EDINBURGH PARTNERS OPPORTUNITIES FUND PLC
(an umbrella type open-ended investment company with variable capital and segregated liability between Funds)
A company incorporated with limited liability as an investment company with variable capital and segregated liability between Funds under the laws of Ireland with registered number 379245
PROSPECTUS
This Prospectus is dated 27 February 2013
The Directors of Edinburgh Partners Opportunities Fund plc whose names appear under the section entitled Directors of the Company accept responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure such is the case), the information contained in the Prospectus and its Supplements is in accordance with the facts and does not omit anything likely to affect the import of such information.
1. INTRODUCTION
The value of and income from Shares in the Company may go up or down and you may not get back the amount you have invested in the Company. Shares constituting each Fund are described in a Supplement to this Prospectus for each such Fund, each of which is an integral part of this Prospectus and is incorporated herein by reference with respect to the relevant Fund. Before investing in the Company, you should consider the risks involved in such investment. Please see the risk factors described under the section entitled Risk Factors below. If you are in any doubt about the contents of this Prospectus and the relevant Supplement you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser.
The Company is an investment company with variable capital and segregated liability between its Funds incorporated on 11 December, 2003 and is authorised in Ireland as an undertaking for collective investment in Transferable Securities pursuant to the Regulations. The authorisation of the Company by the Central Bank does not constitute a warranty by the Central Bank as to the performance of the Company and the Central Bank shall not be responsible for the performance or default of the Company. Authorisation of the Company is not an endorsement or guarantee of the Company by the Central Bank nor is the Central Bank responsible for the contents of the Prospectus.
The Company is structured as an open-ended umbrella fund in that Shares representing interests in different Funds may be issued from time to time by the Directors. Shares of more than one Class may be issued in relation to a Fund. All Shares of each Class will rank pari passu save as provided for in the relevant Supplement. On the introduction of any new Fund (for which the prior approval of the Central Bank is required) or any new Class (which will be notified in advance to the Central Bank), the Company will prepare and the Directors will issue a Supplement setting out the relevant details of each such new Fund or an updated Supplement in respect of a new Class. A separate portfolio of assets will be maintained for each Fund (and accordingly not for each Class) and will be invested in accordance with the investment objective and policies applicable to such Fund. Particulars relating to individual Funds and the Classes of Shares available therein are set out in the relevant Supplement.
Distribution of this Prospectus and the relevant Supplement is not authorised in any jurisdiction unless accompanied by a copy of the then latest published annual or interim report and financial statements. Such reports and this Prospectus together form the Prospectus for the issue of Shares in the Company. This Prospectus may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised. In particular the Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) or the securities laws of any state or political subdivision of the United States and may not, except in a transaction which does not violate U.S. securities laws, be directly or indirectly offered or sold in the United States or to any U.S. Person. U.S. Persons who are subject to the U.S. Employee Retirement Income Security Act of 1974 as amended will not be permitted to invest in the Company unless the Directors and the Custodian otherwise agree. The Company will not be registered under the United States Investment Company Act of 1940 as amended.
The Articles of Association of the Company give powers to the Directors to impose restrictions on the holding of Shares by (and consequently to repurchase Shares held by), or the transfer of Shares to, any U.S. Persons (unless permitted under certain exceptions under the laws of the United States) or by any person who appears to be in breach of any law or requirement of any country or government authority or by virtue of which such person is not qualified to hold such Shares or by any person or persons in circumstances (whether directly or indirectly affecting such person or persons, and whether taken alone or in conjunction with any other person or persons, connected or not, or any other circumstances appearing to the Directors to be relevant) which, in the opinion of the Directors, might result in the Company incurring any liability to taxation or suffering any other pecuniary legal or material administrative disadvantages or being in breach of any law or regulation which the Company might not otherwise have incurred, suffered or breached. The Company shall, where necessary for the collection of Irish tax, repurchase and cancel Shares held by a person who is or is deemed to be or is acting on behalf of an Irish Taxable Person on the occurrence of a chargeable event for Irish taxation purposes and pay the proceeds thereof to the Irish Revenue Commissioners.
This Prospectus may be translated into other languages. Any such translation shall only contain the same information and have the same meanings as this English language document. To the extent that there is any inconsistency between this English language document and the document in another language, this English language document shall prevail. Potential subscribers and purchasers of Shares
should inform themselves as to (a) the possible tax consequences, (b) the legal requirements, (c) any foreign exchange restrictions or exchange control requirements and (d) any other requisite governmental or other consents or formalities which they might encounter under the laws of the countries of their incorporation, citizenship, residence or domicile and which might be relevant to the subscription, purchase, holding or disposal of Shares.
Any information given, or representations made, by any dealer, salesman or other person which are not contained in this Prospectus or the relevant Supplement or in any reports and financial statements of the Company forming part hereof must be regarded as unauthorised and accordingly must not be relied upon. Neither the delivery of this Prospectus or the relevant Supplement nor the offer, issue or sale of Shares shall under any circumstances constitute a representation that the information contained in this Prospectus or the relevant Supplement is correct as of any time subsequent to the date of this Prospectus or the relevant Supplement. This Prospectus or the relevant Supplement may from time to time be updated and intending subscribers should enquire of the Investment Manager or the Administrator as to the issue of any later Prospectus or as to the issue of any reports and financial statements of the Company.
All Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of the provisions of the Memorandum and Articles of Association of the Company, copies of which are available as mentioned herein.
Application may be made for the listing of Shares in any Fund on the Official List and trading on the main market of the Irish Stock Exchange. Details of any such application will be included in the relevant Supplement. Neither the admission of the Shares to the Official List or trading on the main market of the Irish Stock Exchange, nor the approval of the Prospectus and Supplement pursuant to the listing requirements of the Irish Stock Exchange shall constitute a warranty or representation by the Irish Stock Exchange as to the competence of service providers to or any other party connected with the Company, the adequacy of information contained in the Prospectus and the Supplement or the suitability of the Company for investment purposes.
The launch and listing of various Classes within a Fund may occur at different times and therefore at the time of the launch of given Class(es) the pool of assets to which a given Class relates may have commenced to trade. For further information in this regard, the most recent interim and annual reports and financial statements of the Company will be made available to potential investors upon request. This Prospectus and the relevant Supplement shall be governed by and construed in accordance with Irish law.
Defined terms used in this Prospectus shall have the meanings attributed to them in the section entitled Definitions below.
Facilities in the United Kingdom
Copies of the following documents may be inspected free of charge at the offices of Edinburgh Partners Limited at 27-31 Melville Street, Edinburgh, EH3 7JF, United Kingdom (telephone 0131 270 3800) during usual business hours on any week day (other than Saturdays and public holidays):
(i) the Memorandum and Articles of Association of the Company;
(ii) the most recent Prospectus (and any Supplements thereto) and key investor information documents issued by the Company;
(iii) the most recent annual and interim reports and financial statements published by the Company.
