REGULATORY INFORMATION

 

AUTHORISATION
Lennox Investment Management LLP is authorised and regulated by the Financial Conduct Authority with registration number 469971. For details of Lennox Investment Management LLP’s registration, please see www.fca.org.uk.
Lennox Investment Management LLP is registered in the United Kingdom with registration number OC326770.

ACTIVITIES
Lennox Investment Management is engaged as Investment Manager of two investment funds. Lennox Prime Central London Residential Property Fund held its final close in June 2009. Lennox Prime Central London Residential Fund II LP held its final close in June 2014.

CAPITAL REQUIREMENTS DIRECTIVE
Lennox Investment Management LLP, as an authorised firm and as regulated by the Financial Conduct Authority, is subject to minimum regulatory capital requirements. The Firm is categorised as a BIPRU 50,000 Euros limited licence firm by the FCA for capital purposes. The firm is also a sub threshold AIFM. The Firm is not a member group and so is not required to prepare consolidated reporting for prudential purposes.

The management body of the Firm determines its business strategy and risk appetite, along with designing and implementing a risk management framework that recognises the risk that the business faces. It also determines how those risks may be mitigated and assesses on an ongoing basis the arrangements to manage those risks. The management body manages the Firm’s business risks through a framework of policy and procedures having regard to relevant laws, standards, principles and rules, including FCA principles and rules, with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

The management body has identified that operational, counterparty/credit, interest rate, liquidity, market, reputational and key person risks are the main areas of risk to which the Firm is exposed. Annually, there is a formal review of the risks, controls and other risk mitigation arrangements and an assessment of their effectiveness. Where any material risks are identified, the financial impact of these risks is assessed as part of business planning and capital management and a decision is made as to whether the amount of regulatory capital is adequate.

  • The Firm is small with an operational infrastructure appropriate to its size with the objective of minimizing operational risk. Daily controls are in place to both monitor and control operational risk, plus a resilient business continuity plan is in place which is tested periodically. It carries no market risk, and credit risk from management and performance fees receivable from the funds under its management. The Firm follows the standardized approach to market risk and the simplified standard approach to credit risk. Interest risk is minimal to the Firm and only relates to cash balances held by the Firm. Liquidity risk is controlled by actively managing the cash resources of the Firm to ensure adequate capital is retained in cash to more than cover any projected costs. Reputational risks of using outsourced providers is managed by a thorough vetting and review process. Key person risk is actively

monitored and controlled. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge.

As the firm is a limited licence firm, its capital requirements are the greater of:

  • Its base capital requirement of €50,000; or
  • The sum of its market and credit risk requirements: or
  • Its Fixed Overhead Requirement.

The firm maintains suitable controls and procedures to ensure that its capital is maintained at all times. As at 31st March 2017 Lennox Investment Management LLP had capital of £110,041.

REMUNERATION CODE DISCLOSURE
The firm is authorised and regulated by the Financial Conduct Authority as a BIPRU 50,000 Euros Limited Licence Firm, and so it is subject to FCA Rules on remuneration. These are contained in the FCA's Remuneration Code located in the SYSC Sourcebook of the FCA’s Handbook. The FCA defines Remuneration Code Staff (“Code Staff”) in SYSC 19C.3.4 as senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as those detailed above, whose professional activities have a material impact on the firm’s risk profile. Our disclosure is made in accordance with our size, internal organization and the nature, scope and complexity of our activities, therefore we are not required to appoint an independent remuneration committee. The Firm’s policy has been agreed by the Senior Management in line with the Remuneration Code principles laid down by the FCA. Our policy is reviewed annually or following a significant change to the business requiring an update to its internal capital adequacy assessment and designed to ensure that we comply with the Remuneration Code and our compensation arrangements:

  • are consistent with and promote sound and effective risk management;
  • do not encourage excessive risk taking;
  • include measures to avoid conflicts of interest; and
  • are in line with the Firm's business strategy, objectives, values and long-term interests.

Individuals are rewarded based on their contribution to the overall strategy of the business. Investment generation, investment trading, sales & marketing, operations, compliance and other factors such as performance, reliability, effectiveness of controls, business development and contribution to the business are taken into account when assessing the performance of the senior staff responsible for the infrastructure of the Firm. Remuneration is made up of partnership profit share or salary and discretionary bonuses. The factors to be used in setting bonuses are at the absolute discretion of the Firm depending on the performance of the Firm as well as individual performance. The Firm has chosen not to disclose exact remuneration figures. The Firm is a BIPRU Limited Licence firm and, as such, can dis-apply certain rules under the BIPRU remuneration principles proportionality rules. As a result:

  • The Firm does not operate a deferral policy
  • Performance adjustment is not applied.

We may omit required disclosures where we believe that the information could be regarded as prejudicial to the UK or other national transposition of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

UK STEWARDSHIP CODE
COBS 2.2 of the FCA Handbook require Lennox Investment Management LLP to make a public disclosure in relation to the nature of our commitment to the above Code, which was published by the Financial Reporting Council ('FRC') in July 2010 and amended in September 2012. The UK Stewardship Code aims to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. It sets out good practice on engagement with investee companies and is to be applied by firms on a "comply or explain" basis. The FRC recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset managers not to engage with companies, depending on their investment strategy, and in such cases firms are required to explain why it is not appropriate to comply with a particular principle.
Lennox Investment Management LLP pursues a trading strategy that involves Investment into real estate on behalf of its investors. The Code is therefore not relevant to the firm's activities.

June 2018