Home / CY AIF Law of 2018 / PART ΙΙ: PROVISIONS REGARDING THE ALTERNATIVE INVESTMENT FUNDS / Chapter 3: Common provisions regarding the organisation and operation of AIFs / [20] Valuation.

20. Valuation.

(1) Without prejudice to the provisions of article 19 of the Alternative Investment Fund Managers Law, applicable to AIFMs which are internally managed AIFs, this article shall apply to internally managed AIFs, unless otherwise provided in this Law.

(2) The internally managed AIF shall ensure that appropriate and consistent procedures are established, so that a proper and independent valuation of the assets of the AIF can be performed in accordance with this article, the applicable law and the AIF fund rules or instruments of incorporation.

(3) The rules applicable to the valuation of assets and the calculation of the net asset value per unit of the AIF are determined-

(a) by the relevant legislation governing investment companies or limited partnerships, provided that it is not in conflict with the provisions of this Law or the AIFs instruments of incorporation∙ or

(b) in case it is a common fund, by its fund rules.

(4) (a) Internally managed AIFs shall ensure that the net asset value per unit of the AIF is calculated and disclosed to the investors in accordance with this article, the applicable national law and the AIF fund rules or instruments of incorporation. The valuation procedures used shall ensure that the assets are valued and the net asset value per unit is calculated at least once a year

(b) The valuations and calculations of paragraph (a) are carried out -

(a) on the dates at which marketing, redemption and/or repurchase of AIF units takes place∙ and

(b) on the dates mentioned in the annual and half-yearly report of the AIF, respectively, as the reference dates for the listed items.

(5) The investors shall be informed of the valuations and calculations as set out in the relevant AIF fund rules or instruments of incorporation.

(6) Internally managed AIFs shall ensure that the valuation function is performed by -

(a) an external valuer, being a legal or natural person independent from the internally managed AIF or any other person with close links to the internally managed AIF∙ or

(b) the internally managed AIF itself, provided that the valuation task is functionally independent from the portfolio management and the remuneration policy and other measures established by the internally managed AIF ensure that conflicts of interest are mitigated and that undue influence upon employees is prevented.

(7) The depositary appointed for the AIF shall not be appointed as external valuer of the AIF, unless -

(a) it has functionally and hierarchically separated the performance of its depositary functions from its tasks as external valuer∙ and

(b) the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the AIF.

(8) Where an external valuer performs the valuation function, the internally managed AIF shall demonstrate that -

(a) the external valuer is subject to mandatory professional registration recognised by law or to legal or regulatory provisions or rules of professional conduct∙ and

(b) the external valuer can provide sufficient professional guarantees that he is able to perform effectively the relevant valuation function in accordance with sections (2) to (5).

(9) The appointed external valuer shall not delegate the valuation function to a third party.

(10) The valuation shall be performed impartially and with all due skill, care and diligence.

(11) (a) Internally managed AIFs are responsible towards its investors, for the proper valuation of its assets, the calculation of the net asset value and the publication of that asset value. The internally managed AIF liability towards its investors shall, therefore not be affected by the fact that the internally managed AIF has appointed an external valuer.

(b) By way of derogation from paragraph (a) and any contractual arrangements providing otherwise, the external valuer shall be liable to the internally managed AIF for any losses suffered by the internally managed AIF as a result of the external valuer’s negligence or intentional failure to perform its tasks.

(12) The Securities and Exchange Commission may, by means of a directive, specify the rules and the valuation methods of the assets of the AIF and define the details and the technical matters regarding the application of this article.