Edinburgh Partners Limited also provide information in relation to the price of Shares.
Shareholders in the United Kingdom may issue instructions to repurchase Shares and obtain payment of repurchase proceeds on application to the Administrator as described in this Prospectus.
Any person in the United Kingdom who has a complaint to make about the operation of the Company or any Fund may submit his complaint for transmission to the Company to Edinburgh Partners Limited at the address stated above.
Table of Contents
Page
1. INTRODUCTION... 1
2. DEFINITIONS ... 5
3. FUNDS... 9
3.1. Investment Objective and Policies ... 9
3.2. Investment Restrictions ... 9
3.3. Permitted Investments ... 9
3.4. Investment Limits ... 10
3.5. Investment in other collective investment schemes (CIS)... 11
3.6. Index Tracking UCITS... 11
3.7. General Provisions ... 11
3.8. Financial Derivative Instruments (FDIs) ... 12
3.9. Efficient Portfolio Management ... 13
3.10. Borrowing and Lending Powers... 13
3.11. Dividend Policy ... 14
3.12. Risk Factors ... 14
3.13. Management of the Company... 17
3.14. Custodian ... 17
3.15. Administrator ... 18
3.16. Portfolio Transactions and Conflicts of Interest... 18
3.17. Dealing Commissions ... 19
4. SHARE DEALINGS ... 19
4.1. Subscription for Shares ... 19
4.2. Issue Price... 21
4.3. Payment for Shares... 21
4.4. In Specie Issues ... 21
4.5. Confirmation of Ownership... 21
4.6. Anti-Money Laundering Provisions... 22
4.7. Data Protection Information... 22
4.8. Limitations on Purchases ... 22
5. REPURCHASE OF SHARES ... 23
5.1. Repurchases of Shares... 23
5.2. Repurchase Price... 23
5.3. Payment of Repurchase Proceeds... 23
5.4. Limitations on Repurchases ... 23 5.5. Mandatory Repurchases ... 24 6. DILUTION CHARGE... 24 7. EXCHANGE OF SHARES ... 25 7.1. Exchange of Shares ... 25 7.2. Limitation on Exchange ... 25
8. CALCULATION OF NET ASSET VALUE/VALUATION OF ASSETS... 26
9. SUSPENSION OF CALCULATION OF NET ASSET VALUE ... 27
10. FORM OF SHARES AND TRANSFER OF SHARES... 28
11. NOTIFICATION OF PRICES ... 28
12. FEES AND EXPENSES... 29
13. TAXATION ... 29
Ireland ... 30
United Kingdom... 33
14. GENERAL INFORMATION ... 35
14.1. Reports and Financial Statements ... 35
14.2. Incorporation and Share Capital... 36
14.3. Memorandum and Articles of Association... 36
14.4. Litigation and Arbitration... 37
14.5. Directors’ Interests ... 38
14.6. Material Contracts ... 38
14.7. Miscellaneous... 39
14.8. Documents for Inspection ... 39
APPENDIX 1 ... 40
2. DEFINITIONS
Account Opening Form and Dealing Form means the account opening form and dealing form for Shares from time to time;
Administration Agreement means the administration agreement dated 31 March 2008 (as amended from time to time) as novated by way of a novation agreement dated 11 December 2012 between the Company and the Administrator;
Administrator means Northern Trust International Fund Administration Services (Ireland) Limited or any successor thereto duly appointed in accordance with the requirements of the Central Bank;
Articles means the Articles of Association of the Company as amended from time to time; Associated Person means a person who is connected with a Director if, and only if, he or she is:
(i) that Director’s spouse, parent, brother, sister or child;
(ii) a person acting in his capacity as the trustee of any trust, the principal beneficiaries of which are the Director, his spouse or any of his children or any body corporate which he controls; (iii) a partner of that Director.
A company will be deemed to be connected with a Director if it is controlled by that Director;
Base Currency means in relation to any Fund such currency as is specified in the Supplements (or in the relevant Supplement in the case of any subsequent Funds that may be established periodically by the Company with the prior approval of the Central Bank);
Business Day means in relation to any Fund such day or days as is or are specified in the Supplement for the relevant Fund;
Central Bank means the Central Bank of Ireland, or any successor authority;
Central Bank Notices means the notices and guidelines issued by the Central Bank from time to time affecting the Company;
Class means a class of Shares of the Company;
Companies Acts means the Companies Acts 1963 to 2012 and every modification, consolidation, re-enactment or amendment thereof for the time being in force and every applicable regulation made thereunder for the time being in force;
Company means Edinburgh Partners Opportunities Fund plc;
Connected Person means the persons defined as such in the section headed Portfolio Transactions and Conflicts of Interest;
Custodian means Northern Trust Fiduciary Services (Ireland) Limited or any successor thereto duly appointed in accordance with the requirements of the Central Bank;
Custodian Agreement means the custodian agreement dated 31 March 2008 (as amended from time to time) as novated by way of a novation agreement dated 1 June 2011 between the Company and the Custodian;
Dealing Day means in respect of each Fund such Business Day or Business Days as is or are specified in the Supplement for the relevant Fund or such other Business Day or Business Days as the Directors may decide and notify in advance to Shareholders provided always that there shall be at least two Dealing Days for each Fund in each month;
in a Fund, the day and time specified in the Supplement for the relevant Fund; Directors means the directors of the Company, each a Director;
EEA means the European Economic Area; EU means the European Union;
EUR and Euro means the lawful currency of Ireland;
Exchange Charge means the charge, if any, payable on the exchange of Shares as is specified in the Supplement for the relevant Fund;
Foreign Person means (i) a person who is neither resident nor ordinarily resident in Ireland for tax purposes who has provided the Company with the appropriate declaration under Schedule 2B TCA and the Company is not in possession of any information that would reasonably suggest that the declaration is incorrect or has at any time been incorrect, or (ii) the Company is in possession of written notice of approval from the Irish Revenue Commissioners to the effect that the requirement to have been provided with such declaration is deemed to have been complied with in respect of that person or class of shareholder to which that person belongs, and that approval has not been withdrawn and any conditions to which that approval is subject have been satisfied;
Fund means a portfolio of assets which is invested in accordance with the investment objective and policies set out in the relevant Supplement and to which all liabilities, income and expenditure attributable or allocated to such fund shall be applied and charged and Funds means all or some of the Funds as the context requires or any other funds as may be established by the Company from time to time with the prior approval of the Central Bank;
Group Companies companies which are included in the same group for the purposes of consolidated accounts, as defined in accordance with Directive 83/349/EEC or in accordance with international accounting rules;
Initial Issue Price means the price (excluding any Preliminary Charge) per Share at which Shares are initially offered in a Fund during the Initial Offer Period as specified in the Supplement for the relevant Fund;
Initial Offer Period means the period during which Shares in a Fund are initially offered at the Initial Issue Price as specified in the Supplement for the relevant Fund;
Investment Management Agreement means in respect of each Fund the agreement dated 20 January 2004 (as amended from time to time) between the Company and the Investment Manager;
