Summary
FUND 3.9 of the FCA Handbook sets out the valuation framework for AIF assets and the calculation and disclosure of net asset value (NAV) for AIFs managed by full-scope UK AIFMs. It explains which AIFMs and AIFs are in scope, how overall responsibility for valuation is allocated, what is expected from valuation policies and procedures, how often valuations and NAV calculations should take place, when and how an external valuer (including the depositary) may be used, what notifications and investor communications are envisaged, and how the detailed AIFMD Level 2 valuation measures supplement the core rules in this section. Core sections include:
Application
identifies the full-scope UK AIFMs and AIFs to which the valuation requirements in FUND 3.9 apply.
Responsibility of the AIFM
sets out the AIFM’s overarching responsibility for proper valuation of AIF assets, NAV calculation and related publication arrangements.
Standard of care of the valuation
outlines the standard of impartiality, skill, care and diligence expected when performing valuations of AIF assets.
Establishment of procedures for valuation of assets
describes expectations for appropriate, consistent and documented valuation procedures, including independent valuation and NAV calculation processes.
Frequency of valuation of assets and calculation of net asset value
indicates how frequently valuations and NAV calculations should be carried out, differentiating between open-ended and closed-ended AIFs.
Informing investors of valuations of assets and calculations of net asset value
highlights how investors are to be informed of valuations and NAV calculations in line with the fund’s constitutional and offering documents.
Performance of the valuation function
explains the options for the valuation function to be carried out by the AIFM itself or by an external valuer, and notes associated independence expectations
Appointment of the depositary as an external valuer
signposts the specific conditions under which the AIF’s depositary may also act as external valuer, including separation of roles and management of conflicts.
Appointment of an external valuer
summarises the criteria that must be met when appointing an external valuer, including professional standing and the ability to perform the valuation function effectively.
Delegation by an external valuer:
refers to restrictions on further delegation of the valuation function by an external valuer and the relevant AIFMD UK regulatory provisions.
Notification of appointment of an external valuer:
outlines notification expectations where an external valuer is appointed and notes the FCA’s ability to require a different appointee.
Subordinate measures:
links to AIFMD Level 2 valuation provisions that provide additional technical detail and procedural rules supplementing FUND 3.9.
