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CS Professional · IFSCA - Regulations, Listing and Compliances · Fund Management Services

Zenith Asset Managers wants to sell units of its restricted scheme by advertising them in national newspapers inviting all members of the public to apply. Which view is correct under the IFSCA fund management framework?

It is not permitted. A restricted scheme is raised by private placement from a limited class of investors, and inviting the general public through newspaper advertisements amounts to a public offer, which belongs to retail schemes. Pricing, memorandum filing or risk warnings cannot convert it into a public offering.

  1. APermitted, as long as the units are priced above USD 150,000
  2. BPermitted, if a placement memorandum is filed with IFSCA
  3. CNot permitted, because a restricted scheme is raised by private placement and cannot be offered to the publicCorrect
  4. DPermitted, if the advertisement carries a risk warning

Explanation

A restricted scheme is meant for a limited class of investors and is raised through private placement. A public advertisement inviting all comers would turn it into a public offer, which is the territory of retail schemes. A high unit price, a filed memorandum or a risk warning does not change this.

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