Asset Management & Investment Funds: Irish Practice Developments: December 2018
Asset Management & Investment Funds: Irish Practice Developments: December 2018
Some approaching compliance deadlines
31 December 2018. 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 2018. 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 2018. 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. This may include obtaining annual confirmations from service providers and relevant persons in accordance with their business plan/programme of activity, completing onsite visits with service providers, ensuring adoption of valuation policy and making disclosures in respect of connected party transactions.
31 December 2018. 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 submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for Investment Funds and Fund Service Providers (including AIFMs and UCITS management companies) will be detailed on the ONR system.
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
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 Central Bank of any action taken without delay.
31 December 2018. PRIIPs KID. Investment funds 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 exempt from the obligation to produce a PRIIPs KID until at least 31 December 2019. See below for more information on this topic.
1 January 2019. Securitisation Regime - Due diligence and disclosures on securitisations will need to be applied (in the case of UCITS) or updated and refreshed (in the case of AIFMs). Where AIFMs and UCITS are exposed to securitisation positions which do not meet the requirements, they must, acting in the best interest of the investors, take corrective action. See our In Focus paper on this topic.
1 January 2019. Benchmarks Regulation - Prospectuses of UCITS and of funds which are subject to the Prospectus Directive, which reference a benchmark and which have been approved prior to 1 January 2018, will need to be updated at the next update and in any event by no later than 1 January 2019 to include information on the benchmark. See our In Focus Q&A on this topic.
7 January 2019 to 28 March 2019. UK FCA TPR Notifications - The UK FCA has advised that TPR notifications must be made during the period 7 January 2019 to 28 March 2019 (discussed in our November bulletin and below).
15 January 2019. Depositaries to specific types of AIFs. The Central Bank has set out its proposal for a regulatory framework for entities to seek authorisation under Regulation 22(3)(b) of the AIFM Regulations act as depositaries to specific types of AIFs. The Central Bank has invited stakeholders to comment on the proposals until 15 January 2019.
18 January 2019. Outsourcing – The Central Bank issued a Discussion Paper on Outsourcing which is open for comment until 18 January 2018.
31 January 2019. UCITS ManCo ownership confirmation – UCITS management companies need to file the Annual Ownership confirmation by 31 January 2018.
19 February 2019. ESG refinements to the UCITS and AIFMD regimes. ESMA has requested responses to its consultation on integrating sustainability risks and factors in the UCITS Directive and AIFMD (discussed below) by 19 February 2019.
19 February 2019. 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. For 2019, the annual update of the KIID must be filed no later than 19 February 2019 (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.
Central Bank's Christmas and year-end deadlines for:
Fund and sub-fund applications that have Christmas or year-end approval deadlines including self-managed/internally managed investment company/ICAV applications
Approval of post-authorisation amendments that have Christmas or year-end approval or noting deadlines are detailed here.
Central Bank is analysing UCITS funds that report to be actively managed
Director General Derville Rowland delivered a speech on the importance of effective culture within the financial sector, and the importance of being prepared for Brexit.
Key take-aways included:
All regulated firms must implement conduct and consumer protection risk management frameworks that are proportionate to the nature, scale and complexity of the firm and the risks they are designed to manage.
On Fund Management Companies - CP86
The Central Bank will be assessing CP86 compliance by way of supervisory engagements in 2019
Supervisory engagement will focus on the key role the board plays but it will also take account of our strongly held view of the importance of designated person roles (DPs) to ensure the fund management company is organised and run effectively.
Irish ManCos will be expected to demonstrate independence, the proper implementation of EU rules and the protection of the underlying investors in the funds.
Financial services firms need to understand the Brexit risks and ensure they have effective mitigation plans in place.
The Central Bank is working on MoUs through ESMA in order to reach a coordination solution with UK regulators.
On Closet Indexing
The Central Bank has begun analysis of 2,000-plus Irish domiciled UCITS funds that report to be actively managed.
The Central Bank expects that, in the case of a fund management company operating a delegating model, the board satisfies itself that its staff really are operating at all times for the benefit of the management company and the underlying investors.
It is also imperative that firms put in place robust structures to ensure that the best interests of investors are being protected in areas such as fees and incentives.
Central Bank Additional Supervisory Levy for Asset Management Firms
In this context, an Asset Management Firm is a firm authorised by the Asset Management: Authorisation, Advisory & Client Asset Division and supervised by the Asset Management: Supervision Division under
the Investment Intermediaries Act 1995 (No. 11 of 1995),
the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017),
the European Union (Alternative Investment Fund Managers) Regulations 2013 (SI No. 257 of 2013) or
the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 - SI No. 352 of 2011.
Asset Management Firms will be liable to pay the ASL in the first year of authorisation/approval. The amount of the ASL will depend on the PRISM Impact Rating of the Asset Management Firm. PRISM Impact Ratings issue to Asset Management Firms following authorisation. Asset Management Firms seeking Extensions of Authorisation are also in scope. The regulations to introduce this ASL have not yet been published.
The General Scheme of the Companies (Corporate Enforcement Authority) Bill, 2018
The General Scheme of the Companies (Corporate Enforcement Authority) Bill, (the Scheme) has been published. Read more here.
Data Protection Commission confirms list of processing operations requiring a Data Protection Impact Assessment
The Irish Data Protection Commission (DPC) published a non-exhaustive list of processing operations requiring a Data Protection Impact Assessment (DPIA) to be carried out. The list encompasses both national and cross-border data processing operations. It should be read in conjunction with Article 35 of the GDPR and the WP29 DPIA Guidelines. (Read more here)
The proposed UK Temporary Permissions Regime will allow already registered umbrella funds to market additional sub-funds in the UK post-Brexit.
The UK Treasury published a draft Statutory Instrument in respect of the proposed Temporary Permissions Regime (TPR) which is to come into effect in the event of a no-deal Brexit.
The draft Statutory Instrument envisages that the TPR will be available to UCITS and AIFs which can demonstrate that at least one other sub-fund in their umbrella was registered with the FCA and opted into the TPR before 29 March 2019.
This is a very welcome development in that it provides a framework for asset managers to launch and sell new products into the UK post-Brexit.