2.2.4. Managing a Collective Investment Scheme
2.2.4.1. General description
Managing a Collective Investment Scheme is listed in section 4 of Schedule 1 of GEN. It means:
(a) establishing;
(b) managing; or
(c) otherwise operating; or
(d) winding up
a Collective Investment Scheme.
In case any activity as indicated above constitutes Managing Assets, Providing Fund Administration, Dealing as Agent, Dealing as Principal, Arranging Deals in Investments, or Providing Custody, such a Regulated Activity is taken to be incorporated within Managing a Collective Investment Scheme.
An Authorised Firm authorised to carry on the regulated activity of Managing a Collective Investment Scheme is subject to prudential supervision and must comply with AIFC Prudential Rules for Investment Firms.
A Collective Investment Scheme may only be established, promoted or marketed in the AIFC by a Person who is:
(a) a Domestic Fund Manager;
(b) a Foreign Fund Manager; or
(c) another Centre Participant.
Foreign Fund Managers
A Foreign Fund Manager may manage a Domestic Fund in accordance with the AIFC Collective Investment Scheme Rules and Acting Law of the AIFC.
Domestic Fund Managers
Domestic Fund Manager may manage a Fund in other jurisdictions subject to the rules and regulations of that jurisdiction, AIFC Collective Investment Scheme Rules and Acting Law of the AIFC.
However, each foreign jurisdiction needs to be assessed first to ensure there is an adequate level of equivalence, and typically reciprocal arrangements would be expected to be in place.
For more information on fund management activity see Guidance for Fund Management Activity and Funds in the AIFC.
Currency regulation
Currency transactions will be performed via AIFC Banks if processed in only foreign currency, and via second-tier banks in any currency. For more details of transactional implications see Chapter 4 of PERG.
The table below illustrates currency regulation implications if services are offered to residents of Kazakhstan that are not AIFC Participants.
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Are you planning to offer your services to legal entities or natural persons – residents of Kazakhstan that are not AIFC Participants? |
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Yes:
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Your services will be subject to the AIFC Rules on Currency Regulation: |
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Name of allowed activity: |
Managing Investment (including investment funds): 1) in relation to clients (investors) who are citizens and legal entities of the Republic of Kazakhstan investing in securities of the funds incorporated in the AIFC and managed by management companies licensed by ARDFM* 2) in relation to clients (investors) who are professional investors and have financial assets equivalent to not less than USD 150 000, when transferring the investments under the management or investing in securities of the funds incorporated in the AIFC or elsewhere and managed by a fund manager licensed by AFSA. * ARDFM – Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market. Note: Client classification in COB has different threshold for classifying individual clients as Assessed Professional Clients, for example the client needs to have net assets of at least USD 100 000.
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Relevant reference to Schedule 2 to the AIFC Rules on Currency Regulation: |
3.5 in the list of financial services. |
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Type of currency: |
Any currency |
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Transaction: |
Via AIFC Banks: only foreign currency Via second-tier banks: any currency |
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Currency reporting: |
No specific reporting for a financial service. Transactional reporting may be applicable (see Chapter 4 of PERG for more details).
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No: |
Subrule 3.3.2 of AIFC Rules on Currency Regulation applies. |
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2.2.4.2. Exclusions
Arrangements not amounting to a Collective Investment Scheme are specified in section 3 of the AIFC Collective Investment Scheme Rules.
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Arrangement |
Rule |
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Schemes not operated by way of business |
3.3. |
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Deposits |
3.4. |
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Common accounts |
3.5. |
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Commercial activities unrelated to Regulated Activities |
3.6. |
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Group arrangements |
3.7. |
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Franchise arrangements |
3.8. |
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Clearing services |
3.9. |
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Certificates or Options |
3.10. |
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Time‐share and other 'property‐enjoyment' related arrangements |
3.11. |
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Bodies corporate not undertaking investment management
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3.12. |
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Debentures and Warrants of a single issuer |
3.13. |
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Insurance |
3.14. |
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Profit Sharing Investment Accounts (PSIAs) |
3.15. |
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Discretionary Portfolio Accounts |
3.16. |
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Close Relative accounts |
3.17. |
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Sukuk |
3.18. |
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Employee reward schemes |
3.19. |
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Carried interest vehicles |
3.20. |
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Other circumstances |
3.21. |
For requirements applicable to Foreign Fund Managers, i.e. Fund Managers not located in the AIFC see AIFC Collective Investment Scheme Rules.
Specific products or activities forming part of Islamic Financial Business are not regulated as Collective Investment Schemes due to their unique characteristics and the specific regulations applied to them.
Such Islamic Financial Business activities are expressly excluded from the remit of the AIFC Collective Investment Scheme Rules but may be considered as Islamic Investment Funds.
For applicable requirements to Islamic Investment Funds see AIFC Islamic Finance Rules.