Asset Management & Investment Funds: Irish Practice Developments – January 2024
Asset Management & Investment Funds: Irish Practice Developments – January 2024
31 January 2024-UCITS ManCo and AIFM ownership confirmation - UCITS ManCos and AIFMs must file their annual ownership confirmation by 31 January 2024.
20 February 2024 - UCITS KIID/PRIIPs KID - All UCITS made available to "retail investors" in the EEA are required to provide such investors with a PRIIPs KID prior to their investment. In this context, "retail investor" includes any investor that does not fall within the definition of a "professional client" under MiFID. A UCITS which is not made available to "retail investors" in the EEA is not obliged to provide a PRIIPs KID and may continue to produce a UCITS KID. This may be important for marketing in the UK. A UCITS producing a UCITS KIID 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 UCITS KIID must be filed with the CBI. Any update to the KIID filed with the CBI must be translated and filed in other host jurisdictions as necessary. It must then be uploaded on the UCITS' website. UCITS authorised prior to 1 January 2023 that are required to produce a PRIIPs KID and AIFs that are required to produce a PRIIPs KID can make their initial submission of the PRIIPs KID through the CBI portal with the written declaration (detailed on the CBI PRIIPs guidance) from 1 January 2024. See our November bulletin for more detail on filing UCITS KIIDs and PRIIPs KIDs with the CBI. Unlike the UCITS KIID, there is no annual refresh deadline for the PRIIPs KID. The PRIIPs KID must be reviewed regularly and revised when there is a significant change, and at least annually. The PRIIPs KID return will not be a scheduled return on the portal and is set up as an ad hoc return. It is the responsibility of the UCITS/ AIF to be aware of and comply with its regulatory reporting obligations in respect to the initial filing and the submission of any subsequent amendments to the PRIIPs KID to the CBI.
28 February 2024-Fitness & Probity- RFSPs, as part of their annual fitness and probity audit due diligence and depending on their compliance calendar, may need to obtain their annual confirmation and agreement from persons performing PCFs (such as directors) and CFs (such as money laundering reporting officer and company secretary) that they have read the code setting out the Fitness & Probity Standards, that they comply with those standards and agree to notify the RFSP without delay if they no longer comply (the wording in the template agreement at Appendix 2 of the Guidance on Fitness and Probity Standards has been refined). This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards. RFSPs will need to submit their annual PCF confirmation return to the CBI in accordance with new PCF Annual Confirmation Guidance. The first annual submission of confirmation of the completion of the new F&P certification process for each PCF role holder and of confirmation of the completion of the overall certification process for all CFs will relate to the 2024 calendar year and will be required in 2025.
28 February 2024 (expected deadline) - Fund profile return - The annual CBI fund profile return is required for all Irish authorised sub-funds. It is to be prepared for the period up to 31 December 2023, with an anticipated submission deadline of 28 February 2024. 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 updated its fund profile guidance and template in 2022.
14 March 2024 - MiFID II discussion paper on digitalisation of retail investment services - ESMA is seeking responses to its discussion paper (discussed below) on the digitalisation of retail investment services.
Quarter 1 2024 - Macroprudential measures for GBP Liability Driven Investment Funds- Q1 2024. Following the review of the feedback to CBI CP 157 (discussed here) the CBI is expected to publish a feedback statement and announcement of the final measures in the first quarter of 2024.
29 April 2024-EMIR - When reporting under EMIR REFIT (from 29 April 2024), counterparties and entities responsible for reporting should take also into account the EMIR standards and related ESMA guidelines and guidance (including Q&A, validation rules and so on, detailed below).
Quarter 2 2024 - Asset Valuation Frameworks- Irish fund management companies are required to review asset valuation frameworks by end Q2 2024, in line with CBI letter to industry discussed below.
The above list does not cover:
tax, FATCA or CRS filings, director's compliance statement obligations, which apply to listed UCITS VCCs
diversity reporting obligations, which may apply to listed AIF and UCITS VCCs
ad hoc filings, such as regulatory reports, or filings of annual accounts (and related documents which include annual FDI returns) 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 issued:
ELTIF 2.0. 24-hour authorisation will apply to “Qualifying Investor” ELTIFs in Ireland
The Central Bank of Ireland (CBI) has confirmed its intended approach for ELTIF authorisations in Ireland, with the 24-hour authorisation process for “Qualifying Investor” AIFs being made available for “Qualifying Investor” ELTIFs.
As previously advised, the CBI is updating its AIF Rulebook enabling the authorisation in Ireland of ELTIFs using Ireland’s popular regulated fund vehicles, including the ICAV. Importantly, the ELTIF will benefit from the well understood Irish tax regime applicable to Irish regulated funds.
You can read more about the CBI’s approach to the authorisation of ELTIFs here.
Annual PCF confirmation return - filing deadline
The CBI moved the annual PCF confirmation return to the CBI portal and has developed new functionality. Regulated Financial Service Providers(RFSPs)will need to submit their annual PCF confirmation return to the CBI in Q1 2024. The return is now available for submission. Submission dates have not yet been confirmed. CBI published PCF Annual Confirmation Guidance. The CBI recommends that RFSPs ensure that all PCF information is up to date (such as PCF start dates and PCF resignations).
The first annual submission of confirmation of the completion of the new F&P certification process for each PCF role holder and of confirmation of the completion of the overall certification process for all CFs will relate to the 2024 calendar year and will be required in 2025.
