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3.5

Capital Requirements — As set out in section 3 of the PRU Rulebook, a Manager must satisfy a Base Capital Requirement or Expenditure-Based Capital Minimum, whichever is higher.

The table below sets out the Base Capital Requirement for the different categories of Managers.

Regulated Activity Base Capital Requirement
Managing Assets US$250,000
Managing a Public Fund US$150,000
Managing an Exempt Fund or Qualified Investment Fund US$50,000

The applicant should make a reasonable assessment of the amount of additional capital buffer it needs, bearing in mind the scale and scope of its operations.

Use of shareholders' loans to meet Capital Requirements. Under current rules, the Capital Requirement of a Manager can only be met by certain forms of capital instruments. Recognising that Managers in general have relatively simple capital structures, the Regulator may consider granting a waiver to allow Managers who do not hold client money to use shareholders' loans as eligible capital resources to meet Capital Requirement exceeding the BCR, subject to appropriate ring-fencing conditions.