CySEC wishes with Circular 513 to remind all supervised entities of the necessary steps they must take when they no longer meet their own funds requirements and/or concentration limits, as well as their obligation to have sound administrative and accounting procedures and robust internal control mechanisms.
In particular:
- Class 2 and Class 3 CIFs should notify CySEC as soon as they become aware that their own funds fall below their own funds requirement, pursuant to Article 11(4) of the Regulation (EU) 2019/2033 (‘IFR’).
- Class 2 CIFs should notify CySEC without delay when they exceed the concentration limits of Article 37 of IFR.
- All CIFs should have sound administrative and accounting procedures to enable them to monitor their own funds, own funds requirements, concentration risk and all other obligations from IFR.
Therefore, CySEC expects from all supervised entities to:
- Implement sound administration and accounting procedures and adequate internal control mechanisms, appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the CIF, which will enable them to monitor on an on-going basis all their prudential requirements accordingly.
- Notify CySEC without undue delay, and in any case prior to the normal submission of the Prudential Forms 165-01/165-02, when they no longer meet the requirements of Articles 11 and 37 of IFR. This notification to CySEC must be done through the submission of the Prudential Forms 165-01 or 165-02 (depending on the CIF’s categorisation) via TRS, under exceptional reporting as per Section C of this Guide.
- Verify that their internal control framework (i.e. compliance, risk management and internal audit functions, where established) ensures compliance with laws, regulations and supervisory requirements at all times.