Asset Valuations - FMCs to review asset valuation frameworks by end Q2 2024
In 2022, the CBI undertook a review of asset valuation as part of the ESMA Common Supervisory Action (CSA). ESMA issued its report in May 2023.
The CBI wrote to Irish Fund Management Companies (FMCs) to:
highlight the main findings of this work
set out CBI expectations
identify the key actions to be taken by all FMCs to mitigate the issues identified
The CBI set out the following key actions to be taken by all FMCs
All FMCs should have documented, comprehensive and entity specific asset valuation policies and procedures which clearly outline the operational roles and responsibilities for all parties involved in the asset valuation process. FMCs should ensure that there is clear ownership for asset valuation policies, procedures and the review process, which are adhered to and embedded in the FMCs asset valuation process.
Asset valuation policies and procedures should be subject to review by senior management at least annually or where required throughout the year to ensure they remain fit for purpose. Reviews should be performed by persons with appropriate knowledge and experience and the approved valuation methodologies and models should be applied consistently across all funds under management for each FMC.
All FMCs should have a formalised and comprehensive errors procedure in place to ensure remedial action is implemented when valuation errors or incorrect calculations of the NAV occur. These procedures should also be reviewed at least annually and updated where required.
All FMCs are required to consider the observations outlined in the letter to determine if any action is required in relation to arrangements currently in place.
FMCs are required to conduct a review of their asset valuation frameworks to ensure they continue to be fit for purpose and adhere to all relevant legislative requirements including the expectations above. This review should be completed by the end of Q2 2024.
FMCs are required to consider the contents of this letter in conjunction with ESMA’s report, which was published on 24 May 2023.
The letter also sets out details of the process of the CSA.
Individual Accountability Framework / Fitness and Probity Updates
Individual Accountability Framework
The CBI published
a feedback statement in respect of its consultation process (CP153) on the Individual Accountability Framework (IAF)
Conduct Standards apply to CFs, PCFs (including NEDs and INEDs) from 29 December 2023.
Fitness and Probity
In March 2023, the Central Bank (Individual Accountability Framework) Act 2023 (IAF Act) amended and replaced section 21 of the Central Bank Reform Act 2010 to provide that a RFSP shall not permit a person to perform a controlled function in relation to it unless a certificate of compliance with standards of fitness and probity, given by the RFSP in accordance with section 21, is in force in relation to the person.
The IAF Act empowered the CBI to make regulations as to the giving of the certificate of compliance, including prescribing the form and content of the certificate, the period of validity of the certificate and the adoption of related procedures, systems and checks by the RFSP.
The Central Bank Reform Act 2010 (Section 21(6)) Regulations 2024 (S.I. 2 of 2024) (the Certification Regulations) were published by the CBI for this purpose (having been published in draft form, in December 2023, alongside the CBI's new IAF guidance and feedback statement to the public consultation).
F&P Regime enhancements came into effect on 29 December 2023. RFSPs need to have an additional certification process as regards compliance with standards of F&P, for each of their PCFs and CFs. The first annual CBI submission of confirmation of the completion of the certification process for each PCF role holder and of confirmation of the completion of the overall certification process for all CFs, will relate to the 2024 calendar year and will be required in 2025.
Amendments to the Section 4 requirements for conduct to be honest, ethical and to act with integrity, providing for the broadening of, and addition of, categories of prior conduct that may be material to an assessment of fitness and probity; these include, for example:
the issuing of proceedings, whether or not concluded, against the individual
the individual being subject to remuneration clawbacks as a result of alleged wrongdoing
and the individual being subject to disciplinary proceedings
Details on the new certification process for individuals to be appointed to a CF role, including:
an acknowledgment that the CBI has not prescribed a format for ‘certification’
a suggestion that RFSPs may wish to incorporate the certification process as part of their ongoing performance monitoring
New requirements for in-scope holding companies
The Appendices to the Guidance have been updated in relation to:
sample due diligence checks
the agreement of an employee to comply with the guidance
the inclusion of updated lists of CFs and PCFs
The following legislation was also published:
Central Bank Reform Act 2010 (Sections 20 and 22) (Amendment) Regulations 2023 (S.I. No. 663 of 2023). The purpose of these Regulations is to amend the Central Bank Reform Act 2010 (Sections 20 and 22) Regulations 2011 (S.I. No. 437 of 2011) (Principal Regulations) by prescribing new pre-approval controlled functions, effective 29 December 2023:
PCF-54 Head of Material Business Lines for Insurance Undertakings
PCF-55 Head of Material Business Lines for Investment Firms
PCF-53 Head of Client Asset Oversight
amending PCF-16 Branch Manager of branches established outside the State.
Central Bank Reform Act 2010 (Sections 20 and 22 Holding Companies) Regulations 2023 (S.I. No. 664 of 2023). The purpose of these Regulations is to prescribe controlled functions and pre-approval controlled functions for holding companies within the meaning of section 18 of the Central Bank Reform Act 2010, as outlined below. The Regulations came into force on 29 December 2023.
“In the event of the insolvency of the depositary and any third party, or of the depositary or any third party, located in the Union to which custody of UCITS assets has been delegated, the assets of a UCITS held in custody shall be unavailable for distribution among, or redistribution among, or realisation for the benefit of, creditors of that depositary and such third party, or that depositary or such third party, as the case may be.”