law of 20 December 2002 - Alfi

The CSSF can grant a derogation from this requirement and can authorise that thestaff, in part or entirely, is either on secondment 149 or made available by an entity of thesame group or by a non-affiliated company. In this case, the contract governing thissecondment or availability arrangement must be submitted to the CSSF. In addition,this contract must comprise rules governing conflicts of interest between the personsconcerned and the entity if the latter is part of the same group.The CSSF must be informed on the identity of the persons who conduct the businessof the management company. The conduct of the company’s business must bedecided by at least two persons meeting the conditions of reputation and professionalexperience as described under item 5 of this circular. The CSSF must be able tocontact directly the persons who conduct the business of the management company.These persons must be in a position to provide all the information which the CSSFconsiders essential for the performance of its supervision. At least one of thesepersons must be on site 150 .They must not necessarily be employees of the management company the businessof which they conduct, provided that there exists an agreement which precisely definestheir rights and obligations and, if applicable, with whom there exists a hierarchicalconnection. It is also not excluded that the persons concerned conduct the business ofseveral management companies, provided that the CSSF has sufficient evidence thateach of these persons is in a position to accomplish at all times his functions, takinginto account in particular the activities of the management companies concerned.The principle of independence of the management company from the depositary doesnot permit the persons who conduct the business of the management company to beemployed by the custodian of a UCITS which it manages 151 .b) technical infrastructureThe CSSF must receive a description of the IT equipment, the information sourcesand the software which is being used.The management company must have sound administrative and accounting procedures,control and safeguard arrangements for electronic data processing andadequate internal control mechanisms; it must be structured and organised in such away as to minimise the risk of UCITS’ or clients’ interests being prejudiced by conflictsof interest between the management company and its clients, between one of itsclients and another, between one of its clients and a UCITS or between two UCITS(Article 84(1)). These prudential rules will be specified at a later stage in a circular.c) preconditions for authorisation of delegationManagement companies are authorised to delegate to third parties, for the purpose ofa more efficient conduct of their business, the power to carry out on their behalf one ormore of their own functions (Article 85(1)).149 The French original of the circular uses the word “détaché” which implies that the staff must not be employees inthe sense of footnote 148.150 The French original of the circular uses the terms “sur place”. This implies that the relevant person must usuallywork in Luxembourg but can reside either in Luxembourg or in one of its neighbour countries.151 The French original of the circular refers to “dont elles assurent la gestion” which, from a French grammar pointof view, would imply that this portion of the sentence refers to the persons who conduct the business. In fact thesentence makes sense only if the portion of this sentence refers to the management company.188