Promotion and distribution of Custodian Capital limited partnership opportunities

Custodian Capital will produce an information memorandum for each limited partnership opportunity. This document will set out the opportunities, risks, assumptions and forecast returns from the property.

The limited partnership interests in the partnership will not be registered under the securities laws of any jurisdiction. Accordingly, investors will not be afforded the protection any such registration may offer. The distribution of information memoranda and the offer and sale of interests in the partnerships described in the memoranda may be restricted by law in certain jurisdictions. The memoranda do not constitute an offer or solicitation of an offer in any state or other jurisdiction in which such offer or solicitation is not lawful, or in which the person making such offer or solicitation is not qualified to do so.

As a UCIS, the promotion of the partnership and the interests, and the communication of the information contained in the memoranda in the United Kingdom, is restricted by law. The partnership is an unregulated collective investment scheme for the purposes of the United Kingdom’s Financial Services and Markets Act 2000 (‘FSMA’).

The restriction in section 238 of FSMA on the communication of invitations or inducements to engage in investment activity does not apply to memoranda issued by the operator on the ground that they are only being made to and/or directed at the limited classes of person described below in the United Kingdom, namely only to persons falling within one of the following categories, each such person being an ‘exempt recipient’:

  • Investment professionals falling within article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective
    Investment Schemes) (Exemptions) Order 2001 (‘PCISO’), namely authorised firms under FSMA; persons who are exempt in
    relation to promotions of investments of this nature; persons whose ordinary activities involve them investing in funds; governments; local authorities or international organisations; or a director, officer or employee acting for such entities in relation to engaging in investment activity (provided that all such persons as listed here have professional experience of participating in
    unregulated collective investment schemes);

Certified high net-worth individuals falling within article 21 of the PCISO, namely individuals who have signed, within 12 months prior to the date on which memorandum is issued, a prescribed statement to the effect that they recognise that they can lose all of their property or other assets from making investment decisions based on financial promotions and that they had, during the financial year immediately preceding the date of the certification, an annual income to the value of £100,000 or more, or (b) held, throughout the financial year immediately preceding the date of the certification, net assets to the value of £250,000 or more. Net assets for these purposes do not include i) the property which is the individual’s primary residence or any loan secured on that residence; ii) any rights of the individual under a qualifying contract of insurance within the meaning of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, or iii) any benefits (in the form of pensions or otherwise) which are payable on the termination of the individual’s service or on the individual’s death or retirement and to which the individual is (or the individual’s dependants are), or may be, entitled;

  • High-value entities falling within article 22 of the PCISO, namely bodies corporate with called up share capital or net assets of not less than £5 million (except where the body corporate has more than 20 members, in which case the share capital or net assets should be not less than £500,000); unincorporated associations or partnerships with net assets of not less than £5 million; trustees of high-value trusts; or a director, officer or employee acting for such entities in relation to engaging in investment activity;
  • A person who is, or has been in the last 30 months, a participant in an unregulated collective investment scheme;
  • A person for whom the firm communicating the memorandum has taken reasonable steps to ensure that his investment in the partnership is suitable and who is either an established or newly accepted client of the firm;
  • An eligible counterparty or a professional client (as defined in the Financial Conduct Authority’s Handbook of Rules and Guidance); and/or
  • A person in relation to whom the firm communicating the memorandum has undertaken an adequate assessment of that person’s expertise, experience and knowledge and that assessment gives reasonable assurance, in light of the nature of the transactions or services envisaged, that such a person is capable of making their own investment decisions and understanding the risks involved. This person must have received a written warning from the firm and replied in writing in a document separate from the contract, that he is aware of the fact that the operator can promote the partnership to him.
  • The memorandum is available only to the categories of persons listed above and any invitation or investment activity to which it relates will not be available to, and will not be engaged with, any person who does not fall within one of the categories listed above. Accordingly, any person who does not fall within one of the categories listed above should not rely on or take any action in respect of the memorandum. If any person who receives the memorandum is in any doubt about any investment or investment activity to which the memorandum relates, they should consult an authorised person specialising in advising on such investments or investment activities.

No prospectus is required under Section 85 of FSMA as the partnership interests do not fall into the definition of ‘transferable securities’ under S102A of FSMA as they are not negotiable on the capital markets. This is because there are significant restrictions on the transferability of the partnership interests as the operator will be required to consent to the transfer and the transferee will have to fall within certain detailed criteria.