Investment Manager means Edinburgh Partners Limited or any successor thereto duly appointed in accordance with the requirements of the Central Bank;
Irish Stock Exchange means the Irish Stock Exchange Limited; Irish Taxable Person means any person, other than:
(i) a Foreign Person;
(ii) an intermediary, including a nominee, for a Foreign Person;
(iii) a qualifying management company within the meaning of section 739(B) TCA; (iv) a specified company within the meaning of section 734 TCA;
(v) an investment undertaking within the meaning of section 739(B) of the TCA;
(vi) an exempt approved scheme or a retirement annuity contract or trust scheme within the provisions of sections 774, 784 or 785 TCA;
(vii) a company carrying on life business within the meaning of section 706 TCA; (viii) a special investment scheme within the meaning of section 737 TCA; (ix) a unit trust to which section 731(5)(a) TCA applies;
(x) a charity entitled to an exemption from income tax or corporation tax under section 207(1)(b) TCA;
(xi) a person entitled to exemption from income tax and capital gains tax under section 784A(2) TCA , section 787I TCA or section 848E TCA and the units held are assets of an approved retirement fund, an approved minimum retirement fund, a special savings incentive account or a personal retirement savings account (as defined in section 787A TCA);
(xii) the Courts Service; (xiii) a Credit Union;
(xiv) a company within the charge to corporation tax under section 739G(2) TCA, but only where the fund is a money market fund;
(xv) a company within the charge to corporation tax under section 110(2) TCA; (xvi) the National Asset Management Agency;
(xvii) the National Pensions Reserve Fund Commission or a Commission investment vehicle (within the meaning given by section 2 of the National Pensions Reserve Fund Act 2000 as amended);
(xviii) the Republic of Ireland (the State) acting through the National Pensions Reserve Fund Commission or a Commission investment vehicle within the meaning given by section 2 of the National Pensions Reserve Fund Act 2000 (as amended); and
(xix) any other person as may be approved by the directors from time to time provided the holding of Shares by such person does not result in a potential liability to tax arising to the Company in respect of that Shareholder under section 739 TCA
in respect of each of which the appropriate declaration set out in Schedule 2B TCA or otherwise and such other information evidencing such status is in the possession of the Company on the appropriate date.
Markets means the stock exchanges and regulated markets set out in Appendix I, and Market means any one of them;
Member State means a member state of the EU;
Minimum Additional Investment Amount means such amount (if any) as the Directors may from time to time prescribe as the minimum additional investment amount required for Shares of each Class in a Fund as is specified in the Supplement for the relevant Fund;
Minimum Fund Size means such amount (if any) as the Directors consider appropriate for each Fund as set out in the Supplement for the relevant Fund;
Minimum Initial Investment Amount means such amount (if any) as the Directors may from time to time prescribe as the minimum initial subscription for Shares of each Class in a Fund as is specified in the Supplement for the relevant Fund;
Minimum Shareholding means such number or value of Shares of any Class (if any) as specified in the Supplement for the relevant Class within a Fund;
money market instruments shall have the meaning prescribed to it in the Central Bank’s Notices; Month means calendar month;
Net Asset Value or Net Asset Value per Share means in respect of the assets of a Fund or the Shares of any Class in a Fund, the amount determined in accordance with the principles set out under the section entitled Calculation of Net Asset Value/Valuation of Assets as the Net Asset Value of a Fund or the Net Asset Value per Share of the relevant Class;
Non-Voting Shares means Shares that confer on the Shareholders of such Shares no right to vote at general meetings of the Company or the relevant Fund (save in respect of resolutions to approve a change to the investment objectives, a material change to the investment policies or an increase in the fees of the Investment Manager of the Fund in respect of which they hold such Shares) but otherwise will rank pari passu with the other Shares which participate in the relevant Fund. In accordance with the requirements of the Central Bank, Shareholders of Non-Voting Shares will be able to request the exchange of those Shares, without fee, to Voting Shares;
OECD means the Organisation for Economic Co-operation and Development;
Preliminary Charge means in respect of a Fund, the charge payable (if any) on the subscription for Shares as specified in the Supplement for the relevant Fund;
Related Companies has the meaning assigned thereto in Section 140(5) of the Companies Act, 1990. In general this states that companies are related where 50% of the paid up share capital of, or 50% of the voting rights in, one company are owned directly or indirectly by another company;
Repurchase Charge means in respect of a Fund, the charge payable (if any) on the repurchase of Shares as specified in the Supplement for the relevant Fund;
Settlement Date means in respect of receipt of monies for subscription for Shares or dispatch of monies for the repurchase of Shares, the date specified in the Supplement for the relevant Fund; Shares means participating shares in the Company representing interests in a Fund and where the context so permits or requires any Class of participating shares representing interests in a Fund;
Shareholders means holders of Shares, and each a Shareholder; Sterling and GBP means the lawful currency of the United Kingdom;
Supplement means any Supplement to the Prospectus in respect of a Fund issued on behalf of the Company from time to time;
TCA means the Taxes Consolidation Act, 1997, as amended;
Transferable Securities shall have the meaning prescribed to it in the Central Bank’s Notices;
UCITS means an undertaking for collective investment in Transferable Securities pursuant to the UCITS Directive;
UCITS Directive means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the Co-ordination of laws, regulations and administrative provisions relating to UCITS as amended, supplemented or replaced from time to time;
UCITS Notices mean the notices and guidance notes issued by the Central Bank from time to time; UCITS Regulations or Regulations means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended from time to time) and any rules or notices pursuant to them made by the Central Bank which are applicable to the Company;
UK means the United Kingdom;
United States and U.S. means the United States of America, (including each of the states, the District of Columbia and the Commonwealth of Puerto Rico) its territories, possessions and all other areas subject to its jurisdiction;
US Dollars, Dollars and $ means the lawful currency of the United States or any successor currency; US Person means any person falling within the definition of the term US Person under Regulation S promulgated under the US Securities Act of 1933, as amended from time to time;
Valuation Point means the point in time by reference to which the Net Asset Value of a Fund and the Net Asset Value per Share are calculated as is specified in the Supplement for the relevant Fund provided that there shall be a Valuation Point for each Dealing Day.
Voting Shares means Shares that confer on the Shareholders thereof the right to notice of and to attend and vote at general meetings of the Company and the relevant Fund but otherwise they will rank pari passu with other Shares which participate in the relevant Fund.
