an unauthorised AIF.

Full-scope UK AIFM

FUND 1.3.4G
  1. (1)

    A full-scope UK AIFM is a UK AIFM which is authorised in accordance with AIFMD and, therefore, subject to its full requirements.

  2. (2)

    A full-scope UK AIFM must be either:

    1. (a)

      an external AIFM; or

    2. (b)

      an internally managed AIF.

  3. (3)

    PERG 16, question 3.6 provides guidance on where an AIFM is acting as an external AIFM or an internally managed AIF.

  4. (4)

    A full-scope UK AIFM is permitted under FUND 1.4.3 R (3) to FUND 1.4.3 R (6) to provide certain additional services. Where it carries on those services it is also an AIFM investment firm and subject to additional requirements for those services.

Small AIFM

FUND 1.3.5G
  1. (1)

    AIFMD provides that an AIFM which has assets under management below certain thresholds (a "small AIFM") may be subject to limited requirements under AIFMD. However, this is subject to the right of EEA States to impose stricter requirements.

  2. (2)

    In the UK, the regulatory regime provides that a small AIFM with a registered office in the UK may be either:

    1. (a)

      a small authorised UK AIFM; or

    2. (b)

      a small registered UK AIFM.

Small authorised UK AIFM

FUND 1.3.6G
  1. (1)

    A small authorised UK AIFM will be carrying on the regulated activity of managing an AIF and will be subject to FCA rules in respect of that activity. The application of FCA rules to a small authorised UK AIFM will depend on whether it manages an authorised AIF or an unauthorised AIF. A small authorised UK AIFM which manages an authorised AIF will be subject to the requirements in COLL, but a small authorised UK AIFM of an unauthorised AIF will not be subject to COLL.

  2. (2)

    A small authorised UK AIFM may also opt in to the full requirements in AIFMD, in which case it will become a full-scope UK AIFM.

Small registered UK AIFM

FUND 1.3.7G

A small registered UK AIFM will not be carrying on a regulated activity in respect of its activities as an AIFM for an AIF for which it is entitled to be registered. Regulation 10 of the AIFMD UK regulation provides for three categories of small registered UK AIFM:

  1. (1)

    to fall within the first category the AIFM must:

    1. (a)

      have a registered office in the UK;

    2. (b)

      be a small AIFM;

    3. (c)

      be an internally managed AIF of an AIF which is a body corporate and is not a collective investment scheme; and

    4. (d)

      not be an external AIFM.

  2. (2)

    to fall within the second category the AIFM must:

    1. (a)

      have a registered office in the UK;

    2. (b)

      be a small AIFM; and

    3. (c)

      only manage AIFs which:

      1. (i)

        are collective investment schemes;

      2. (ii)

        are not authorised AIFs;

      3. (iii)

        holds the majority of their assets as land, directly or indirectly, through an entity which also meets the conditions in (ii) to (iv) of this sub-paragraph (but this condition does not apply during the first 180 days and the last 180 days of the period during which the undertaking is an AIF);

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      4. (iv)

        do not hold any specified investments other than:

        1. (aa)

          contracts of insurance which relate to land held by the AIF; and

        2. (bb)

          shares through which the AIF holds land; and1

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      5. (v)

        are1 operated, or will be established and operated, by a person with a Part 4A permission to carry on the regulated activity of establishing, operating or winding up a collective investment scheme.

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  3. (3)

    to fall within the third category the AIFM must:

    1. (a)

      have a registered office in the UK;

    2. (b)

      be a small AIFM; and

    3. (c)

      have applied for registration as a EuSEF manager or EuVECA manager and meet the conditions for such registration.

FUND 1.3.8G

Under regulation 16 of the AIFMD UK regulation a small registered UK AIFM may apply to the FCA for a Part 4A permission to manage an AIF. In its application a small registered UK AIFM may apply to become:

  1. (1)

    a small authorised UK AIFM; or

  2. (2)

    a full-scope UK AIFM, in accordance with article 3(4) of AIFMD.