Asset Management & Investment Funds: Irish Practice Developments
Some Approaching Deadlines
- 10 November 2017. Dedicated email address. The Central Bank requires both Irish UCITS and Irish authorised AIFs managed by non-Irish fund management companies to provide the Central Bank with a dedicated email address by 10 November 2017.
- 15 November 2017. Central Bank request for details of QIAIF applications for pre Christmas or pre year end authorisation/ approval/ notings. The Central Bank has requested details of applications which have pre Christmas or pre year end authorisation/ approval/ noting deadlines to be furnished by mid November and weekly thereafter (see below for more detail).
- 31 December 2017. Corporate Governance – completion of reviews of board and individual director performance. Under the Irish Funds Corporate Governance Code, the overall Board's performance and that of individual members must be reviewed annually with a formal documented review and a review of the chairperson taking place at least once every three years.
- 31 December 2017. Anti-Money Laundering/Counter Terrorist Financing (AML/CTF) – collective investment schemes and management companies should be aware of the regulatory expectation to offer training to their boards on the law relating to AML/CTF on an annual basis (and at such other times as may be appropriate). Boards should also ensure that they have considered whether to adopt a board level AML/CTF policy. Where the board has adopted such a policy, it should ensure that it receives appropriate confirmations from relevant persons and that it is subject to periodic review.
- 31 December 2017. Business Plan/Programme of Activity - UCITS management companies, self-managed UCITS, AIFMs and internally managed AIFs, where they have not already done so, may need to complete their annual performance review on service providers. They should also obtain annual confirmations from service providers and relevant persons in accordance with their business plan/programme of activity, complete onsite visits with service providers, ensure adoption of valuation policy and make disclosure in respect of connected party transactions.
- 31 December 2017. Fitness & Probity - management companies, AIFMs, self-managed/internally-managed UCITS/AIFs and other regulated financial service providers (RFSPs), where they have not already done so, will need to obtain their annual certification from persons performing PCFs (e.g. directors) and CFs (e.g. money laundering reporting officer and company secretary) that they are aware of the Fitness and Probity Standards, agree to continue to abide by those Standards and will notify the board if they no longer comply. This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards.The Annual PCF Confirmation Return due date (for the year ending 31/12/17) for Investment Funds and Fund Service Providers (including AIFMs and UCITS management companies) has not yet been published on the Central Bank webpage (The 2016 return had a filing deadline of 28 February 2017). The Annual PCF Confirmation Return (which is made via the ONR system) involves a mandatory declaration to confirm that the CEO or equivalent, has confirmed in writing that the RFSP has brought the Standards to the attention of all PCFs, that the RFSP is satisfied on reasonable grounds that all PCFs comply with the Standards, that the written agreement of all PCFs to abide by the Standards has been obtained, that all necessary due diligence has occurred and that the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the Central Bank of any action taken without delay.
- 1 January 2018. PRIIPs KID. Investment funds made available to retail investors within the European Union fall within the scope of the PRIIPs Regulation, whether those investment funds are established prior to, or after, 1 January 2018.
- A "retail investor" for the purpose of the PRIIPs Regulation is a "retail client" as defined in MiFID II which is a client "who is not a professional client" as defined in MiFID II. RIAIFs and Professional Investors AIFs made available to retail investors in the EEA will need to be accompanied by a PRIIPs KID from 1 January 2018. QIAIFs which do not limit investor eligibility to MiFID professional clients are potentially caught by the PRIIPs Regulation insofar as they are made available to Qualifying Investors that are not professional clients.
- QIAIFs may therefore wish to examine or consider their investor base, distribution arrangements, prospectus disclosure, subscription documentation or other elements to identify if any adjustments are required to ensure that the QIAIF is not in scope of the PRIIPs Regulation.
- For example, some QIAIFs may choose to limit access to the fund to MiFID professional clients to fall outside the scope of the PRIIPs Regulation. Documenting or enforcing this limitation may happen in a number of ways. UCITS are exempt from the obligation to produce a PRIIPs KID until 31 December 2019.
- In due course, the PRIIPs Regulation will be subject to review which will assess whether the transitional arrangements for UCITS should be prolonged, or whether, with some adjustments, the UCITS KIID might be replaced by or considered equivalent to the PRIIPs KID. Where investment funds are wrapped into insurance products, they may be required to provide supplementary information or data to enable the underlying insurance company to produce the PRIIPs KID.
- 1 January 2018. Benchmarks Regulation - takes effect (subject to transitional provisions). See our July Question of the Month for more details.