3. FUNDS
3.1. Investment Objective and Policies
The Articles provide that the investment objective and policies for each Fund will be formulated by the Directors at the time of the creation of that Fund. Details of the investment objective and policies for each Fund of the Company appear in the Supplement for the relevant Fund. The Directors may establish further Funds from time to time with the prior approval of the Central Bank. In addition, the Shares in each Fund may be divided into a number of different Classes. The Directors may also add other Classes which will be notified in advance to the Central Bank.
Any change in the investment objective of a Fund may only be made with the approval of an ordinary resolution of the Shareholders of the Fund. Subject to notifying the Shareholders, the Directors may change the investment policies of a Fund but any material change to the investment policies of a Fund will also require the approval of an ordinary resolution of the Shareholders of the Fund. In the event of a change of investment objective and/or policies of a Fund, a reasonable notification period must be given to each Shareholder of the Fund to enable a Shareholder to have its Shares repurchased prior to the implementation of such change.
3.2. Investment Restrictions
The investment restrictions for each Fund are formulated by the Directors at the time of the creation of the Fund. The Articles provide that investments may only be made as permitted by the Regulations and subject to any restrictions and limits set out in the Regulations. Subject to the foregoing, additional restrictions relating to the investment and borrowing powers of each Fund may be formulated by the Directors at the time of the creation of such Fund. Details of these additional restrictions (if any) shall appear in the Supplement for the relevant Fund.
3.3. Permitted Investments
Investments of a Fund must be confined to:
3.3.1. transferable securities and money market instruments as prescribed in the UCITS Notices which are either admitted to official listing on a stock exchange in a Member State or non-Member State or which are dealt on a market which is regulated, operates regularly, is recognised and open to the public in a Member State or non-Member State and is listed in Appendix I;
3.3.2. recently issued transferable securities which will be admitted to official listing on a stock exchange or other market (as described above) within a year;
3.3.3. money market instruments, as defined in the UCITS Notices, other than those dealt in on a regulated market;
3.3.4. shares or units of UCITS;
3.3.5. shares or units of non-UCITS as set out in the Central Bank’s Guidance Note 2/03; 3.3.6. deposits with credit institutions as prescribed in the UCITS Notices; and
3.3.7. financial derivative instruments as prescribed in the UCITS Notices. 3.4. Investment Limits
3.4.1. A Fund may invest no more than 10 per cent. of its Net Asset Value in transferable securities and money market instruments other than those referred to in paragraph 3.3 above.
3.4.2. A Fund may invest no more than 10 per cent. of its Net Asset Value in recently issued transferable securities which will be admitted to official listing on a stock exchange or other market (as described in paragraph 3.3.1) within a year. This restriction will not apply in relation to investment by a Fund in certain U.S. securities known as Rule 144A securities provided that the securities are issued with an undertaking to register with the U.S. Securities and Exchange Commission within one year of issue and the securities are not illiquid securities (i.e. they may be realised by the Fund within seven days at the price, or approximately at the price, at which they are valued by the Fund).
3.4.3. A Fund may invest no more than 10 per cent. of its Net Asset Value in transferable securities or money market instruments issued by the same body provided that the total value of transferable securities and money market instruments held in the issuing bodies in each of which it invests more than 5 per cent. is less than 40 per cent.
3.4.4. Subject to the prior approval of the Central Bank, the limit of 10 per cent. (as described in paragraph 3.4.3 above) is raised to 25 per cent. in the case of bonds that are issued by a credit institution which has its registered office in a Member State and is subject by law to special public supervision designed to protect bond-holders. If a Fund invests more than 5 per cent. of its Net Asset Value in these bonds issued by one issuer, the total value of these investments may not exceed 80 per cent. of the net asset value of the Fund.
3.4.5. The limit of 10 per cent. (as described in paragraph 3.4.3 above) is raised to 35 per cent. if the transferable securities or money market instruments are issued or guaranteed by a Member State or its local authorities or by a non-Member State or public international body of which one or more Member States are members.
3.4.6. The transferable securities and money market instruments referred to in paragraphs 3.4.4. and 3.4.5 above shall not be taken into account for the purpose of applying the limit of 40 per cent. referred to in paragraph 3.4.3.
3.4.7. A Fund may not invest more than 20 per cent. of its Net Asset Value in deposits made with the same credit institution.
Deposits with any one credit institution, other than credit institutions authorised in the EEA, credit institutions authorised within a signatory state (other than an EEA member state) to the Basle Capital Convergence Agreement of July 1988 or a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand, held as ancillary liquidity, must not exceed 10 per cent. of a Fund’s Net Asset Value.
This limit may be raised to 20 per cent. in the case of deposits made with the Custodian
3.4.8. The risk exposure of a Fund to a counterparty to an over the counter (OTC) derivative may not exceed 5 per cent. of its Net Asset Value.
This limit is raised to 10 per cent. in the case of credit institutions authorised in the EEA, credit institutions authorised within a signatory state (other than an EEA member state) to the Basle Capital Convergence Agreement of July 1988 or a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand.
3.4.9. Notwithstanding paragraphs 3.4.3, 3.4.7 and 3.4.8 above, a combination of two or more of the following issued by, or made or undertaken with, the same body may not exceed 20 per cent. of a Fund’s Net Asset Value: investments in transferable securities or money market instruments; deposits; and/or risk exposures arising from OTC derivatives transactions.
3.4.10. The limits referred to in paragraphs 3.4.3, 3.4.4, 3.4.5, 3.4.7, 3.4.8 and 3.4.9 above may not be combined, so that exposure to a single body shall not exceed 35 per cent. of a Fund’s Net Asset
Value.
3.4.11. Group companies are regarded as a single issuer for the purposes of paragraphs 3.4.3, 3.4.4, 3.4.5, 3.4.7, 3.4.8 and 3.4.9 above. However, a limit of 20 per cent. of a Fund’s Net Asset Value may be applied to investment in transferable securities and money market instruments within the same group.
3.4.12. A Fund may invest up to 100 per cent. of its Net Asset Value in different transferable securities and money market instruments issued or guaranteed by any Member State, its local authorities, non-Member State or public international body of which one or more Member States are members.
The individual issuers may be drawn from the following list:
OECD governments (provided the relevant issues are investment grade), Government of Brazil (provided these issues are of investment grade), Government of India (provided these issues are of investment grade), Government of Singapore, European Investment Bank, European Bank for Reconstruction and Development, International Finance Corporation, International Monetary Fund, Euratom, The Asian Development Bank, European Central Bank, Council of Europe, Eurofima, African Development Bank, International Bank for Reconstruction and Development (The World Bank), The Inter American Development Bank, European Union, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Government National Mortgage Association (Ginnie Mae), Student Loan Marketing Association (Sallie Mae), Federal Home Loan Bank, Federal Farm Credit Bank, Tennessee Valley Authority, Straight-A Funding LLC.
