S.L. 370.32 Art. 34Delegation.

(1) The depositary shall not delegate to third parties its functions as described in this Part save for those referred to in regulation 32(1).

(2) The depositary may delegate to third parties the functions referred to in regulation 32(1) subject to the following conditions:

(a) the tasks are not delegated with the intention of avoiding the requirements prescribed in the Act, the Rules and regulations issued thereunder;

(b) the depositary can demonstrate that there is an objective reason for the delegation;

(c) the depositary has exercised all due skill, care and diligence in the selection and the appointment of any third party to whom it wants to delegate parts of its tasks, except where that third party is a central securities depository acting in the capacity of an investor CSD as defined in the delegated act adopted pursuant to Articles 29(3) and 48(10) of Regulation (EU) No 909/2014, and keeps exercising all due skill, care and diligence in the periodic review and ongoing monitoring of any third party to whom it has delegated parts of its tasks and of the arrangements of the third party in respect of the matters delegated to it; and

(d) the depositary ensures that the third party meets the following conditions at all times during the performance of the tasks delegated to it:

(i) the third party has the structures and the expertise that are adequate and proportionate to the nature and the complexity of the assets of the AIF or the AIFM acting on behalf of the AIF which have been entrusted to it;

(ii) for custody tasks referred to in regulation 32(1)(a), the third party is subject to effective prudential regulation, including minimum capital requirements, and supervision in the jurisdiction concerned and the third party is subject to an external periodic audit to ensure that the financial instruments are in its possession: Provided that where the law of a third country requires that certain instruments be held in custody by a local entity and no local entities satisfy the delegation requirements prescribed above, the depositary may delegate its functions to such a local entity only to the extent required by the law of the third country and only for as long as there are no local entities that satisfy the delegation requirements subject to the following requirements:

(a) the investors of the relevant AIF must be duly informed that such delegation is required due to legal constrains in the law of the third country and of the circumstances justifying the delegation, prior to their investment; and

(b) the AIF, or the AIFM on behalf of the AIF, must instruct the depositary to delegate the custody of such financial instruments to such local entity;

(iii) the third party segregates the assets of the depositary’s clients from its own asses and from the assets of the depositary in such a way that they can at any time be clearly identified as belonging to clients of a particular depositary;

(iv) the third party does not make use of the assets without the prior consent of the AIF or the AIFM acting on behalf of the AIF and prior notification to the depositary;

(v) the third party complies with the general obligations and the prohibitions set out in regulation 30(2) and (3) and regulation 32(1) and (3).

(3) The third party may, in turn, sub-delegate those functions, subject to the same requirements prescribed in the above sub-regulations. In such a case, regulation 36 shall apply mutatis to the relevant parties. mutandis

(4) For the purposes of Article 21 of the AIFMD, as transposed in these regulations and the Investment Services Rules, the provision of services by a central securities depository acting in the capacity of an issuer CSD as defined in the delegated act adopted pursuant to Articles 29(3) and 48(10) of Regulation (EU) No 909/2014 shall not be considered a delegation of the depositary’s depositary functions, and the provision of services by a central securities depository acting in the capacity of an investor CSD as defined in such delegated act shall be considered a delegation of the depositary’s depositary functions.