Full-scope UK AIFMGuide to applications and ongoing compliance

Full-scope management of alternative investment funds, covering governance, risk and portfolio management, depositary arrangements, disclosures and regulatory reporting.

Select the minimum sufficient combination of permissions that lawfully supports the actual business, client scope and financial responsibilities, rather than treating the broadest permissions or fastest approval as the sole objective.

• Appropriate manager authorisation can support a UK team's lawful management of the intended fund categories and clarify whether it may manage authorised AIF, unauthorised AIF or both. Institutional investors, depositaries and counterparties can use this to verify permissions and restrictions, but FCA authorisation does not endorse fund returns or guarantee compensation for all investor losses.[2] [3]

• The full-scope regime incorporates risk management, valuation, delegation oversight and investor disclosure into an enforceable governance framework, helping manage long-term illiquid assets and complex leveraged strategies. Capital and liquid asset requirements constrain the manager's own operational risks, while depositary arrangements protect fund assets; they serve different functions.[1] [2] [9]

• Choosing small authorised status or eligible registration according to actual scale and activities can avoid incorrectly applying full AIFMD and MiFID capital requirements. Managers below the size threshold may still opt for full-scope authorisation where there is a genuine business need. A UK structure may also manage overseas funds, but UK NPPR, marketing rules in other countries and post-Brexit passporting restrictions must be checked independently.[2] [5] [10]

• First identify each AIF individually, considering facts such as raising capital, multiple investors, a defined investment policy and collective investment for investors' benefit, then identify the party genuinely undertaking AIFM responsibilities under the contract. Family offices, holding companies, joint ventures or arrangements currently having only one investor cannot be automatically excluded by name alone; whether the fund's legal documents permit capital raising from additional investors and the actual fundraising arrangements both matter.[1] [3] [23]

• Calculate and retain the small-manager threshold test, explaining sources of leverage, each fund’s redemption rights and initial investment dates, and relevant portfolios under common management or control. If the threshold is exceeded and the circumstances are not recognised as temporary under the rules, transition to full-scope authorisation is required. UK managers below the threshold that do not fall within statutory registration categories generally still require small-manager authorisation, rather than being free to choose registration alone.[2] [4] [5]

• Full-scope applications must demonstrate business sustainability, sufficient funds to cover start-up losses, staffing and systems costs, and the suitability of directors, controllers and those effectively managing the business. Small authorised applicants must also meet the FCA threshold conditions; ordinary small registered applicants are not subject to these authorisation threshold conditions, but must still meet registration eligibility, accurate information and transparency reporting requirements, and cannot be described as having no compliance obligations.[6] [7]

• Risk management must maintain appropriate functional and hierarchical separation from portfolio management, with market, credit, counterparty, operational and liquidity controls tailored to the strategy. For illiquid property, PE or infrastructure, independent valuation methods and conflict management should be explained. Open-ended strategies must align redemption terms with asset liquidity; submitting only a generic risk manual is insufficient.[1] [2]

• Full-scope AIFM should implement depositary or relevant custody arrangements according to the fund's location, whether it is marketed in the UK and the scope of FUND. UK AIF generally involves a full depositary arrangement; where a UK full-scope manager markets third-country AIF through NPPR, arrangements may involve one or more entities performing cash monitoring, safekeeping and oversight duties. It is incorrect to state categorically that every overseas fund must appoint a full UK depositary.[9] [11]

• When delegating investment management, risk management, administration or valuation, the objective reasons, delegate's qualifications, conflicts of interest, oversight resources and sub-delegation controls must be explained. The manager retains ultimate responsibility. Outsourcing must not turn it into a letter-box entity, nor may a delegated investment adviser simply be described as the fund's AIFM; a LTAF manager must not rely on outsourcing to meet its own essential asset knowledge and staff competence requirements.[2] [3] [20]

• Different rules apply to distribution to professional investors, eligible retail investors and the public, requiring target-market, financial promotion, disclosure and suitability arrangements. Permission to manage an unauthorised AIF does not confer permission to sell that fund to the UK public. If separately managed accounts, advice or reception and transmission of orders are also provided, additional permissions and MIFIDPRU must be checked rather than treating all activities as falling within the AIFM management exemption.[2] [3]

Shareholders and controllers must disclose direct and indirect holding structures, ultimate beneficial owners, sources of funds, significant influence and connected relationships. Full-scope authorisation assessment considers whether qualifying holders are suitable to ensure prudent management, but this application condition must not be confused with subsequent Section 178 control notification thresholds. For ordinary non-MiFID AIFM, the subsequent control threshold is generally 20%, and significant influence below that percentage may also be relevant.[6] [12] [13]

