Asset Management & Investment Funds: Irish Practice Developments - Dec 2020
Asset Management & Investment Funds: Irish Practice Developments - Dec 2020
Some approaching compliance deadlines
25 December 2020: Central Register of Beneficial Ownership of ICAVs and Unit Trusts- The deadline for filing beneficial ownership information on the central register for ICAVs and unit trusts in existence before 25 June 2020 is 25 December 2020.
31 December 2020: Brexit - The UK left the EU on 31 January 2020 and is now in an 11 month transition period. From 1 January 2021, the UK will be a third country as regards the implementation and application of EU law. The clock continues to count down the time to agree complex arrangements to govern EU-UK relations. See our question of the month for more.
31 December 2020: 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. Once every three years a formal documented review and a review of the chairperson must take place.
31 December 2020: Anti-Money Laundering/Counter Terrorist Financing - 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 2020: Business Plan/Programme of Activity- UCITS ManCos, 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 (albeit remotely), ensure adoption of valuation policy and make disclosure in respect of connected party transactions.
31 December 2020: Fitness & Probity– Where they have not already done so, RFSPs 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.
29 January 2021: AIFMD consultation - Deadline for responses to the EU Commissions consultation on AIFMD (which will likely also affect UCITS).
31 January 2021/ 28 February 2021: Fitness & Probity- RFSPs will need to submit their annual PCF Confirmation Return to CBI. The submission due date for the annual PCF Confirmation Return (for the year ending 31/12/20) for UCITS ManCos and for AIFMs is likely 31 January 2021. The submission due date for investment funds will likely be 28 February 2021. The current annual PCF Confirmation Return and associated reporting date and submission deadline for each entity will be detailed on the ONR system.
The Annual PCF Confirmation Return is made via the ONR system and 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
the RFSP is satisfied on reasonable grounds that all PCFs comply with the standards
the written agreement of all PCFs to abide by the standards has been obtained
all necessary due diligence has occurred
the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the CBI of any action taken without delay
31 January 2021: UCITS ManCo and AIFM ownership confirmation- UCITS ManCos and AIFMs need to file the annual ownership confirmation by 31 January 2021.
19 February 2021: UCITS KIID - A UCITS must update its KIID on an annual basis for each sub-fund/standalone fund within 35 business days of the end of each calendar year. The annual update of the KIID must be filed no later than 19 February 2021 (where required). Any update to the KIID filed with the CBI must be translated (as necessary) and filed in any other host jurisdictions where the UCITS is registered to market its shares and must then be uploaded on the UCITS' website. AIFs which have issued a PRIIPs KID must review KIDs regularly, when there is a significant change, and at least annually. The KID must be revised as necessary. Unlike the UCITS KIID, there is no annual refresh deadline. UCITS are currently exempt from the obligation to produce a PRIIPs KID until 31 December 2021.
28 February 2021: Fund Profile Return- The annual Central Bank Fund Profile Return is required for all Irish authorised sub-funds. It is to be prepared for the period up to 31 December 2020, with a submission deadline (via the ONR) of 28 February 2021. The CBI does not anticipate that the fund profile will change from year to year, as changes would most probably reflect changes within the fund's offering documents. Therefore, year-to-year updates to the fund profile are expected to be minimal and reflect significant changes. The CBI issued guidance and a template.
10 March 2021: Sustainable Finance Disclosures- Obligations under the Sustainable Finance Disclosures Regulation come into effect (see our November bulletin for more detail).
31 March 2021: MMFR quarterly reporting - MMF managers must continue to send their quarterly reports to national regulators by quarter end.
31 March 2021: CP86 analysis and action plan - Fund management companies (which include UCITS management companies, authorised AIFMs, self-managed UCITS investment companies/ICAVs and internally managed AIFs which are authorised AIFMs) must complete their assessment of their operations against the requirements of CP86 and agree an action plan by end Q1 2021.
The above list does not cover tax, FATCA or CRS filings, ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include any annual FDI return) and semi-annual accounts or other similar returns which deadlines vary to reflect the particular entity's year end. By way of example, the Companies (Accounting) Act 2017 obliges UCITS investment companies and AIF investment companies to file annual accounts with the CRO within eleven months of their financial year-end. The CBI set out the reporting requirements for UCITS management companies and the reporting requirements for AIF management companies.
CBI deadlines for pre-Christmas/ year-end applications 2020
The Central Bank of Ireland (CBI) 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)
for approval of post-authorisation amendments that have pre-Christmas or pre year-end approval or noting deadlines
for revocations, Individual Questionnaire filings, investment manager registrations and conversion/migration applications that have pre-Christmas or pre year-end deadlines
The CBI already has performance fee requirements under the CBI UCITS Regulations, some of which have an implementation date of 27 November 2020, and the AIF Rulebook in respect of retail AIFs. Consequently, implementation of the ESMA Guidelines will have certain complexities and for a period of time the existing performance fee requirements as well as the performance fee regime established under the ESMA Guidelines will run in parallel. For the avoidance of doubt, in the event of any inconsistency between the ESMA Guidelines and the CBI UCITS Regulations or the AIF Rulebook, the statutory obligations of the CBI UCITS Regulations and the AIF Rulebook will prevail.
