Given the long-term nature of private equity (PE) investments, it is crucial for investors to feel confident that their investments are secure and well-managed.

Frequent questions we often get includes:

• Is my money safe and where are the assets stored?
• What if I change my wealth manager?
• What are the implications in the event of a divorce?

In this Operations Quarterly we dive into these questions.

Bankruptcy Remote Structure

Investors are protected if a fund company goes bankrupt. The regulatory frameworks in place ensure that the assets of the funds are held separately from the assets of the fund management company.

The investment through ROYC's platform is made in a RAIF – Reserved Alternative Investment Fund structure in Luxembourg. RAIFs are required to be managed by an external Alternative Investment Fund Manager (AIFM), and the AIFM directive provides a high level of investor protection.

All AIFMs are supervised by the Luxembourg financial authority CSSF, which ensures that the AIFM does not breach any of the requirements in the directive. Some of the mandatory measures for an AIFM include risk and liquidity management, various compliance measures, and an obligation to provide investors with transparency regarding investment strategy, risks, and fees. Most importantly, a depositary must be appointed for each fund.

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What is the role of a depositary? This is a crucial role for investor protection. The depositary must be independent of the AIFM to avoid conflicts of interest and is typically a credit firm with a license from the CSSF to act as a depositary institute. They will safeguard the fund’s assets and protect the investors’ interests by monitoring all cash flows, ensuring all investor payments are received and correctly booked to the fund, and that all transfers out of the fund are accurate and in the best interest of the investors. They also ensure that all legal and regulatory requirements are followed.

In practice, if a fund company dissolves, the management of the funds will be transferred to another AIFM. This ensures that the funds can continue to operate and are not directly impacted by the dissolution of the initial AIFM.

Transfer of Shares

During a long investment period, circumstances can change for the investor, and uncertainty about what will happen to the investment can make investors feel uncomfortable.

When investing through a wealth manager, if the investment is made as a direct investment in the investor's name, there will be no effect on the investment if the investor changes their bank or wealth manager. The investment continues as before. Just contact us so we can update your contact information and bank account numbers if needed.

If the investment is made as a nominee investment in the name of the wealth manager, we have the same situation as in cases of divorce or death – a transfer of shares needs to take place.

Our Administrator keeps track of the shares in the Shareholders’ register for each sub-fund. This register is the official proof of who owns the Limited Shares, and the Company will recognize the person listed as the legal owner. If you want to transfer shares, you need to fill out a written declaration of transfer, signed by both the person transferring the shares and the person receiving them, and it will be entered into the register.

The person receiving the shares will need to go through the usual due diligence process, just like all other investors. For transfers, our Administrator adheres to Luxembourg law, but in cases of divorce or inheritance, the family law or law of succession of the recipient’s country of residence will apply.

Phone Call Away

You can easily get in touch with our dedicated team by giving us a call or sending us an email. We are always here to assist you and ensure your investments are well taken care of. Whether you have questions, need advice, or want to discuss your investment strategy, our experts are just a phone call away. Your peace of mind is our top priority, and we are committed to providing you with the best service possible.

Summary

We prioritize the safety and proper management of your investments, offering multiple layers of protection through legal safeguards and the depositary function. To conclude, here are the answers to some common questions regarding the safety and management of your investments:

Is my money safe and where are the assets stored?

Yes, there are several layers of protection for your money and assets by law and through the depositary function.

What if I change my wealth manager?

If the investment is made in your name, nothing changes except for updating your contact information. If the investment is in the name of your wealth manager, we will transfer the investment to you.

What are the implications in the event of a divorce?

In the event of a divorce, the process follows the laws of your country of residence. A transfer of assets is possible if agreed upon in your settlement.