This chapter applies to:
a collective portfolio management firm; and
a collective portfolio management investment firm.
A collective portfolio management firm that manages an AIF is an internally managed AIF or an external AIFM. If the firm is a full-scope UK AIFM this affects the firm's base capital resources requirement (see IPRU-INV 11.3.1R). An internally managed AIF that is a full-scope UK AIFM is not permitted to engage in activities other than the management of that AIF, whereas an external AIFM that is a full-scope UK AIFM may manage AIFs and/or UCITS, provided it has permission to do so. A full-scope UK AIFM that is an external AIFM and/or a UCITS management company may undertake any of the additional investment activities permitted by article 6(4) of AIFMD or article 6(3) of the UCITS Directive (as applicable), provided it has permission to do so, but if so it is classified as a collective portfolio management investment firm, as opposed to a collective portfolio management firm.
A collective portfolio management investment firm is also subject to the requirements of either (i) GENPRU and BIPRU or (ii) IFPRU in addition to the requirements of IPRU-INV 11, as explained in IPRU-INV 11.6.2G.
A small authorised UK AIFM that is not also a UCITS management company is not a collective portfolio management firm or a collective portfolio management investment firm and is therefore not subject to IPRU-INV 11. This type of firm is subject to IPRU-INV 5 if it is an investment management firm, GENPRU and BIPRU if it is a BIPRU firm or IFPRU if it is an IFPRU investment firm.
Except where a rule makes a different provision, terms in this chapter must have the meaning given to them in the Companies Act 2006 or the firm's accounting framework (usually UK generally accepted accounting principles or IFRS) where defined in that Act or framework.
This chapter amplifies threshold condition 2D (Appropriate resources) by providing that a firm must meet, on a continuing basis, a minimum capital resources requirement. This chapter also amplifies Principles 3 and 4 which require a firm to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems, and to maintain adequate financial resources by setting out a capital resources requirement for a firm according to the regulated activity or activities it carries on.
This original purpose of this chapter was to implement relevant requirements of AIFMD and the UCITS Directive, which included1 imposing capital and professional indemnity insurance requirements on a full-scope UK AIFM and a UCITS management company. AIFMD and the UCITS Directive incorporate references to provisions of the Banking Consolidation Directive and the Capital Adequacy Directive in relation to initial capital, own funds and fixed overheads. However, in line with article 163 of the CRD, the Banking Consolidation Directive and the Capital Adequacy Directive were1 repealed from 1 January 2014 and references to these directives were1 replaced with references to the CRD and the UK CRR2 in line with the correlation table set out in Annex II to the CRD and in Annex IV to the UK CRR2.