10.1. Application

This chapter applies to all Funds managed by Fund Managers located in the AIFC.

10.2. Financial Statements

A Fund Manager must ensure that each Fund that it manages prepares financial statements for each financial year of the Fund in accordance with International Financial Reporting Standards (IFRS) or US GAAP.

10.3. Accounting Records

(a) A Fund Manager must ensure that each Fund that it manages keeps accounting records that are:

1. (i) sufficient to show and explain transactions undertaken by the Fund; and
2. (ii) capable of determining the financial position of the Fund on an on-going basis; and
3. (iii) record the financial position of the Fund as at its financial year end.

(b) The Accounting Records must be:

1. (i) retained by the Fund Manager or Fund for at least six years from the date to which they relate;
2. (ii) at all reasonable times, open to inspection by the AFSA and the auditor of the Fund; and
3. (iii) capable of reproduction, within a reasonable period not exceeding 3 business days, in hard copy and available in English.

10.4. Auditor of a Non-Exempt Fund and a Real Estate Investment Trust

(a) Every Non-Exempt Fund and Real Estate Investment Trust must appoint an external auditor to conduct an audit of the Fund's annual financial statements in accordance with the requirements of the relevant standards published by the International Auditing and Assurance Standards Board (IAASB) and to produce an auditor's report on those audited financial statements.

(b) A Fund Manager must prior to the appointment of the auditor, take reasonable steps to ensure that the auditor has the required skills, resources and experience to audit the type of Non-Exempt Fund and/or Real Estate Investment Trust for which the auditor has been appointed.

(c) A Fund Manager must notify the AFSA of the appointment, resignation or termination of an auditor of a Non-Exempt Fund or a Real Estate Investment Trust.

(d) A Non-Exempt Fund and a Real Estate Investment Trust must appoint an auditor to fill any vacancy in the office of auditor and ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as reasonably practicable.

(e) A Non-Exempt Fund and a Real Estate Investment Trust must take reasonable steps to ensure that the auditor and the relevant audit staff of the auditor are independent of, and not subject to, any conflict of interest with respect to the Fund Manager or any other service provider to the Fund.

(f) A Fund Manager must notify the AFSA if it or any Non-Exempt Fund or Real Estate Investment Trust that it manages becomes aware, or has reason to believe, that the auditor or the relevant audit staff of the auditor of the relevant Non-Exempt Fund or Real Estate Investment Trust are no longer independent of the Fund Manager or any other service provider to the Non-Exempt Fund or Real Estate Investment Trust, or have a conflict of interest which may affect their judgement in respect of the Non-Exempt Fund or Real Estate Investment Trust.

(g) A Fund Manager must take reasonable steps to ensure that it and its employees:

1. (i) provide any information to the Non-Exempt Fund's or Real Estate Investment Trust's auditor that the auditor reasonably requires, or is entitled to receive as auditor;
2. (ii) give the auditor right of access at all reasonable times to relevant records and information within its possession regarding the Fund and allow the auditor to make copies of those records and information;
3. (iii) do not interfere with the auditor's ability to discharge its duties in respect of the Non-Exempt Fund or Real Estate Investment Trust;
4. (iv) report to the auditor any matter which may significantly affect the financial position of the Non-Exempt Fund or Real Estate Investment Trust; and
5. (v) provide such other assistance as the auditor may reasonably request it to provide.

(h) A Fund Manager must, in writing, require any Person to whom the Fund Manager has delegated or outsourced any functions to co operate with the Non-Exempt Fund's or Real Estate Investment Trust's auditor in accordance with the provisions specified in (g).

10.5. Periodic Reports of Non-Exempt Funds and Umbrella Funds

(a) Each Non-Exempt Fund must produce an annual report and interim report in respect of each of its accounting periods.

(b) An annual report must be produced within four months after the end of each annual accounting period for the Non-Exempt Fund.

(c) An interim report within one month after the end of each interim accounting period for the Non-Exempt Fund.

(c-1)    For a Fund which is an Umbrella Fund, the Fund Manager must prepare an interim report for each Sub-Fund, but this is not necessary for the Umbrella Fund as a whole.

(d) Each annual and interim report of a Non-Exempt Fund must:

1. (i) be available free of charge to the Non-Exempt Fund's Unitholders;
2. (ii) be available in English; and
3. (iii) be sent to the AFSA.

(e) The annual and interim report for a Non-Exempt Fund or the Sub-Funds of an Umbrella Fund must be clear, complete and true and contain information for the relevant period and must include:

1. (i) the name of the Non-Exempt Fund or Sub-Fund, its investment objective and investment policy;
2. (ii) a brief assessment of the Non-Exempt Fund's or Sub-Fund’s risk profile;
3. (iii) a review of the Non-Exempt Fund's or Sub-Fund’s investment activities and investment performance during the period;
4. (iv) sufficient information to enable Unitholders to form a view on where the NonExempt Fund's or Sub-Fund’s property is invested at the end of the period and the extent to which that has changed over the period; and
5. (v) any other significant information which would reasonably enable Unitholders to make an informed judgment on the activities of the Non-Exempt Fund or Sub-Fund during the period and the results of those activities at the end of the reporting period.

