Article 27: Segregation of Assets

Article 27: Segregation of Assets

a. The custodian must, in relation to each investment fund to which it acts as custodian, open a separate account in a local bank under its name with the account designated as being for the benefit of the relevant investment fund.

b. The custodian must segregate each investment fund’s assets from its own assets and from the assets of its other clients, and must separately identify, by registration in the name of the custodian for the benefit of the relevant investment fund the securities and other assets of such investment fund. The custodian must register the real estate assets of the fund and the ownerships in unlisted companies that are not deposited at the Depositary Center in the name of a company fully owned by the custodian. The custodian must maintain all necessary records to support the performance of its contractual responsibilities.

c. As an exception to the provisions of Paragraph (a) of this Article, in the case of an investment fund that takes the form of a special purposes entity, the custodian must open a separate account with a local bank in the name of such special purposes entity.

d. As an exception to the provisions of Paragraph (b) of this Article, in the case of an investment fund that takes the form of a special purposes entity, the custodian must segregate the assets of each investment fund from its own assets and the assets of its other clients. Such assets must be specified independently by registering the securities and other assets in the name of the special purposes entity. It shall also maintain all necessary records and other documents that support the performance of its contractual obligations.

e. The custodian must deposit all cash belonging to the investment fund into the relevant bank account referred to in Paragraph (a) or Paragraph (c) of this Article, whichever applies, and must deduct from the relevant bank account payments for investments and expenses incurred in the management and operation of the investment fund in accordance with these Regulations, the updated Fund’s Terms and Conditions that it received from the fund manager, and the contract by which the custodian was appointment by the fund manager.

f. Real estate assets of a fund may be pledged to an entity licensed to provide loans that extended a loan to the fund.