This section has no associated Explanatory Memorandum
[[11. To specify—U.K.
(a)the conditions for fulfilling the following requirements—
(i)i)that the AIFM must be able to justify its entire delegation structure on objective reasons;
(ii)that the delegate must dispose of sufficient resources to perform the respective tasks and the persons who effectively conduct the business of the delegate must be of sufficiently good repute and sufficiently experienced;
(iii)where the delegation concerns portfolio management or risk management, that it is conferred only on undertakings which are authorised or registered for the purpose of asset management and subject to supervision in the countries in which they are established;
(iv)where the delegation concerns portfolio management or risk management and is conferred on a third-country undertaking, that cooperation between the FCA and the supervisory authority of the undertaking is ensured;
(v)that the delegation does not prevent the effectiveness of supervision of the AIFM, and, in particular, must not prevent the AIFM from acting, or the AIF from being managed, in the best interests of its investors;
(vi)that the AIFM must be able to demonstrate that the delegate is qualified and capable of undertaking the functions in question, that it was selected with all due care and that the AIFM is in a position to monitor effectively at any time the delegated activity, to give at any time further instructions to the delegate and to withdraw the delegation with immediate effect when this is in the interest of investors;
(vii)that no delegation of portfolio management or risk management is conferred on—
(aa)the depositary or a delegate of the depositary; or
(bb)any other entity whose interests may conflict with those of the AIFM or the investors of the AIF, unless such entity has functionally and hierarchically separated the performance of its portfolio management or risk management tasks from its other potentially conflicting tasks, and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the AIF;
(viii)that the third party does not sub-delegate any of the functions delegated to it unless the following conditions are met—
(aa)the AIFM consented prior to the sub-delegation;
(bb)the AIFM notified the FCA before the sub-delegation arrangements become effective;
(cc)the sub-delegation and the sub-delegate satisfy the conditions imposed in paragraphs (i) to (vi) imposed on delegations and delegates;
(ix)that no sub-delegation of portfolio management or risk management is conferred on—
(aa)the depositary or a delegate of the depositary; or
(bb)any other entity whose interests may conflict with those of the AIFM or the investors of the AIF, unless such entity has functionally and hierarchically separated the performance of its portfolio management or risk management tasks from its other potentially conflicting tasks, and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the AIF;
(b)the conditions under which the AIFM is deemed to have delegated its functions to the extent that it becomes a letter-box entity and can no longer be considered to be the manager of the AIF.]]