There is a regulatory obligation placed on the evaluator of an investment fund's in-kind shares...

Under the CISI provisions concerning evaluation of in-kind shares for investment funds, an evaluator has specific responsibilities relating to valuation quality, liquidity and risk. The evaluator must prepare the evaluation report in accordance with applicable international standards, use sufficient and complete information, properly assess the asset and clarify whether the in-kind shares provided to the investment fund are capable of being liquidated. This liquidity determination is important because an asset that cannot readily be disposed of may materially affect the fund's ability to implement its investment policy, meet liquidity requirements or realise value for investors. The evaluator must also analyse risks associated with the evaluated asset and reflect their potential effect on future expectations and assumptions used in the valuation. The CISI requirement does not specifically require the evaluator, for this purpose, to state whether the shares were acquired at a discount, classify them as short- or long-term assets, or identify them as capital-growth or income-oriented investments. Consequently, option B directly corresponds to the evaluator obligation specified in the CISI study material.

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