CFCL Investment regulation - Isle of Man

Holding restrictions – CSD market 

Disclaimer

The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 26 February 2021. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and customers should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.

Market restrictions

There is no statutory nominee concept under the laws of Isle of Man for investment funds. In the absence of any provisions of the constitutional documents of the Investment Fund, CFCL as the nominee will be recognised as the legal and beneficial owner of the relevant interests in the investment fund. Beneficial interest of CFCL’s clients may be recognised in practice depending on provisions of the constitutional documents governing the investment fund or AML requirements.

Clients are advised to consult with appropriate counsel before holding fund units/shares through CFCL in Isle of Man. By holding such securities, CFCL clients are deemed to be aware of any law, regulation, rules, and policies applicable thereto.

Restrictions on clients

No general restrictions on customer residency for holdings held through CFCL.

However, certain funds may impose specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.

Restrictions on settlement

There is no general restriction on settlement of Isle of Man investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.

Disclosure requirements

Introductory information and categories​

This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.

Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.

Disclosure requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.

For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.

In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.

In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.

The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.

Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.

It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.

In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.

N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.

Disclosure categories

Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:

Category 1

Markets where disclosure by Clearstream Banking to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;

Category 2

Markets where disclosure by Clearstream Banking of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;

Category 3

Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Banking, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.

Disclosure requirements – Register Market 

Disclosure Category: 2

Clearstream Fund Centre (CFCL) may be required, under the laws and regulations of Isle of Man to disclose the information of CFCL clients and ultimate beneficial owners, upon request, in the case of holding Isle of Man investment funds.

Consent

In order to comply with the applicable legislation, clients with holdings in Isle of Man investment funds or entering into transactions in the Isle of Man market must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requester (for example, the Fund Manager, Transfer Agent, Regulator, Tax authority) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CFCL.

Disclosure Requirements

Clients are advised that under local laws and regulations, investment funds and its agents may require CFCL, on request, to disclose information on CFCL clients and ultimate beneficial owners.

Background and legal basis

Clients are advised that disclosure of holdings and identity of CFCL clients and ultimate beneficial owners may arise from the following local laws and regulations:

• Anti-Money Laundering and Countering the Financing of Terrorism Code 2019;
• Proceeds of Crime Act 2008;
• Terrorism and Other Crime (Financial Restrictions) Act 2014.

Sanctions

Non-compliance with the disclosure requirements may result in the fund manager or its agent refusing acceptance of the proposed investment, and/or mandatory redemption of the existing holdings. The code requires the regulated entities and persons in Isle of Man to refuse and discontinue any business relationship with the party that failed to comply with the disclosure request.

Disclaimer

The information contained in the Disclosure Requirements is based on the legal opinion obtained by CFCL that was issued on 26 February 2021. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.