The Fund must hold securities from at least six different issues, with securities from any one issue not exceeding 30 per cent. of net assets.
3.5. Investment in other collective investment schemes (CIS)
3.5.1. Some Funds may not invest more than 10 per cent. of its Net Asset Value in open-ended CIS, whilst others may not invest more than 20 per cent. of its Net Asset Value in any one CIS. 3.5.2. Investment in non-UCITS may not, in aggregate, exceed 30 per cent. of its Net Asset Value. 3.5.3. The CIS in which the Fund invests are prohibited from investing more than 10 per cent. of their
Net Asset Value in other open-ended CIS.
3.5.4. When a Fund invests in the shares or units of other CIS that are managed, directly or by delegation, by the Investment Manager or by any other company with which the Investment Manager is linked by common management or control, or by a substantial direct or indirect holding, the Investment Manager or other company may not charge subscription, switching or redemption fees on account of the investment by the Fund in the shares or units of such other CIS.
3.5.5. Where a commission (including a rebated commission) is received by the Investment Manager by virtue of an investment in the shares or units of another CIS, this commission must be paid into the property of the Fund.
3.6. Index Tracking UCITS
3.6.1. A Fund may invest up to 20 per cent. of its Net Asset Value in shares and/or debt securities issued by the same body where the investment policy of the Fund is to replicate an index which satisfies the criteria set out in the UCITS Notices and is recognised by the Central Bank.
3.6.2. The limit in paragraph 3.6.1 above may be raised to 35 per cent., and applied to a single issuer, where this is justified by exceptional market conditions.
3.7. General Provisions
3.7.1. The Company acting in connection with all of the CIS it manages, may not acquire any shares carrying voting rights that would enable it to exercise significant influence over the management of an issuing body.
3.7.2. A Fund may acquire no more than:
(i) 10 per cent. of the non-voting shares of any single issuing body; (ii) 10 per cent. of the debt securities of any single issuing body; (iii) 25 per cent. of the shares or units of any single CIS;
(iv) 10 per cent. of the money market instruments of any single issuing body.
NOTE: The limits laid down in sub-paragraphs (ii), (iii) and (iv) above may be disregarded at the time of acquisition if at that time the gross amount of the debt securities or of the money market instruments, or the net amount of the securities in issue cannot be calculated.
3.7.3. Paragraphs 3.7.1 and 3.7.2 above shall not be applicable to:
(i) transferable securities and money market instruments issued or guaranteed by a Member State or its local authorities;
(ii) transferable securities and money market instruments issued or guaranteed by a non-Member State;
(iii) transferable securities and money market instruments issued by public international bodies of which one or more Member States are members;
(iv) shares held by a Fund in the capital of a company incorporated in a non-Member State which invests its assets mainly in the securities of issuing bodies having their registered offices in that non-Member State, where under the legislation of that non-Member State such a holding represents the only way in which the Fund can invest in the securities of issuing bodies of that non-Member State. This waiver is applicable only if in its investment strategies the company from the non-Member State complies with the limits laid down in paragraphs 3.4.3 to 3.4.11, 3.5.1, 3.5.2, 3.7.1, 3.7.2 above and paragraphs 3.7.4, 3.7.5 and 3.7.6 below, and provided that where these limits are exceeded, paragraphs 3.7.5 and 3.7.6 below are observed;
(v) shares held by a Fund in the capital of subsidiary companies carrying on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the repurchase of shares or units at the request of share or unit holders exclusively on their behalf.
3.7.4. A Fund need not comply with the investment restrictions herein when exercising subscription rights attaching to transferable securities or money market instruments that form part of their assets.
3.7.5. The Central Bank may allow recently authorised Funds to derogate from the provisions of paragraphs 3.4.3 to 3.4.12, 3.5.1, 3.5.2, 3.6.1 and 3.6.2 above for six months following the date of their authorisation, provided they observe the principle of risk spreading.
3.7.6. If the limits laid down herein are exceeded for reasons beyond the control of a Fund, or as a result of the exercise of subscription rights, the Fund must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its Shareholders.
3.7.7. The Company may not carry out uncovered sales of transferable securities; money market instruments; shares or units of CIS; or financial derivative instruments.
3.7.8. A Fund may hold ancillary liquid assets. 3.8. Financial Derivative Instruments (FDIs)
3.8.1. Position exposure to the underlying assets of FDI, including embedded FDI in transferable securities or money market instruments, when combined where relevant with positions resulting from direct investments, may not exceed the investment limits set out in the UCITS Notices.
(This provision does not apply in the case of index based FDI provided the underlying index is one which meets with the criteria set out in the UCITS Notices).
3.8.2. A Fund may invest in FDIs dealt OTC provided that the counterparties to the OTC transactions are institutions subject to prudential supervision and belonging to categories provided by the Central Bank.
3.8.3. Investment in FDIs are subject to the conditions and limits laid down by the Central Bank. 3.9. Efficient Portfolio Management
Subject to the specific provisions relating to efficient portfolio management set out in the relevant Supplement, the Company may employ techniques and instruments for the relevant Fund under the conditions and within the limits laid down by the Central Bank provided that such techniques and instruments are used for efficient portfolio management. The Company may also employ techniques and instruments intended to provide protection against exchange risks in the context of the management of the assets and liabilities of the Company.
Use of techniques and instruments which relate to Transferable Securities and money market instruments and which are used for the purposes of efficient portfolio management shall be understood as a reference to techniques and instruments which fulfill the following criteria:
(i) they are economically appropriate in that they are realised in a cost effective way; (ii) they are entered into for one or more of the following specific aims:
(a) the reduction of risk; (b) the reduction of cost; or
(c) the generation of additional capital or income for the Fund a level of risk which is consistent with the risk profile of the Fund and the risk diversification rules set out in the Central Bank’s Notices.
(iii) their risks are adequately captured in the risk management process; or
(iv) they cannot result in a change to the Fund’s declared investment objective or add substantial supplementary risks in comparison to the general risk policy as described in its sales documents.
Prior to the entry into any financial derivative instruments for the purposes of efficient portfolio management by a Fund, the Company will ensure that a risk management process relating to the use of such financial derivative instruments has been adopted on behalf of the relevant Fund, details of which will be sent to the Central Bank and will be available on request to the Company or the Administrator. The Company will, on request, provide supplementary information to Shareholders relating to the risk management methods employed, including the quantitative limits that are applied and any recent developments in the risk and yield characteristics of the main categories of investments in respect of the relevant Fund.
The Company may enter into repurchase/reverse repurchase and stocklending arrangements for the purposes of efficient portfolio management. Any such arrangements entered into by the Company will be in accordance with the Central Bank Notices.
