Asset Management & Investment Funds: Irish Practice Developments - July 2018

Some approaching compliance deadlines

  • 31 August 2018. Fund Profile Return - The first Central Bank Fund Profile return is to be prepared for the period up to 30 June 2018, with a submission deadline (via ONR) of 31 August 2018. This 30 June 2018 return applies to all sub-funds authorised by the Central Bank at 30 June 2018 whether they are dormant, have assets or have not launched. The Fund Profile return replaces the IF Annual Sub-Fund Profile return. 
    • All sub-funds, regardless of whether the IF Annual Sub-Fund Profile return to 31 December 2017 has already been submitted to the ONR, will be required to submit the new updated return for the period up to 30 June 2018. Subsequent Fund Profile returns are to be prepared for the period to 31 December. These Fund Profile returns will also carry a submission deadline of 28 February. In 2018 alone, in addition to the 30 June 2018 return, a Fund Profile return will be required, made up to 31 December 2018. This additional return will have a submission deadline of 28 February 2019.
    • The Central Bank 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 to a Fund's profile. The Central Bank has issued guidance and a template here.

  • 1 September 2018. Money Market Funds - Money Market Funds which are availing of a transitional period have been advised by the Central Bank to submit all documents requiring review to the Central Bank no later than 1 September 2018.

  •  5 October 2018. UCITS investing in a non-UCITS investment fund- Irish UCITS which currently invest in non-UCITS investment funds must review their holdings (of non- UCITS investment funds) to ensure compliance with the new requirements detailed below and may need to disinvest where compliance cannot be achieved by 5 October 2018.

  • 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. Form FS1 is the form which will accompany the filing. It is available from the following webpage and will incur a filing fee of €15.

  • 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.

  • 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.

  • 21 January 2019. Money Market Funds - The MMF Regulation introduces new requirements for MMFs in particular, portfolio composition, valuation of assets, diversification, liquidity management and credit quality of investment instruments. Existing UCITS and AIF MMFs must comply with the new rules by 21 January 2019.

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 will vary to reflect the particular entity's year end.

Central Bank requirements for UCITS investing in a non-UCITS investment fund

On 5 July 2018, the Central Bank of Ireland (Central Bank) updated its UCITS Q&A to clarify its requirements relating to investment by a UCITS in a non-UCITS investment fund. UCITS investing in non-UCITS investment fund must ensure compliance with specific requirements.

These include that

  • the constitutional document of the non-UCITS investment fund must include a prohibition on investing more than 10% of its net assets in other investment funds
  • and either
    • the non-UCITS investment fund is also subject to requirements in its jurisdiction of domicile which are equivalent to UCITS investor protections
  • or
    •  the non-UCITS fund has requirements which are equivalent to UCITS investor protections in its constitutional document or offering document. A statement of the intended investment approach does not constitute a rule for this purpose. (The Central Bank had previously allowed scope for a UCITS to satisfy itself that a non UCITS investment fund was in practical compliance where the constitutional document did not contain the conforming provisions).

UCITS Funds which currently invest in non-UCITS investment funds must review their holdings (of non- UCITS investment funds) to ensure compliance with the new requirements detailed above and may need to disinvest where compliance cannot be achieved by 5 October 2018.

Non UCITS Funds with UCITS investors may wish to consider whether they can amend their constitutional or offering document to meet the requirements.

Central Bank highlights key relevance of the work of the organisational effectiveness director

The Central Bank issued a notice to fund ManCos (which includes self managed investment funds). The notice advises Fund ManCos that from 1 July 2018 the Central Bank will be assessing how they have implemented and embedded the Central Bank requirements in respect of the organisation of Fund Management Companies within their organisations.

These requirements came into full effect on 1 July 2018. The requirements are detailed in the Central Bank UCITS Regulations and the Central Bank's AIF Rulebook supported by the Central Bank's Fund Management Companies – Guidance. The Guidance sets out that the board of the Fund Management Company should design its governance practices so as to be appropriate and commensurate to the business of the relevant company and, where applicable, the investment funds it manages.

The Central Bank will be considering the appropriateness of firms' resources and organisational structures, with the work carried out by the organisational effectiveness director being of key relevance. All fund ManCos must have this organisational effectiveness role in place.

The role requires an independent director to keep the fund management company's organisational effectiveness, including the appropriateness of resources and board composition, under review, and to regularly submit reports to the board for discussion and decision making. Through supervisory engagement with relevant firms, the Bank will evaluate this work, placing a particular emphasis on whether the board of the particular fund ManCo has implemented any proposals to improve its organisational effectiveness.

Central Bank Markets Updates

The Central Bank published issue 10 of its Markets Update on 15 June 2018. Some key developments are detailed below. 

Central Bank of Ireland

European Securities and Markets Authority (ESMA)

European Banking Authority (EBA)

The Central Bank published issue 11 of its Markets Update. Some key developments are detailed below:

Central Bank of Ireland

  • Enhancements to the Regulated Disclosures Submission Process - Update

European Securities and Markets Authority (ESMA)

  • ESMA updates UCITS and AIFMD Q&As
  • ESMA fines five banks €2.48 million for issuing credit ratings without authorisation
  • ESMA writes to European Commission on share cancellation under MMFR
  • ESMA clarifies endorsement regime for non-EU credit ratings
  • ESMA finalises standards for the implementation of the Prospectus Regulation
  • ESMA updates Q&As on Benchmarks Regulation
  • ESMA defines standards for the implementation of the Securitisation Regulation
  • Prospectuses: ESMA consults on risk factors and exemptions for takeovers, mergers and divisions
  • ESMA updates Q&A on EMIR data reporting
  • ESMA updates Q&As on MiFID II and MiFIR investor protection and intermediaries
  • ESMA updates Q&As on temporary product intervention measures
  • ESMA consults on the Clearing Obligation under EMIR
  • ESMA statement at ECON scrutiny session on Benchmarks Regulation
  • ESMA seeks candidates for its stakeholder group

European Banking Authority (EBA)

  • European Supervisory Authorities publish further guidance on the Key Information Document for PRIIPs. On 20th July 2018, the European Supervisory Authorities (ESAs) published further guidance on the Key Information Document (KID) requirements for Packaged Retail and Insurance-based Investment Products (PRIIPs). The guidance consists of additional questions and answers and updates to the flow diagrams for the risk and reward calculations (new calculation example for Category 3 PRIIPs stress performance scenario).

Irish Funds GDPR Bulletin

The Irish Funds GDPR Working Group has published its fifth GDPR bulletin. The bulletin is an accountability checklist which outlines the key documents that form part of every data protection framework and should be available for inspection by Data Protection Authorities or other relevant stakeholders. Please speak with your usual contact on the Asset Management & Investment Funds team if you would like a copy of the checklist.

Central Bank

For more information please contact a member of the Asset Management & Investment Funds Team.

Date publised: 27 July 2018