(f) An annual report of a Non-Exempt Fund, other than a Fund which is an Umbrella Fund, must contain:

1. (i) the full audited financial statements of the Fund for the annual accounting period; and
2. (ii) the auditor's report on the financial statements; and
3. (iii) a report of the Fund Manager containing the following information:
4. (A) a review of the Non-Exempt Fund's investment activities during the period to which the report relates; and
5. (B) particulars of any significant change to the Non-Exempt Fund since the date of the last report; and
6. (C) any other information which would enable Unitholders to make an informed judgment on the development of the activities of the Non Exempt Fund during the relevant period and the results of those activities as at the end of that period; and
7. (D) for a Non-Exempt Fund which invests a substantial proportion of its assets in other Funds, a statement as to the maximum proportion of management fees charged to the Non-Exempt Fund itself and to other Funds in which that Fund invests.

(g) An annual report of a Fund which is an Umbrella Fund must contain:

1. (i)        for each Sub-Fund:
2. (A)       the full audited financial statements for the annual accounting period;
3. (B)       the report of the Fund Manager in accordance with requirements set out in CIS 10.5-1.; and
4. (C)      if the Fund is a Public Fund, the comparative table in accordance with CIS 10.5-2.;
5. (ii)       an aggregation of the financial statements required by (j)(i)(A) for each Sub-Fund;
6. (iii)      the report produced by the auditor in accordance with CIS 10.4.; and
7. (iv)      if the Fund is a Public Fund, the Oversight Report in accordance with CIS 10.5-3.

10.5-1. Fund Manager’s report

The matters set out in (a) to (f) must be included in any Fund Manager’s report, except for the Corporate Treasury Centre Fund Manager's report:

(a)       a restatement of the investment objectives of the Fund;

(b)       a restatement of the policy for achieving those objectives;

(c)       a review of the investment activities, including in relation to (a) and (b), during the period to which the report relates;

(d)       particulars of any fundamental change requiring prior approval by Unitholder meeting made since the date of the last report;

(e)       particulars of any significant change requiring pre-event notification since the date of the last report;

(f)        any other information which would enable Unitholders to make an informed judgement on the development of the activities of the Fund during this period and the results of those activities as at the end of that period;

(g)       for a report on an Umbrella Fund, the information required in (a) to (h) must be given for each Sub-Fund if it would vary from that given in respect of the Umbrella Fund as a whole; and

(h)       for a Fund which invests a substantial proportion of its assets in other Funds, a statement as to the maximum proportion of management fees charged to the Fund itself and to other Funds in which that Fund invests.

(i)             for a report on an ESG Fund the information containing:

(i)     on how the Fund’s investment focus has been met during the financial period, including a comparison with the previous period (if any); and

(ii)    the actual proportion of investments that meet the Fund’s investment focus (if applicable); and

(iii)  any action taken by the Fund in attaining the Fund’s ESG focus.

(j) for a report on a Single Family Office Fund, statements:

(i) confirming that the Single Family Office Fund continues to comprise members of the Single Family;

(ii) confirming that the number of members of the Single Family has not changed (or, if it has, setting out details of the change);

(iii) confirming that the Single Family Office continues to maintain investable assets of USD 1 million.

10.5-2. The comparative table for the annual report for an Umbrella Fund

The comparative table for the annual report for an Umbrella Fund must set out:

(a)       the performance record over the last five calendar years, or if the Fund has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing:

1. (i)        the highest and the lowest price of a Unit of each class in issue during each of those years; and
2. (ii)       the net income distributed or, for accumulation Units, allocated for a Unit of each class in issue during each of those years, taking account of any sub-division or consolidation of Units that occurred during that period;

(b)       as at the end of each of the last three annual accounting periods or all of the Fund's annual accounting periods, if less than three:

1. (i)        the total net asset value of the Fund Property at the end of each of those years;
2. (ii)       the net asset value per Unit of each class; and
3. (iii)      for a report of the directors of an Investment Company, the number of Units of each class in issue; or
4. (iv)      for a report of the Fund Manager of any other Fund, the number of Units of each class in existence or treated as in existence; and

(c)       if, in the period covered by the table:

1. (i)        the Fund Manager has been the subject of any event such as a transfer scheme having a material effect on the size of the Fund, but excluding any issue or cancellation of Units for cash; or
2. (ii)       there have been changes in the investment objectives of the Fund;
3. an indication, related in the body of the table to the relevant year in the table, of the date of the event or change in the investment objectives and a brief description of its nature.

10.5-3. Oversight report

(a)       The Person providing the oversight function of a Public Fund must make a report to Unitholders of the Fund which must be included in the Fund’s annual report referred to in CIS 10.5-1.

(b)       The oversight report must contain:

1. (i)        a description, which may be in summary form, of the duties of the Person carrying out the oversight functions and in respect of the safekeeping of the Fund Property; and
2. (ii)       a statement whether, in any material respect:
3. (A)       the issue, sale, redemption and cancellation, and calculation of the price of the Units and the application of the Fund's income, have not been carried out in accordance with the Rules and, the Constitution; and
4. (B)       the investment and borrowing powers and restrictions applicable to the Fund.

10.6. Valuation of Fund property

• (a) A Fund must have comprehensive and well documented valuation policies and procedures in place to ensure the production of timely and accurate valuation of the Fund and Units of the Fund.
• (b) A Fund Manager must ensure that the investment portfolio of each Fund managed by that Fund Manager is valued at regular intervals as appropriate to the nature of the Fund, market practice and investor expectations, and in accordance with the valuation procedures set out in the Fund's Constitution or Offering Materials, except where such valuation is suspended in any circumstances that are set out in the Fund's Constitution or Offering Materials.
• (c) A Fund Manager must ensure that as soon as practicable after each valuation point for each Fund it manages, the Fund notifies Unitholders of the value per Unit of the Fund.
• (d) Where required by these Rules, a Fund Manager must appoint an independent third party valuer which is expert in valuing the type of investments held by the Fund to value the Fund's investments.