Ch. 9ADVANCED ~20 mins

Depositary & Custody

Safekeeping, oversight duties and strict liability

Think of the depositary as two things at once: (1) asset guardian — it holds the fund's financial instruments and monitors all cash flows; and (2) independent checker — it performs ongoing oversight of the management company to verify the fund is run correctly.

Why the Depositary Matters

The depositary sits between the ManCo/AIFM (who invests the fund's money) and the investors (who own it). It acts as a structural check against misappropriation, error, and rule-breaking. Critically: a management company or AIFM cannot act as its own fund's depositary — the roles must be completely separate.

▸Depositary = asset guardian: holds financial instruments in custody; verifies ownership of non-custodied assets
▸Depositary = independent checker: 9+ statutory oversight duties — NAV, investment rules, dealing, distributions, AML
▸Market plumbing context: depositaries sit at the centre of CSDR settlement rules, T+1 changes, and emerging rules for virtual/crypto assets
▸Extra expectations apply where funds invest in newer asset types (private credit, crypto, infrastructure) — the depositary must still fulfil its verification duties even where custody is not straightforward