• FUNDS 15.1 FUNDS 15.1 Meeting the conditions to be classified as a Qualified Investor Fund

    • Guidance

      1. Rule 3.3.2 provides that a Domestic Fund may be constituted as a Qualified Investor Fund only if it satisfies all of the conditions in Rule 3.3.4. Rule 3.3.4 provides that a Qualified Investor Fund must:
      (a) have its Units offered to persons only by way of Private Placement;
      (b) have only Unitholders each of whom meets the criteria to be classified as a Professional Client; and
      (c) have an initial subscription to be paid by a person to become a Unitholder in the Fund of at least US$500,000.
      2. The definition of "Professional Client" is set out in Rule 1.2.1.
      3. Generally a firm will not be able to undertake mass marketing activities relating to Units of Qualified Investor Funds because such marketing would not meet the Private Placement requirement, and would be likely to amount to a public offer, which can only be made in respect of a Unit of a Public Fund.

    • FUNDS 15.1.2

      (1) A Fund may be classified as a Qualified Investor Fund only if it fulfils the conditions in Rule 3.3.4 at the inception of the Fund and on an on-going basis.
      (2) A Fund Manager must ensure that a Fund which is or is intended to be established and operated as a Qualified Investor Fund meets the conditions in Rule 3.3.4 both at the inception of the Fund and on an on-going basis.
      (3) For the purposes of (2), where a Fund Manager makes arrangements with other Authorised Persons or Persons in other jurisdictions to Offer to issue or sell the Units of a Qualified Investor Fund, then it must take reasonable steps to ensure that those Authorised Persons or other Persons do not Offer to issue or sell the Units in a manner that would result in a breach of the conditions in Rule 3.3.4.
      (4) As soon as a Fund Manager becomes aware that a Qualified Investor Fund it manages no longer meets or is likely not to meet the conditions in Rule 3.3.4, it must immediately:
      (a) commence proceedings relating to the winding up of the Fund, or alternatively, take necessary steps to have the Fund reconstituted as an Exempt Fund or registered as a Public Fund; and
      (b) notify the Regulator of that fact and the measures it has taken and proposes to take under (a).