HLI Regulatory Umbrella Model

FSMA makes provision for certain exempt persons to be able to undertake permitted regulated activities without being authorised persons, namely the Appointed Representative of an authorised firm. Under such an arrangement the authorised firm contracts with the appointed representative to act as a principal with regards to regulated activity, accepting full responsibility for the compliant behaviour of the appointed representative. The principal is obliged to ensure that the appointed representative is competent to act in the desired capacity and that it remains solvent for the duration of the arrangement, as well as maintaining controls over the compliance monitoring of all their activities. Hutchinson Lilley Investments Limited (HLi) has undertaken a number of Appointed Representative agreements as principal, working with aspirant investment firms providing them with the support and assistance to permit them to achieve their ambitions in a wholly compliant manner. An Appointed Representative firm’s activities are limited to advising on investments: in order for the firm to take on investment management activities it will need to consider regulatory incubation.
In addition to the Appointed Representative arrangements HLi is able to offer regulatory incubation via a unique umbrella structure to investment firms that will permit their investment teams to take on discretionary investment activities in advance of the firm’s own authorisation. The HLi regulatory umbrella is a legal, transparent and fully compliant incubatory solution that does not involve any equity or basis point give up. Only a straightforward monthly fee is charged and fees earned on investment management flow in full to the incubatee. The structure has been used to launch several investment firms, collectively managing more than $1billion in funds. On authorisation of the incubatee firm the structure falls away without the need for any subjective valuation or any additional consent to be given. The structure can be established very swiftly – once the due diligence process has been completed firms could be managing assets within a fortnight.
HLi are supported in offering their regulatory umbrella services by the leading compliance consultancy Complyport Limited to ensure that all such arrangements are both robust and transparent, all the while providing the prospective investment firm with a practical and pragmatic solution to their needs. Incubatees are free to use any service provider they choose; HLi do not dictate prime broker, fund administrator, legal advisor, auditor or consultant of any form. The minimum incubation period is three months, which will extend to meet the full duration of the regulatory authorisation process. More prolonged engagements are feasible on an individual basis.