- 3 Jan 2018. MiFID II - comes into effect and may trigger changes to fund documentation. They may include prospectus disclosures and investment management and distribution agreement updates to ensure that MiFID authorised service providers comply with the new requirements. See below for further details.
- 19 February 2018. UCITS KIID - A UCITS must update its key investor information document (KIID) on an annual basis for each sub-fund / standalone fund within 35 business days of the end of each calendar year. This year the annual update of the KIID must be filed no later than 19 February 2018 (where required). Any update to the KIID filed with the Central Bank must be translated (as necessary) and filed in any other host jurisdictions where the UCITS is registered to market its shares and uploaded on the UCITS' website.
- 25 May 2018. GDPR - the General Data Protection Regulation will come into force on 25 May 2018 and will introduce a sweeping new data protection regime. See our May Question of the Month for details of steps funds may take to prepare for the new regime.
- 21 July 2018. MMF Regulation. The MMF Regulation must be implemented by EU member states by 21 July 2018. The MMF Regulation introduces new requirements for MMFs in particular, portfolio composition, valuation of assets, diversification, liquidity management and credit quality of investment instruments. The rules will apply to all MMFs, whether they are UCITS or AIFs. For more information, see our In Focus paper here.
- 30 November 2018. Filing Annual accounts of Variable Capital Companies in CRO. The Companies (Accounting) Act 2017 obliges UCITS investment companies and AIF investment companies to file annual accounts for financial years commencing on or after 1 January 2017 with the CRO within eleven months of the relevant financial year end. By 30 November 2018 we will see the first such accounts being filed.
The above list does not cover ad hoc filings, such as regulatory reports. It also does not cover filings of annual accounts and related documents including the annual FDI Return, semi-annual accounts or other similar returns whose deadlines will vary to reflect the particular entity's year end.
Michael D’Arcy, Minister of State with special responsibility for Financial Services and Insurance, spoke at the A&L Goodbody Annual Asset Management & Investment Funds Seminar on 26 October 2017.
Minister of State Michael D’Arcy attended and spoke at the A&L Goodbody Annual Asset Management & Investment Funds Seminar on 26 October 2017. Notably, he pointed out that:
"Ireland is the perfect location for firms looking for an EU base to passport financial services across the Union. In addition to our commitment to the EU we have a number of key factors which make Ireland an attractive location for investment. Promoting the strengths of our jurisdiction in a concerted manner across both private and public sector stakeholders remains key to the ongoing success of financial services in Ireland - the most globalised sector of our economy. Pivotal to this is the government's IFS2020 Strategy. This Strategy, now entering its fourth year of implementation, has been and will continue to be flexible and adaptable to changing needs and external challenges.
Next January I look forward to launching a suite of similarly responsive measures in the form of the Strategy's 2018 Action Plan. This will coincide with our hosting the third annual European Financial Forum - to take place on the 31st January 2018 in Dublin Castle. Last year's Forum was attended by 650 delegates, representing over 400 companies from 20 countries around the world and across the spectrum of international financial services. Our speakers for next year, which I will announce presently, will be well worth coming to hear. I am very encouraged that the EFF is becoming a flagship event of the financial services calendar and we want to make sure it stays there."
Click here to read the Minister's speech on the Dept/Finance website.
Michael Hodson, Central Bank Director of Asset Management Supervision spoke at the A&L Goodbody Annual Asset Management & Investment Funds Seminar on 26 October 2017.
26 October 2017. Michael Hodson, Director of Asset Management Supervision delivered a speech to an A&L Goodbody seminar on Asset Management Supervision: The landscape today and 2018 supervision priorities.
Mr Hodson outlined recent structural changes introduced in the Central Bank, the Central Bank supervisory engagement model and the Central Bank's regulatory role. Mr Hodson detailed the Central Bank’s supervisory priorities for 2018, discussed the outsourcing arrangements within the asset management sector and also discussed developments at a European level.
He noted that the Central Bank will continue to challenge existing authorised entities on their preparations for Brexit on the basis that firms should be planning now to ensure they are adequately prepared should a hard Brexit materialise. He re-iterated the words of Deputy Governor Ed Sibley (below) that, “the long term strength, reputation and functioning of Ireland as a financial services centre would be poorly served by the Central Bank engaging in a competitive race to the bottom by allowing ‘shell’ or ‘briefcase’ firms to relocate here”.
