Fund Structuring & Legal Frameworks Flashcards
7 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fund Structuring & Legal Frameworks flashcards as text
Under the AIFMD (Alternative Investment Fund Managers Directive) in the EU, which of the following is a key requirement for non-EU fund managers marketing to EU investors?
Answer: They may use National Private Placement Regimes (NPPR) to market in certain EU member states
Non-EU AIFMs can access EU investors via NPPRs in compliant member states while awaiting an EU passport.
What is the function of a 'GP commitment' (general partner commitment) in a private equity fund?
Answer: It aligns the GP's interests with LPs by requiring the GP to co-invest a percentage of total fund capital
A GP commitment (typically 1–2% of fund capital) demonstrates conviction and aligns economic incentives between manager and investors.
A parallel fund structure is typically established to:
Answer: Accommodate investors with different tax, regulatory, or legal requirements while investing in the same portfolio
Parallel funds hold the same investments proportionally but are structured separately to meet the specific legal or tax needs of different investor groups.
Which of the following best describes the 'waterfall' in a private equity fund?
Answer: The sequential order in which capital distributions are allocated among LPs and the GP
The distribution waterfall specifies the order — return of capital, preferred return, catch-up, then carried interest — in which profits are distributed.
Form PF, filed with the SEC, is primarily used to:
Answer: Report systemic risk data about private funds to regulators (SEC and FSOC)
Form PF collects confidential information about private fund advisers' exposures to assist regulators in monitoring systemic risk.
A Luxembourg SICAV (Société d'Investissement à Capital Variable) is best characterized as:
Answer: An open-end investment company with variable share capital, commonly used for UCITS and AIFs
A Luxembourg SICAV is an open-end corporate fund vehicle widely used for both UCITS retail funds and alternative investment funds.
In the context of fund structuring, what is the primary role of an 'independent administrator'?
Answer: To calculate NAV, maintain investor records, and process subscriptions and redemptions independently of the manager
An independent fund administrator provides NAV calculation and investor servicing that is separate from the manager, enhancing credibility and reducing conflicts of interest.