Home / CY AIFM Law of 2013 / PART ΙΙΙ – OPERATING CONDITIONS FOR AIFMs / CHAPTER 2 - Organisational Requirements /  Section 19 - Valuation. 

Valuation.

19.-(1) AIFMs shall ensure that, for each AIF that they manage, 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 section, the applicable law and the AIF rules or instruments of incorporation.

(2) The rules applicable to the valuation of assets and the calculation of the net asset value per unit of the AIF are determined by the law of the country where the AIF is established and/or in the AIF rules or instruments of incorporation.

(3) AIFMs shall ensure that the net asset value per unit of AIFs is calculated and disclosed to the investors in accordance with this section, the applicable national law and the AIF 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, the investors shall be informed of the valuations and calculations as set out in the relevant AIF rules or instruments of incorporation. The valuations and calculations -

(a) if the AIF is of the open-ended type, shall also be carried out at a frequency which is both appropriate to the assets held by the AIF and its issuance and redemption frequency; and

(b) if the AIF is of the closed-ended type, shall also be carried out in case of an increase or decrease of the capital by the relevant AIF.

(4) AIFMs shall ensure that the valuation function is either performed by-

(a) an external valuer, being a legal or natural person independent from the AIF, the AIFM and any other persons with close links to the AIF or the AIFM; or

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

(5) The depositary appointed for an 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.

(6) Where an external valuer performs the valuation function, the AIFM 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 to be able to perform effectively the relevant valuation function in accordance with subsections (1) to (3); and

(c) the appointment of the external valuer complies with the requirements of paragraphs (a) to (f) of subsection (1) and subsection (2) of section 20 of this Law and with the delegated acts adopted pursuant to paragraph 7 of Article 20 of Directive 2011/61/EU.

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

(8) AIFMs of the Republic shall notify the appointment of the external valuer to the Commission, which may require that another external valuer be appointed instead, where the conditions laid down in subsection (6) are not met.

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

(10) Where the valuation function is not performed by an independent external valuer, the Commission may require the AIFM of the Republic to have its valuation procedures and/or valuations verified by an external valuer or, where appropriate, by an auditor.

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

(b) Notwithstanding paragraph (a) and irrespective of any contractual arrangements providing otherwise, the external valuer shall be liable to the AIFM for any losses suffered by the AFIM as a result of the external valuer’s negligence or intentional failure to perform its tasks.