Full-scope AIFM must have at least two persons of good repute and with relevant experience effectively conducting the business, and allocate board, investment and risk responsibilities according to actual governance. The headcount requirement does not mean that four or five positions must each be filled by a separate person, nor can UK residence, full-time employment or a particular professional title be stated as a universal statutory condition for all personnel; the key considerations are time commitment, competence, effective control and substantive management in the UK.[1] [20] [23] [32]

Authorised firms should determine SM&CR functions according to their Core, Enhanced or Limited Scope classification: SMF1 is chief executive, SMF3 executive director, SMF16 compliance oversight and SMF17 money laundering reporting; partnership structures may involve SMF27. CIO does not automatically become SMF3 by virtue of a job title, and the SMF4 chief risk function is not a mandatory approved position for every Core AIFM. Firms must assess fitness and propriety for applicable certification roles at least annually and retain statements of responsibilities and regulatory reference materials.[14] [15]

Compliance oversight and MLRO must have practical knowledge of UK rules, fund processes and financial crime risks, with sufficient authority and resources to challenge management. Appointing external advisers does not transfer the manager's responsibility. A manager that is solely a small registered manager is not brought fully within the SM&CR for authorised firms merely by registration, but this must be reassessed if it also undertakes other FSMA-authorised activities.[5] [7] [14]

There is no uniform capital amount for all UK fund managers. First distinguish full-scope external management, internal management, small authorised management, registration and additional CPMI services. Capital committed by fund investors or fund net assets are not the manager’s own regulatory capital. An application also cannot rely solely on promises of future capital injections without evidence of available funds.[2] [7]

The base own funds requirement for a full-scope external AIFM is €125,000, while the base requirement for an internally managed AIFM is €300,000. An additional size-based funds requirement of 0.02% applies to the portion of relevant AIF portfolios exceeding €250 million; the combined cap on the base and this size-based addition is €10 million. This is not an overall cap on all ongoing capital, as expenditure, professional liability and other applicable requirements may still be higher.[2] [23]

The core ongoing requirement for a pure collective investment management CPM is the higher of the base amount plus applicable size-based funds and one quarter of relevant annual fixed overheads, plus applicable professional liability capital. Professional negligence coverage generally takes the form of additional own funds equal to 0.01% of the relevant AUM, or compliant professional indemnity insurance. Choosing insurance may still require additional funds to cover excesses, and FCA separately requires corresponding liquid assets. Insurance must not be described as entirely eliminating funding responsibilities.[2]

A small authorised AIFM with no other permissions must maintain liquid capital under Chapter 5 of IPRU-INV: the higher of £5,000 and the total capital requirement. Total capital may include expenditure, position, counterparty, foreign exchange and other risks. The general expenditure requirement is 6/52 of annual expenditure; it may be 25% where client money or assets are held or an affiliated group custodian is used. A fixed £5,000 own funds requirement may apply only to qualifying exemptions, such as no relevant transactions, professional-client VC or investment primarily in qualifying real estate.[2]

Generally eligible internally managed closed-ended investment companies and property managers within the small registered category have no uniform AIFMD prudential minimum capital requirement, but RVECA and SEF managers have a separate €50,000 initial capital requirement, with ongoing own funds of at least one-eighth of the previous year's fixed expenditure. Full-scope CPMI are also subject to Chapter 11 of IPRU-INV and MIFIDPRU. Small authorised firms also conducting MiFID business must likewise be treated according to their classification. For typical small non-interconnected investment managers, the requirement is the higher of the £75,000 permanent minimum requirement and FOR, but this amount cannot be treated as uniform capital for all additional activities.[2] [5]

Three-year financial forecasts must include monthly profit, balance sheet, cash flow and capital analysis, explaining stress scenarios and orderly wind-down funding. FCA requires evidence before authorisation that eligible equity funding has already been injected, such as bank balances in the company’s name, or the capital provisions of Companies House’s SH01 or LLP agreement. The original page’s claim that funds must already be deposited in a local UK bank account on the application submission date is not a uniform official requirement for all applications.[7]

The applicant must have a designated principal place of business in the UK and specify which activities take place in the UK, how the board and senior management operate, who controls system records and how FCA can supervise it. A full-scope UK AIFM should meet the UK registered office and actual head office requirements; a mailbox or virtual address alone cannot replace genuine management capability. Lawful overseas delegation does not mean that all investment decisions must be executed personally by UK staff.[7] [23]

In practice, a UK Ltd or LLP may be considered as an external management entity, but the legal form should match the AIFM category and liability arrangements. The fund LP, its GP and its manager must also be identified separately. An overseas manager's notification to market in the UK under NPPR does not establish a UK head office or confer UK authorisation to manage AIF; overseas branches and subsidiaries cannot be treated as the same permission route either.[3] [5] [10]