The CBI is proposing a phased implementation of the ESMA Guidelines over time due to the need to consult on amending the domestic framework to incorporate the ESMA Guidelines, to reflect the transitional periods provided for under the ESMA Guidelines and to maintain a consistent approach for retail investor funds.
In order to incorporate the ESMA Guidelines into the Central Bank’s regulatory framework it is proposed to issue specific Central Bank Performance Fee Guidance.
You can read more about performance fees and listen to an audio update here.
25 December 2020 deadline for existing ICAVs and Unit Trusts to file on the CBI's Central Register of Beneficial Ownership.
The CBI updated its Beneficial Ownership Register FAQ which sets out the CBI's interpretation of the legislation which underpins the CBI's central register of beneficial ownership (CBI Central RBO) and its expectations for ICAVs and unit trusts.
The deadline for filing beneficial ownership information on the CBI's Central RBO is 25 December 2020 for ICAVs and unit trusts in existence before 25 June 2020.
ICAVs registered and unit trusts authorised after 25 June 2020, have 6 months from their date of registration or authorisation to file.
The FAQs and filing mechanism are prescriptive. The FAQ recognises that it is ultimately a matter for a unit trust or ICAV to interpret requirements.
You can read about the detail of requirements in our In Focus paper on beneficial ownership and Irish investment funds here.
For ICAVs the requirements are as for companies with the following refinements.
No PPSN number or form BEN 2 is required to validate the information on the beneficial owner.
The CBI expects that when recording senior managing officials, the ICAV includes at a minimum a director and manager/CEO, and would expect that the chairperson is included among directors recorded. The FAQ also notes that it is ultimately a matter for the ICAV to interpret this requirement, and record additional senior management or directors as senior managing officials as they see fit.
When entering the details of a beneficial owner on the CBI Central RBO, the presenter must indicate whether or not the person is currently a PCF holder in this or any other Regulated Financial Services Provider.
For unit trusts, the CBI requires the following.
A natural person to be identified as the beneficial owner. This is required even where there is no investor owning more than 25%. This natural person must exercise ultimate control over the entity by means of direct or indirect ownership or by other means. Ultimately, it is a matter for each unit trust to determine who this is but the CBI notes that this may be a person in the trustee or management company who, in respect of the unit trust, exercises such a role. For example, the most senior PCF in the depositary or management company.
The depositary or settlor whether they are a natural person or a corporate entity to also be identified.
As with ICAVs, no PPSN number or form BEN 2 is required to validate the information on the beneficial owner.
As with ICAVs, when entering the details of a beneficial owner on the CBI Central RBO, the presenter must indicate whether or not the person is currently a PCF holder in this or any other regulated financial services provider.
When unit trusts submit details of the depositary or settlor:
the details of the corporate depositary or settlor should be entered in the field titled: Further information / clarification in relation to nature / extent of ownership / control
the details should include (as relevant) - legal name, registered office, Central Bank Institution Code, Companies Registration Office number
It is important that the details submitted in the CBI Central RBO are consistent with the ICAV's or unit trust's own internal register of beneficial ownership.
Please speak with your usual contact in the ALG Asset Management & Investment Funds team if you require advice on these issues.
CBI speech by Colm Kincaid, CBI Director of Securities and Markets Supervision
The CBI has engaged with Irish funds and furnished some clarification in respect of the outcome of its thematic review of the implementation of its framework for governance, management and oversight in fund management companies discussed here.
the three full time employee requirement is a minimum requirement and is to be applied to all fund management companies, including self managed investment companies
as regards the requirement that fund management companies appoint locally based persons who conduct managerial functions (Designated Persons) and other staff with sufficient time dedicated to their roles in order to fulfil their duties, the CBI notes:
"It is difficult to see how a fund management company could be considered to be located in Ireland unless a clear and convincing preponderance of the firm’s Designated Persons and management roles (including key roles) are performed within the jurisdiction".
The CBI are always open to discuss the requirements for particular entities on a one to one basis. There may be a small element of room for manoeuvre.
CBI markets updates
The CBI published issue 14 2020 of its markets updates. It contains updates from the CBI and ESMA.
CBI updates include:
The Central Bank publishes Consultation Paper 133, “Consultation on enhancements to the Central Bank Client Asset Requirements, as contained in the Central Bank Investment Firms Regulations”