3.10. Borrowing and Lending Powers
The Company may borrow up to 10 per cent of its net assets, provided this borrowing is on a temporary basis. The Custodian may give a charge over the assets of the relevant Fund in order to secure borrowings. Credit balances (e.g. cash) may not be offset against borrowings when determining the percentage of borrowings outstanding. Without prejudice to the powers of the Company to invest in Transferable Securities, the Company may not lend to, or act as guarantor on behalf of, third parties. A Fund may acquire debt securities and securities which are not fully paid.
A Fund may acquire foreign currency by means of a back-to-back loan agreement. Foreign currency obtained in this manner is not classed as borrowings for the purposes of the borrowing restriction provided that the offsetting deposit is denominated in the Base Currency of the Fund and equals or exceeds the value of the foreign currency loan outstanding. However, where foreign currency borrowings exceed the value of the back-to-back deposit, any excess is regarded as borrowing for the purpose of this restriction.
3.11. Dividend Policy
The Directors decide the dividend policy and arrangements relating to each Fund and details are set out where applicable in the relevant Supplement. Under the Articles, the Directors are entitled to declare dividends out of the profits of the relevant Fund being: (i) the accumulated revenue (consisting of all revenue accrued including interest and dividends) less expenses and/or (ii) realised and unrealised capital gains on the disposal/ valuation of investments and other funds less realised and unrealised accumulated capital losses of the relevant Fund. The Directors may satisfy any dividend due to Shareholders in whole or in part by distributing to them in specie any of the assets of the relevant Fund, and in particular any investments to which the relevant Fund is entitled. A Shareholder may require the Company instead of transferring any assets in specie to him, to arrange for a sale of the assets and for payment to the Shareholder of the net proceeds of same. The Company will be obliged and entitled to deduct an amount in respect of costs which may include re-registration costs and duties and taxes including amounts in respect Irish taxation from any dividend payable to a Shareholder in any Fund who is or is deemed to be or is acting on behalf of an Irish Taxable Person and pay such sum to the Irish tax authorities. Dividends not claimed within six years from their due date will lapse and revert to the relevant Fund.
The Company does not employ equalisation and consequently does not distinguish between income and capital elements which make up the Net Asset Value at the point that Shares are either issued or redeemed. Therefore the amount of any dividends payable may be affected by the level of issue and redemption of Shares in a particular Class.
Dividends payable in cash to Shareholders will be paid by electronic transfer to the bank account designated by the Shareholder in which case the dividend will be paid at the expense of the payee. Shareholders have the option of having any dividends declared by the Company to which they are entitled re-invested in further Shares of the same Class to which the dividend relates.
3.12. Risk Factors
The investments of the Company in securities are subject to normal market fluctuations and other risks inherent in investing in securities. The value of investments and the income from them, and therefore the value of and income from Shares relating to each Fund can go down as well as up and a Shareholder may not get back the amount he invests. Changes in exchange rates between currencies or the conversion from one currency to another may also cause the value of the investments to diminish or increase. Due to the Preliminary Charge and the Repurchase Charge which may be payable on the issue and repurchase of Shares, an investment in Shares should be viewed as medium to long term.
Each Fund is a segregated portfolio of assets and will accordingly bear its own liabilities and will be solely liable to third parties for all of the liabilities of the relevant Fund. While the provision of the Companies Acts provide for segregated liability between Funds, these provisions have yet to be tested in foreign courts, in particular, in satisfying local creditors’ claims. Accordingly, it is not certain that the assets of any Fund of the Company may not be exposed to the liabilities of other Funds of the Company. As at the date of this Prospectus, the Directors are not aware of any existing or contingent liability of any Fund of the Company.
The Company and the Investment Manager will not have control over the activities of any company or collective investment scheme invested in by a Fund. Managers of collective investment schemes and companies in which a Fund may invest may manage the collective investment schemes or be managed in a manner not anticipated by the Company or the Investment Manager.
The Company may fail to deliver its objective due to poor stock selection or as a result of being geared in a falling market or ungeared in a rising market.
be valued at the probable realisation value as determined in accordance with the provisions set out below under the section entitled Calculation of Net Asset Value/Valuation of Assets. Estimates of the probable realisation value of such investments are inherently difficult to establish and are the subject of substantial uncertainty. The Company may consult the Investment Manager with respect to the valuation of unquoted investments. There is an inherent conflict of interest between the involvement of the Investment Manager in determining the valuation price of a Fund’s investments and its other responsibilities.
The income and gains of a Fund from its assets may suffer withholding tax which may not be reclaimable in the countries where such income and gains arise. If this position changes in the future and the application of a lower rate results in a repayment to the relevant Fund, the Net Asset Value will not be re-stated and the benefit will be allocated to the existing Shareholders rateably at the time of repayment.
Where a Fund enters into stocklending arrangements for efficient portfolio management purposes there are risks in the exposure to market movements if recourse has to be had to collateral, or if there is fraud or negligence on the part of the Custodian, Investment Manager or lending agent. In addition there is an operational risk associated with marking to market daily valuations and there are the potential stability risks of providers of collateral. The principal risk in such stocklending arrangements is the insolvency of the borrower. In this event the Company could experience delays in recovering its securities and such event could possibly result in capital losses.
Any change in the Company’s tax status or in taxation legislation could affect the value of the investments held by each Fund and affect each Fund’s ability to provide the investor returns. Potential investors and Shareholders should note that the statements on taxation which are set out herein are based on advice which has been received by the Directors regarding the law and practice in force in the relevant jurisdiction as at the date of this Prospectus and each Supplement. As is the case with any investment, there can be no guarantee that the tax position or proposed tax position prevailing at the time an investment is made in the Fund will endure indefinitely. The attention of potential investors is drawn to the tax risk associated with investing in the Company. See section headed Taxation.
The Company is exposed to investment strategy risk, market risk (comprising currency risk, interest rate risk, and other price risk), liquidity risk, credit risk, concentration risk, emerging markets risk, borrowing risk, operational risk, financial risk, legal, tax and regulatory risk and key personnel risk.
3.12.1. Investment strategy risk is the risk that the Company may fail to deliver its objective due to poor stock selection.
3.12.2. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The components of market risk include currency risk, interest rate risk and other price risk as detailed below.
3.12.3. Currency risk arises from the possibility that the value of assets will fluctuate due to changes in foreign exchange rates. The Company invests in securities and other investments that are denominated in currencies other than the Base Currency of the relevant Fund. Accordingly, the value of the Company’s assets and liabilities may be affected favourably or unfavourably by fluctuations in currency rates and therefore the Company will necessarily be subject to foreign exchange risks. Currency risk may result from exposures to changes in spot prices, forward prices and volatilities of currency rates. Funds may offer Shares in currencies other than the Base Currency of the relevant Fund and Shareholders may be subject to fluctuations in their value as a consequence of movements in exchange rates between Base Currency and offered currency.