He also referenced the Central Bank Cross Industry Guidance in respect of IT and cybersecurity risks (September 2016). He emphasised that fund management companies need to be mindful that all obligations introduced as a result of CP86 will influence the Central Bank's supervisory focus in 2018 with all obligations applicable from 1 July 2018.
Other Central Bank Speeches
- 17 October 2017. Deputy Governor Ed Sibley, in his first major speech since appointment, delivered an address to the Financial Centres Summit 2017 on The Irish Financial Services sector: a Prudential Regulation Perspective in which he outlined his priorities for prudential regulation of the financial services sector. He highlighted the importance of firms’ preparations for MiFID II, the completion of Capital Markets Union and noted that the Central Bank continues to examine closely the proposals for the future of the European Supervisory Authorities.
- 2 October 2017. Gerry Cross, Director of Policy and Risk delivered a speech on Brexit and other current issues in financial services regulation. Mr Cross noted that "The Central Bank is conducting a review of ESMA’s three sector specific opinions. While this review is not complete we are finding that our approach is in general terms very consistent with what is in those opinions. This is not surprising as some of the key issues are ones to which we have given a significant amount of close consideration over the recent period, even before Brexit emerged."
Central Bank Christmas Deadlines
The Central Bank of Ireland (Central Bank) issued details of its deadlines for receipt of applications for approval of fund and sub-fund applications that have pre-Christmas or pre year-end approval deadlines. This includes self managed/ internally managed investment company/ ICAV applications and risk management processes. This also includes approval of post authorisation amendments that have pre-Christmas or pre year-end approval or noting deadlines.
The Central Bank also issued details of its deadlines for receipt of applications in relation to Investment Managers and ICAV registration/ conversion/ migration applications.
Details of the Central Bank deadlines are set out here.
Central Bank Markets Update
- The Central Bank published Issue 8 of its Markets Update which included:
- The third edition of its Investment Firms Q&A with new questions 1026-1031 on MiFID II and local firms.
- The 20th edition of its UCITS Q&A with new question 1085 on the maintenance of a designated email address for regulatory correspondence for Irish UCITS. The Q&A expands requirements so that Irish UCITS managed by non-Irish fund management companies must provide the Central Bank with a dedicated email address by 10 November 2017. The email address is required “to facilitate effective and efficient communication between the Central Bank and Irish authorised funds”.- The 26th edition of its AIFMD Q&A with new Question 1124 on the maintenance of a designated email address for regulatory correspondence for Irish authorised AIFs. The Q&As expands requirements so that both and Irish authorised AIFs managed by non-Irish fund management companies must provide the CBI with a dedicated email address by 10 November 2017. The email address is required “to facilitate effective and efficient communication between the Central Bank and Irish authorised funds”.
Central Bank levy
The Central Bank published the following:
its Guide To Industry Funding Regulations 2017. The levies for Investment Funds, Alternative Investment Fund Managers and other Investment Fund Service Providers are set out in Category E (pages 18/19) of the guide.
its feedback to:
- consultation papers CP 95 Consultation Paper on Funding the Cost of Financial Regulation and
- CP 108 New Methodology to Calculate Funding Levies: Credit Institutions, Investment Firms, Fund Services Providers and EEA insurers.
- its frequently asked questions on the funding levy.
Key highlights include that:
- Industry funding levy moves from 50% (of the cost of regulation) to 65% for most regulated firms in 2017
- Levying process for credit institutions, EEA investment firms and EEA fund service providers has changed for 2017
- Changes to levies for branches of EEA insurance companies to be phased in over two years
The Central Bank has also signed the Central Bank Act 1942 (Section 32D) (Investment Funds — Additional Supervisory Levy Regulations 2017) SI 441 of 2017 which will introduce a new supervisory levy. This will be a once off levy for new fund structures and new sub-funds in addition to the annual levy detailed above. This will apply to all funds, whether stand-alone, umbrella fund structures or sub-funds of existing umbrella fund structures, which are authorised or approved on or after 1 December 2017 as follows:
- Standalone structure, €5,000
- Umbrella with one sub-fund, €5,000
- Amount per additional sub-fund, €2,000 (with a max per application of €23,000 so the single authorisation of an umbrella with more than 10 sub-funds will be charged the maximum of €23,000). Additional sub-funds in a later application will attract the €2,000 per sub-fund levy.
The supervisory levy will be billed on or shortly after authorisation or approval and funds will have 28 days to pay it.
Central Bank of Ireland
16 new platforms and 68 new funds (including sub-funds) were authorised by the Central Bank in September 2017.
For more information please contact a member of the Asset Management & Investment Funds Team.
Date published: 02 November 2017