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Discretionary Investment Management Agreement Template for England and Wales

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Key Requirements PROMPT example:

Discretionary Investment Management Agreement

"Need a Discretionary Investment Management Agreement for a UK-based wealth management firm managing portfolios for high-net-worth retail clients, with specific provisions for ESG investment restrictions and quarterly performance reporting requirements."

Document background
The Discretionary Investment Management Agreement is essential when a client wishes to delegate investment decisions to a professional manager in the UK. This agreement, governed by English and Welsh law, establishes the manager's authority to make investment decisions without prior client approval, within agreed parameters. It must comply with FCA regulations, FSMA 2000, and MiFID II implementation in UK law. The document covers investment strategy, risk management, fees, reporting, and regulatory requirements, providing clarity and protection for both parties while ensuring regulatory compliance.
Suggested Sections

1. Parties: Identification of the investment manager and the client, including registered addresses and company numbers

2. Background: Context of the agreement and basic premises, including regulatory status of the investment manager

3. Definitions: Key terms used throughout the agreement including regulatory and investment-specific definitions under FSMA, MiFID II, and other applicable regulations

4. Appointment and Authority: Scope of discretionary authority granted to the manager under FSMA and FCA regulations

5. Investment Objectives and Restrictions: Agreed investment strategy, risk profile, and restrictions in compliance with COBS rules

6. Services: Detailed description of regulated services to be provided under FSMA and related regulations

7. Fees and Charges: Management fees, transaction costs, and other charges with full disclosure as required by FCA rules

8. Reporting and Valuations: Frequency and content of reports and valuations as required by COBS

9. Representations and Warranties: Standard declarations including regulatory status, compliance with AML regulations, and data protection laws

10. Termination: Circumstances and process for ending the agreement in compliance with FCA requirements

Optional Sections

1. Custody Arrangements: Details of custody services if provided, compliance with CASS rules

2. Delegation: Terms for delegating investment management functions under FCA requirements

3. Corporate Actions: Handling of corporate actions and voting rights in compliance with SRD II

4. Best Execution: Details of best execution policy as required by MiFID II/UK MiFIR

Suggested Schedules

1. Investment Guidelines: Detailed investment restrictions and guidelines aligned with FCA requirements

2. Fee Schedule: Detailed breakdown of all fees and charges as required by MiFID II cost disclosure rules

3. Risk Warnings: Mandatory risk disclosures required by COBS

4. Authorized Persons: List of persons authorized to give instructions with requirements under MAR

5. Custody Terms: Detailed custody terms if applicable under CASS rules

6. Best Execution Policy: Firm's execution policy as required by MiFID II/UK MiFIR

7. Conflicts of Interest Policy: Summary of firm's conflicts policy as required by FCA rules

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions








































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Industries

Financial Services and Markets Act 2000 (FSMA): Primary legislation governing financial services regulation in the UK, establishing the regulatory framework and FCA's powers

Financial Services Act 2012: Reformed the UK financial regulatory structure, particularly regarding financial markets and services oversight

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Defines which activities require FCA authorization and regulation in the financial services sector

FCA Handbook - COBS: Conduct of Business Sourcebook containing detailed rules for firms' business practices and client interactions

FCA Handbook - SYSC: Senior Management Arrangements, Systems and Controls requirements for organizational and operational controls

FCA Handbook - PRIN: Principles for Businesses establishing the fundamental obligations of all regulated firms

FCA Handbook - PROD: Product Intervention and Product Governance Sourcebook governing product design and distribution

UK MiFID II Implementation: UK version of Markets in Financial Instruments Directive II, governing investment services and activities

UK MiFIR: UK Markets in Financial Instruments Regulation, covering financial instruments trading and transparency

Money Laundering Regulations 2017: Requirements for preventing and detecting money laundering in financial services

Proceeds of Crime Act 2002: Legislation dealing with money laundering and proceeds of crime, including reporting obligations

UK GDPR: UK General Data Protection Regulation governing personal data processing and protection

Data Protection Act 2018: UK's implementation of data protection requirements, complementing UK GDPR

Consumer Rights Act 2015: Protection for consumers in contracts for goods, services, and digital content

Unfair Contract Terms Act 1977: Regulates unfair terms in contracts, particularly regarding liability limitations

Alternative Investment Fund Managers Regulations 2013: Regulations governing alternative investment fund managers and their activities

Common Law Contract Principles: Fundamental principles of contract law including offer, acceptance, consideration, and intention

Misrepresentation Act 1967: Governs remedies for misrepresentation in contract formation

Market Abuse Regulation (UK MAR): Regulations preventing market abuse and maintaining market integrity

Criminal Justice Act 1993: Contains provisions relating to insider dealing and market manipulation offenses

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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