Pillar 3 Disclosure

PILLAR 3 DISCLOSURE – 31 December 2017

Capricorn Fund Managers Limited (the “Firm”) was incorporated with limited liability in England and Wales on 17 March 2009 and is authorised and regulated by the Financial Conduct Authority (the “FCA”) with Firm reference number 505252. The Firm acts as an investment advisor and investment manager to collective investment schemes and segregated accounts (the “Funds”).

The Firm is categorised as a Collective Portfolio Management Investment firm (subject to BIPRU) by the FCA for capital purposes. It reports on a stand-alone basis.

Pillar 3 disclosure fulfils the Firm’s obligation to disclose to market participants key pieces of information on a firm’s capital, risk exposures and risk assessment processes.


The Directors of the Firm determine its business strategy and the risk appetite. They have designed and implemented a risk management framework that recognizes the risks that the business faces. The Directors also determine how those risks may be mitigated and assess on an ongoing basis the controls and procedures necessary to manage those risks. The Directors meet on a regular basis and discuss projections for profitability, liquidity, regulatory capital, business planning and risk management.

As an investment advisor and manager, the Firm considers the following as key risks to its business:

Business risk – This risk represents a fall in assets under management in the Funds or the loss of key staff which may reduce the fee income earned by the Firm and hinder its ability to finance its operations and reimburse its expenses.

Operational risk – This risk covers a range of operational exposures from risk of trading errors to risk of breach of a Fund’s investment objectives. Legal, regulatory and reputational risks are also included within the category of operational risk.

Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors.

Market risk – The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling.

The above risks are assessed and mitigated as part of the Internal Capital Adequacy Assessment Process (”ICAAP”).


The capital resources of the business comprise Tier 1 capital with no deductions.

As a limited licence firm the capital resources requirement is calculated as the total of Pillar 1 and Pillar 2 capital requirements.

Pillar 1 capital is the greatest of:

1. a base capital requirement of Euro 125,000 plus any professional indemnity risk currently £25,000;
2. the sum of market and credit risk requirements; and
3. the Fixed Overhead Requirement (“FOR”).

In addition as an AIFM there is a second capital adequacy test that Own Funds must exceed the FOR plus a professional indemnity risk requirement.

Pillar 2 capital is calculated by the Firm as representing any additional capital to be maintained against any risks not adequately covered under the requirement in Pillar 1 as part of its ICAAP..

As at 31 December 2017, following the completion of the audit, the Firm’s regulatory capital position was:

Capital item£000
Tier 1 capital: Share Capital and Audited Reserves780
Own Funds780
Pillar 1 Capital Resources Requirement for 2017/2018460
FOR plus PII requirement505


The approach of the Firm to assessing the adequacy of its internal capital to support current and future activities is contained in the ICAAP. This process includes an assessment of the specific risks to the Firm and the internal controls in place to mitigate those risks. Finally, an assessment is made of the probability of occurrence and the potential impact, in order to arrive at a level of required capital, as relevant. The Firm stress tests future impact by considering the Firm’s financial forecasts, its breakeven point and, in order to address the worst case scenario, the costs to close.

The Firm’s ICAAP is formally reviewed by the Directors approximately every 12 months, but will be revised should there be any material changes to the Firm’s business or risk profile.


Given the nature and small size of our business, remuneration for all employees is set by the Board of the Firm. The Firm formally reviews the performance of all employees and based thereon determines each employees overall level of remuneration and the split of that between base salary, bonus, etc. in compliance with the FCA Rules and the Remuneration Code.

The Firm has defined “Code Staff” to be the senior management of the Firm. The aggregate level of remuneration earned by staff is disclosed in our audited financial statements.

The Firm has determined that they are a “Tier 3” firm and has applied proportionality and, where relevant, has disapplied various provisions of the FCA Remuneration Code.

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United Kingdom

Capricorn Fund Managers Limited

Malta House, 36-38 Piccadilly
London W1J 0DP, United Kingdom

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