Contributed By Travers Smith LLP
As stated above, a closed ended fund in the UK will almost certainly be an AIF for the purposes of the AIFMD. As such, the AIF's manager will be an alternative investment fund manager (AIFM) for the purposes of the AIFMD and will need to be authorised to carry out AIF management in respect of that vehicle. Any person who carries on the activity of managing an AIF in the UK without being duly authorised, and in the absence of an exclusion, commits an offence. In addition, if he or she has entered into an agreement with another person (eg, an investor) in the course of that activity, this agreement is unenforceable against that other party, who is entitled to receive his or her money back, and to compensation for any loss.
An investment trust could be self-managed or managed by an external manager. The board of an externally managed ITC will generally consist of non-executive directors, the majority of whom must be independent of the investment manager. In many cases investment trusts will now have no manager representative on the board, due to its unpopularity with investors.
Open- ended Funds
The manager of open-ended authorised funds must be authorised by the FCA, with permission to either "manage a UCITS" or "manage an authorised AIF". A management company authorised in another EEA state may also manage an open-ended fund in the UK.
Each open-ended fund must also have a depositary which, in the UK, is a regulated activity for which the depositary must hold the appropriate FCA permissions.