The publicly listed office address of FCA is 12 Endeavour Square, London E20 1JN, and its principal regulatory portals are Connect and RegData. This address is provided solely to identify the regulator; it is neither the applicant’s registered address nor an account address for investors to remit funds to a manager. This material may be prepared and explained by Tang Shangyong (Mr Tang) of Rengang Yongsheng (Hong Kong) Limited, but is not issued on behalf of FCA or PRA.[7] [16]

• Submit a regulatory business plan explaining each fund type’s investment strategy, target investors, charges, fundraising channels and launch timing, and map each business activity to managing authorised AIF, managing unauthorised AIF or other permissions. The plan must discuss potential harm to consumers and markets; a third-party generic template should not replace the actual business model.[2] [7]

• Provide company or LLP formation documents, articles or partnership agreements, group and organisation charts, and appendices covering controller structure, beneficial owners, owners and influencers. Attach significant event disclosures, explanations of related businesses and sources of funds, enabling FCA to look through the structure and identify those who truly control and manage the business.[2] [6]

• Submit monthly financial forecasts for three years and regulatory capital calculations, separately identifying base funding, size-related additions, FOR, professional liability, liquid capital and applicable MIFIDPRU items. Make good any shortfall before authorisation and evidence the amount injected; for insurance arrangements, provide policy coverage, deductibles and coverage-funding calculations.[2] [7]

• Submit the AIF Schedule and the formation documents, offering documents, fund rules or partnership agreement for each fund to be managed, explaining its location, master-feeder relationships, leverage and redemption rights. The full-scope AIF Schedule should be completed in the original xls format specified by FCA; offering documents and investment management agreements must be consistent with the permissions sought and fee disclosures.[2] [8]

• Prepare investment management agreements, risk management policies, liquidity stress testing, valuation processes and conflicts of interest policies covering illiquid assets, related-party transactions and fund expense allocation. Also provide a compliance monitoring plan, personal dealing and market abuse controls, and applicable remuneration policies and investor disclosures.[1] [2]

• Provide written confirmation of substantially finalised depositary arrangements for the applicable funds, together with delegation and sub-delegation agreements. FCA may request sight of agreements that have been put in place. A complete full-scope application cannot rely solely on a general letter of intent to cooperate: documents should in principle be final versions ready for signature or already signed, rather than drafts still subject to substantive negotiation.[2] [8]

• Submit the relevant Form A or Long Form A, curriculum vitae, experience and fitness and propriety information, clearly identifying the responsibilities and time commitments of actual managers, directors, compliance oversight and MLRO. Provide statements of responsibilities, background checks and regulatory references under the applicable regime; do not automatically tie different function approvals to three fixed positions of CEO, CIO and CRO.[2] [14] [15]

• Prepare the IT self-assessment, system access rights, business continuity and cyber risk materials, together with the AML risk assessment and policies on CDD, sanctions and handling suspicious activity. If controlling or holding client assets is proposed, also explain the responsible persons, accounts, CASS applicability analysis and audit arrangements; where retail business is involved, explain the Consumer Duty implementation plan.[2] [7] [19]

This is provided as a reference for organising the project; it cannot replace current official application forms or case-specific requests for additional materials. Please do not send identity documents or customer records through website forms.

• The first step is to complete regulatory perimeter and size tests, identify the actual AIFM, fund vehicles, delegated managers and distributors, and determine UK and overseas marketing arrangements. Then select the full-scope, small authorised or specific eligible registration route and confirm any additional permissions required, rather than incorporating a company first and only then discovering that the business model cannot operate under the chosen route.[2] [3] [4] [5]

• The second step is to put in place shareholders, the UK principal place of business, actual managers, compliance and MLRO, together with depositary, administration, audit and IT service providers. Supplement capital and liquid resources in line with three-year forecasts, and prepare each fund’s formal documents, risk framework and delegation oversight mechanisms to an operationally ready standard.[2] [7] [8]

• The third step is to submit the relevant forms, fund list and attachments through Connect and pay the applicable application fee. As at the verification date, authorised AIFM is listed in Category 6 at £11,260, and small registration in Category 3 at £1,130. These are application fees and are normally non-refundable; they exclude annual regulatory fees, fund product authorisation fees, legal costs and service-provider costs. VoP should be checked separately against the charging rules for the specific variation.[2] [5] [16]