3.12.4. Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of assets. Interest rate risks may result from exposures to changes in the level, scope and curvature of yield curves, the volatility of interest rates and credit spreads. The Company’s assets and liabilities, excluding short-term debtors and creditors, may comprise financial instruments which have an interest rate exposure.
3.12.5. Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices other than those arising from currency risk or interest rate risk, whether caused by factors specific to an individual investment, its issuer or any factor affecting traded financial investments. It may result from exposures to changes in the prices and
volatilities of individual equities, equity baskets, equity indices and commodities. The Company has no control over the activities of any company invested in by a Fund. Companies in which a Fund may invest may be managed in a manner not anticipated by the Company.
3.12.6. Liquidity risk is the risk that the Company may encounter difficulty in meeting obligations associated with financial liabilities on time or at a reasonable price, for example its obligation to meet cash redemptions. Among other things liquidity could be impaired by an inability to access secured and/or unsecured sources of financing, an inability to sell assets or unforeseen outflows of cash or collateral or violations of principal trading broker terms or covenants. This situation may arise due to circumstances outside of the Company’s control, such as general market disruption or an operational problem affecting the Company or third parties. Also the ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time. In certain circumstances, the market prices at which investments are valued may not represent the realisable value of those investments, taking into account both the size of the Company’s holding and the frequency with which such investments are traded. The Company provides for the subscription and redemption of Shares and it is therefore exposed to the liquidity risk associated with Shareholder redemptions in accordance with the terms in this Prospectus and Supplements. Substantial redemptions of Shares in the Company could require the Company to liquidate its investments more rapidly than otherwise desirable in order to raise cash for the redemptions. These factors could adversely affect the value of the Shares redeemed and the valuation of the Shares that remain in issue.
3.12.7. Credit risk is the risk that one party to a financial investment will cause a financial loss for the other party by failing to discharge an obligation. The Company may be adversely impacted by an increase in its credit exposure relating to investing, financing, banking and other activities. The Company is exposed to the potential for credit-related losses that can occur as a result of an individual, counterparty or issuer being unable or unwilling to honour its contractual obligations. As the Company’s credit exposure increases, it could have an adverse effect on the Company’s business and profitability if material unexpected credit losses occur.
3.12.8. Concentration risk arises when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of liquidity risk may arise from the repayment terms of financial liabilities, source of borrowing facilities or reliance on a particular market in which to realise liquid assets. Concentration of foreign exchange risk may arise if the Company has a significant net open position in a single foreign currency or aggregate net open positions in several currencies that tend to move together. The Company may invest in a limited number of investments. A consequence of a limited number of investments is that performance may be more favourably or unfavourably affected by the performance of an individual investment.
3.12.9. The Funds may have exposure to emerging markets. The risks of investment are greater for investments in emerging markets. Emerging market countries typically have economic and political systems that are less fully developed, and can be expected to be less stable, than those of more advanced countries. Investments may be subject to sudden and sometimes substantial fluctuations in their values. Low trading volumes may result in a lack of liquidity and in price volatility. Shareholders should therefore be aware of the risks attached to investing in such markets, which could have an impact on the performance of the Funds.
3.12.10.The use of borrowing can cause both the gains and losses in the net asset value of the Company to be magnified.
3.12.11.Operational risk is the potential that for loss caused by a deficiency in information, communications, transaction, processing and settlement, and accounting systems. The main risk is that third parties may fail to ensure that statutory requirements such as Companies Acts and Irish Stock Exchange requirements are met.
3.12.12.Financial risk can occur when inappropriate accounting policies or a failure to comply with current or new accounting standards may lead to a breach of regulations.
3.12.13.Legal, tax and regulatory risk changes could occur which may adversely affect the Company. A failure to comply with the Companies Acts and a breach of the rules of the Irish Stock Exchange
may result in censure by the Central Bank and or the Company’s suspension from listing on the Irish Stock Exchange.
3.12.14.There is a risk that key personnel within the Investment Manager might leave or are not involved in the management of the Company’s Funds.
Additional risk factors (if any) in respect of each Fund are set out in the Supplement for the relevant Fund.
3.13. Management of the Company Directors of the Company
The Directors of the Company are described
below:-Frank Ennis (Irish resident): Mr Ennis has been an independent financial consultant since 2001. From 2000-2001 he was joint CEO and board director of Trinity Technology Limited. He joined PricewaterhouseCoopers in 1977 where he spent five years as an auditor, prior to assuming responsibility for the management of a number of departments, including the Technology Industry Group, the International Financial Services Group, the Business Services Group and the Inward Investment Group, and was a partner from 1985 – 2000. He graduated from Trinity College in 1977 with a Bachelor of Business Studies.
Denis Murphy (Irish resident): Mr Murphy has thirty years experience with Allied Irish Bank holding various senior positions in Credit, Corporate Banking and International Lending. He holds a Bachelor of Commerce Degree from University College Dublin, an MBA from Fordham University and is a Fellow of the Institute of Bankers in Ireland.
Sam Bleakney (UK resident): Mr Bleakney has been finance partner since 2003 and finance director of Edinburgh Partners Limited since 2007. Prior to joining Edinburgh Partners he worked from 2000 to 2002 as finance director at Stocktrade, the execution only stockbroking division of Brewin Dolphin Holdings plc, and prior to that spent over ten years at Templeton Global Investors Limited where he was chief financial officer for Europe between 1998 and 2000. He is a chartered accountant having worked with PricewaterhouseCoopers in the UK and the Channel Islands.
Kenneth Greig (UK resident): Mr Greig has been legal partner and legal director of Edinburgh Partners Limited since 2003 and is a qualified solicitor. From 2002 to 2003 he was director of legal and technical services at Scottish Widows Investment Partnership and prior to that he was head of legal and compliance at Morgan Stanley Asset Management and he was head of legal services from 1999 to 2002 at AXA Investment Managers in London.
For the purposes of this Prospectus, the address of all the Directors is the registered office of the Company.
The Company has delegated the day to day investment management and administration of the Company to the Investment Manager and the Administrator respectively. Consequently, all Directors of the Company in relation to the Company are non-executive.
None of the Directors have had any convictions in relation to indictable offences, been involved in any bankruptcies, individual voluntary arrangements, receiverships, compulsory liquidations, creditors voluntary liquidations, administrations, company or partnership voluntary arrangements, any composition or arrangements with its creditors generally or any class of its creditors of any company where they were a director or partner with an executive function, (save in the case of Mr. Frank Ennis who was a director and joint chief executive officer of Trinity Group Limited, a company engaged in the technology sector which company went into compulsory liquidation on 14 May 2001) nor have any of its Directors had any public criticisms by statutory or regulatory authorities (including recognised professional bodies) nor has any Director ever been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.
