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32.—(1) This regulation applies where—
(a)the law of a third country requires certain financial instruments to be held in custody by a local entity; and
(b)there is no local entity that satisfies the delegation requirements in implementing provisions relating to Article 21.11(d)(ii) of the directive.
(2) The depositary is not required to comply with the obligation in regulation 30(2) in relation to the financial instruments mentioned in paragraph (1)(a) if—
(a)the rules or instruments of incorporation of the AIF concerned expressly allow for a discharge of the obligation;
(b)the investors of the AIF were informed of the discharge and of the circumstances justifying the discharge prior to their investment;
(c)the AIF, or the AIFM on behalf of the AIF, instructed the depositary to delegate the custody of the financial instruments to a local entity;
(d)a written contract between the depositary and the AIF, or the AIFM acting on behalf of the AIF, expressly allows for such a discharge; and
(e)a written contract between the depositary and the local entity expressly transfers the obligation of the depositary to the local entity and enables the AIF, or the AIFM acting on behalf of the AIF, to make a claim against the local entity in respect of the loss of financial instruments or for the depositary to make such a claim on their behalf.
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