• Step four: FCA checks completeness and conducts substantive review. Applicants must provide accurate, consistent responses to enquiries about the business, personnel, capital and risk controls. Management interviews are arranged case by case; there is no uniform number of weeks that can be promised for case officer allocation, enquiry rounds or waiting times.[7] [8]

• The fifth step, after receiving the written decision, is to check the permission’s effective date, limitations, requirements and senior management approvals, and confirm that fund information, depositary and delegation arrangements meet the conditions for starting business. If any fund rules, depositary information or investor disclosures permitted to follow later in a full-scope application remain outstanding, they must be supplied at least one month before the intended start of business, as required by legislation and FCA. Receipt of authorisation must not be treated as unconditional permission to manage all funds.[6] [8]

A decision on a complete application for a full-scope UK AIFM should be made within three months of receipt of the complete materials, with a further three-month extension possible where required by the specific circumstances and notified to the applicant. The statutory information required for completeness includes those effectively managing the business, qualifying holdings, business organisation and compliance arrangements, remuneration and fund strategies. Submitting forms alone does not constitute a complete application, and a permitted extension is not an alternative starting-point rule for a general six-month period.[6] [8]

Where a full-scope application is incomplete, the three-month clock has not started and FCA will request the missing information. Section 55V(8) of FSMA expressly excludes such applications from the usual six-month period for complete applications and twelve-month period for incomplete applications. It is therefore not possible to promise a decision on an incomplete full-scope application within twelve months of initial submission; generally, only small authorised applications fall within the framework in section 55V of six months for complete applications and twelve months from initial receipt for incomplete applications.[6] [8] [17]

The statutory deadline for a complete ordinary small registered AIFM application is three months; an incomplete application must be decided no later than six months after initial receipt. Article 12 of AIFMR expressly excludes SEF and RVECA registrations from this ordinary deadline. They must be handled under their respective fund regulations; not all registration applications can be described as following the same three-month process.[18]

The preparation period is not the statutory approval period. Recruitment, capital availability, bank account opening, service provider due diligence and finalising fund documents affect when an application meets the completeness standard. Budgets may be phased by project, but the original page's total period of six to twelve months and fixed weekly durations for each stage are experience-based estimates without uniform official validation. They are not a FCA service commitment and cannot guarantee when registration, authorisation or an acquisition will succeed.[7] [8]

Ordinary full-scope AIFM and small AIFM not authorised under MiFID generally qualify as non-Directive firms under the control regime, with only a single threshold of 20% or more, rather than a universal 10% threshold. The assessment also covers shares, voting rights, indirect interests and significant influence in the manager or parent company. Increases within the same band generally do not require a new notification, but changes in identity, group or parent relationships should still be reassessed under the rules.[12] [13]

Directive categories, including managers also authorised under MiFID and UCITS management companies, are subject to the 10%, 20%, 30% and 50% control bands. Decisions to acquire control and increases crossing a band must be notified and receive the corresponding approval before completion. A complete notification under Section 178 is normally assessed within sixty working days, excluding interruption periods for additional enquiries. Proposed reductions or cessations of control also require notification, but generally do not require prior approval.[12] [13]

For changes to directors or partners, assess whether they perform senior management functions requiring approval. Where applicable, submit individual approval applications before they take up their duties, and update statements of responsibilities and regulatory registration. Departures, changes in responsibilities or findings of unfitness must be handled under the relevant Form C, Form D and notification rules. Registering changes with Companies House cannot replace FCA procedures.[14] [15]

Adding management of authorised funds, MiFID additional activities or other permissions may require VoP. New funds and material changes to strategy or delegation may also trigger AIFM notifications. Small registration alone is not a Part 4A licence, so the acquisition approval regime for authorised firms cannot be applied mechanically. First check its registration conditions and any other permissions held, and proceed according to the specific notification obligations.[2] [5]

AIFMD transparency reports are now submitted through RegData, with managers using FRN and funds using PRN; common data items are AIF001 and AIF002. Small authorised and ordinary small registered managers generally report annually, with the reporting period ending on day 31 of month 12. For full-scope managers, reporting may be annual, half-yearly or quarterly depending on AUM and fund conditions, and is generally due no later than one month after period-end. Funds of funds may have an additional fifteen days; the deadline is not uniformly thirty working days.[24] [26]

Funds within the scope of FUND 3.3 should complete the required annual report within six months after year-end, including audited financial information, business activities, material disclosure changes and applicable remuneration information, and provide it to regulators and investors in accordance with the rules. Non-UK funds managed by a UK full-scope AIFM that are not marketed in the UK have specific scope exemptions from FUND 3.3 and the full depositary chapter, but this does not imply that no other reporting applies. Audits of the management company and the fund must also be assessed separately.[11] [23]