3.14. Custodian
Northern Trust Fiduciary Services (Ireland) Limited has been appointed Custodian under the Custodian Agreement. The Custodian is a private limited liability company incorporated in Ireland on 5 July 1990.
Its main activity is the provision of custodial services to collective investment schemes. The Custodian is an indirect wholly-owned subsidiary of Northern Trust Corporation. Northern Trust Corporation and its subsidiaries comprise the Northern Trust Group, one of the world’s leading providers of global custody and administration services to institutional and personal investors. As at 31 December 2012 the Northern Trust Group’s assets under custody and administration totalled in excess of US$4.8 trillion. Under the terms of the Custodian Agreement, the Custodian has full power to delegate the whole or any part of its custodial function, but its liability will be affected by the fact that it has entrusted to a third party some or all of the investments of the Company and each Fund in its safe-keeping. In order to discharge this responsibility, the Custodian must exercise care and diligence in choosing and appointing a third party as a safe-keeping agent so as to ensure that the third party has and maintains the expertise, competence and standing appropriate to discharge the responsibilities concerned. The Custodian must maintain an appropriate level of supervision over the third party and make appropriate enquires from time to time to confirm that the obligations of the third party continue to be completely discharged. 3.15. Administrator
Northern Trust International Fund Administration Services (Ireland) Limited is a private limited liability company incorporated in Ireland on 15 June 1990 and is an indirect wholly-owned subsidiary of Northern Trust Corporation. Northern Trust Corporation and its subsidiaries comprise the Northern Trust Group, one of the world’s leading providers of global custody and administration services to institutional and personal investors. The principal business activity of Northern Trust International Fund Administration Services (Ireland) Limited is the administration of collective investment schemes.
The Administrator is not involved directly or indirectly with the business affairs, organisation, sponsorship or management of the Company and is not responsible for the preparation of this document other than the preparation of the above description and accepts no responsibility or liability for any information contained in this document except disclosures relating to it.
3.16. Portfolio Transactions and Conflicts of Interest
Subject to the provisions of this section, the Directors, the Investment Manager, the Administrator, the Custodian, any Shareholder and any of their respective subsidiaries, affiliates, associates, agents or delegates (each a Connected Person) may contract or enter into any financial, banking or other transaction with one another or with the Company. This includes, without limitation, investment by the Company in securities of any Connected Person or investment by any Connected Persons in any company or bodies any of whose investments form part of the assets comprised in any Fund or be interested in any such contract or transactions. In addition, any Connected Person may invest in and deal in Shares relating to any Fund or any property of the kind included in the property of any Fund for their respective individual accounts or for the account of someone else.
Any cash of the Company may be deposited, subject to the provisions of Central Bank Acts, 1942 to 1998, of Ireland, as amended by the Central Bank and Financial Services Authority of Ireland Act, 2003 to 2004, with any Connected Person or invested in certificates of deposit or banking instruments issued by any Connected Person. Banking and similar transactions may also be undertaken with or through a Connected Person.
Any Connected Person may also deal as agent or principal in the sale or purchase of securities and other investments to or from the Company. There will be no obligation on the part of any Connected Person to account to the Company or to Shareholders for any fees or commissions so arising, and any such fees or commissions may be retained by the relevant party, provided that such transactions are carried out as if effected on normal commercial terms negotiated at arm's length, are consistent with the best interests of the Shareholders and:
(i) a certified valuation of such transaction by a person approved by the Custodian (or in the case of any such transaction entered into by the Custodian, the Directors) as independent and competent has been obtained; or
(ii) such transaction has been executed on best terms reasonably available on an organised investment exchange under its rules; or
where (i) and (ii) are not reasonably practicable, such transaction has been executed on terms which the Custodian is (or in the case of any such transaction entered into by the Custodian, the Directors are)
satisfied conform with the principle that such transactions be carried out as if effected on normal commercial terms negotiated at arm’s length and are in the best interests of Shareholders.
The Investment Manager may also, in the course of its business, have potential conflicts of interest with the Company in circumstances other than those referred to above. The Investment Manager will, however, have regard in such event to its obligations under the Investment Management Agreement and, in particular, to its obligations to act in the best interests of the Company so far as practicable, having regard to its obligations to other clients when undertaking any investments where conflicts of interest may arise and will ensure that such conflicts are resolved fairly as between the Company, the Funds and other clients. The Investment Manager will ensure that investment opportunities are allocated on a fair and equitable basis between the Company and its other clients. In the event that a conflict of interest does arise the Investment Manager will endeavour to ensure that such conflicts are resolved fairly.
As the fees of an Investment Manager are usually based on the Net Asset Value of a Fund, if the Net Asset Value of the Fund increases so do the fees payable and accordingly there is a conflict of interest for the Investment Manager in cases where the Investment Manager is responsible for or involved in the determination of the valuation price of any of a Fund’s investments.
The Directors will endeavour to ensure that any potential conflicts of interest which may arise will be resolved as soon as possible and in a manner which does not unfairly prejudice the Company.
3.17. Dealing Commissions
The Investment Manager may effect transactions through the agency of another person with whom the Investment Manager has an arrangement under which that party will from time to time provide or procure for the Investment Manager goods, services or other benefits such as research and advisory services. Commissions will only be used to pay for "permitted" research as defined by the UK Financial Services Authority and by the US SEC Safe Harbour rules.
Under such arrangements, no direct payment is made for such services or benefits, but instead the Investment Manager undertakes to place business with that party. For the avoidance of doubt, such goods and services do not include:
3.17.1. Services relating to the valuation or performance measurement of portfolios; 3.17.2. Computer hardware (including office administrative computer software);
3.17.3. Connectivity services such as electronic networks and dedicated telephone lines; 3.17.4. Seminar fees or membership fees to professional associations;
3.17.5. Subscriptions for publications;
3.17.6. Travel, accommodation or entertainment costs; 3.17.7. Order and execution management systems;
3.17.8. Purchase or rental of standard office equipment or ancillary facilities; 3.17.9. Employees’ salaries;
3.17.10.Direct money payments; and 3.17.11.Publicly available information.
In such cases, the Investment Manager shall ensure that there are reasonable grounds to be satisfied that such provisions shall assist in the provision of its investment services to the relevant Fund which do not and are not likely to impair achieving compliance with the duty of the Investment Manager to act in the best interests in provision of investment services to the relevant Fund and/or compromise the ability to comply with the Investment Manager’s best execution obligations.
Details of any such dealing commission arrangements will be disclosed in the periodic reports of the relevant Funds.
4. SHARE DEALINGS
4.1. Subscription for Shares General
Shares may be issued on any Dealing Day. Shares issued in a Fund or Class will be in registered form and denominated in the Base Currency specified in the relevant Supplement for the relevant Fund or a