Regulatory capital, applicable liquid asset and operating funding requirements must be met continuously, not through a one-off deposit at application. Financial statements and capital and risk reports should be checked against RegData arrangements and the actual prudential category. FSA039 was withdrawn on 2025-06-27 and closed in RegData on day 11 of month 7, and must no longer be listed as a fixed half-yearly return. Legacy references such as FSA029 and FSA030 should likewise not be listed as a uniform checklist for all AIFM without checking the category.[2] [27]

REP008 is an annual report of disciplinary action against persons other than senior managers for breaches of the conduct rules, not a remuneration return. The usual reporting period runs from day 1 of month 9 to day 31 of month 8, with reportable matters submitted by day 31 of month 10 or the next working day. Where the period ends on or after 2025-08-31 and there are no reportable matters, a nil return is no longer required and the associated late reporting fee is not charged. Disciplinary action against SMF themselves instead uses the relevant Form C or Form D. It is incorrect to claim generally that any return filed one day late automatically incurs a £250 penalty.[28]

Managers subject to MLR based on their activities should implement a firm-wide AML risk assessment, investor and beneficial owner due diligence, risk-proportionate source of funds and wealth checks, UK sanctions screening and escalation of suspicious activity. CDD and related transaction records are generally retained for five years from the end of the business relationship or completion of an occasional transaction; deletion of personal data at expiry is subject to exceptions, including legislation and litigation. Outsourcing fund administration or KYC cannot replace the manager's oversight responsibility.[1] [2] [29]

Where client money or custody assets are held or controlled, check the chapters of CASS, segregation, reconciliation, allocation of responsibilities and asset audits; fund assets held by a depositary must not automatically be treated as the manager’s own client money. Medium and large CASS firms generally must submit CMAR monthly, and the annual classification questionnaire should be completed within fifteen working days from day 31 of month 12. Small firms not requiring CMAR are not thereby wholly exempt from CASS, and abolition of FSA039 certainly does not mean abolition of the client assets regime.[19]

Disclosures on fund strategy, redemption, valuation, leverage, fees and conflicts of interest must be updated to reflect actual changes. Authorised funds must additionally comply with COLL product governance and investor documentation requirements. FCA may also undertake thematic reviews, firm-specific supervision or require skilled persons' reports. Formal policy statements on the 2026 reforms to FRAME reporting and remuneration must still be monitored; existing returns must not be discontinued early.[1] [23]

Before acquisition, check the legal entity, FRN, current permissions, restrictions and requirements in the FCA register. Distinguish full-scope authorisation, small authorisation and small registration, and verify that the buyer's plans remain within the permitted scope. Authorisation generally attaches to the legal entity and cannot be sold as a standalone licence separate from the company. Acquiring a shell company cannot circumvent change-in-control approval, personnel approval or review of a new business model.[2] [12] [13]

Specialist due diligence should repeat AIF identification and AUM threshold testing for each fund, checking for omitted related management, leverage exposures or incorrect use of NAV, and verify consistency among the responsibilities of the fund's LP, GP, external AIFM and delegated investment manager. Review change-of-control termination clauses, key person clauses, investor consent or notification, custody responsibilities and subdelegation in depositary and delegation agreements to avoid key service providers or investors withdrawing after completion.[3] [4] [9]

Check historical Annex IV data, reporting frequency, the PRN list and any unresolved late reporting, regulatory enquiries and capital shortfalls, focusing on valuation models, NAV corrections, redemption suspensions, side pockets, expense allocation and related-party transactions. Also check fund audit opinions, administrator and depositary reconciliations, title to PE or real estate assets, client asset deficiencies and post-completion professional indemnity insurance coverage; do not look only at the manager's income statement.[2] [19] [24]

Review controllers' sources of funds, management's regulatory history, substantive compliance and MLRO capabilities, outstanding complaints, litigation and regulatory restrictions, and prepare post-completion capital and exit budgets. Small registered targets also face the risk that reforms in 2026 may change eligibility and costs. Contracts should make applicable regulatory approvals, retention of key personnel and service-provider confirmations the relevant conditions precedent, but must not guarantee FCA approval or treat reforms not yet in force as established transaction rights.[12] [21] [23]

The following are specific permissions, organisational models or statutory categories covered by this topic. They do not necessarily each constitute a separate financial licence.

Primarily based on FCA, PRA / Bank of England, GOV.UK and current legislation. Older third-party guides supplied by users are used to organise business material and do not override the latest official requirements.

Information compiled by: RenGang Yongsheng (Hong Kong) Limited

Tang Shangyong (Mr Tang / Drew) · Business Manager
Global financial licence application, transaction and ongoing compliance services

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