Asset Management & Investment Funds: Irish Practice Developments - Sept 2020
Central Bank deadlines for pre-Christmas/ year-end applications 2020
The Central Bank of Ireland (CBI) has 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.
Investment Limited Partnerships (Amendment) Bill 2020
The Investment Limited Partnerships (Amendment) Bill 2020 (the ILP Bill) has been published and is now progressing through the legislative process. It is expected to be enacted soon.
It will substantially overhaul the Investment Limited Partnership Act 1994. This will bring welcome changes that will help make Ireland an attractive location for the setting up of regulated Investment Limited Partnerships (ILPs).
The main changes contained in the 2020 Bill include:
- A new definition of ‘limited partner’ which further clarifies the limited liability nature of a limited partnership interest.
- The ability to establish investment limited partnerships as umbrella funds with segregated liability between such sub-funds.
- Providing for the migration-in and migration-out of Ireland of ILPs.
- Greater clarity around the actions that a limited partner may take in connection with the limited partnership, without losing the benefit of limited liability.
- The ability to have an alternative foreign name of the limited partnership, which is helpful in a variety of jurisdictions such as China.
- Updating the provisions regarding capital contributions by limited partners and updating the provisions relating to the return of capital which were out of sync with legislation for other types of Irish regulated fund vehicles and limited partnership law in other major jurisdictions.
- Clarity that a limited partnership agreement may provide that it can be amended with the approval of a majority of limited partners, by value, and a majority of the general partners. The consent of all limited partners will no longer be required, unless provided for in the partnership agreement.
- Various updates to bring the legislation in line with equivalent legislation applicable to the other types of Irish regulated fund structures.
- Providing greater ability for parties to agree specific terms that will apply in their partnership agreement.
- Making provision in respect of the beneficial ownership of ILPs, including a central register of beneficial ownership, which will be maintained by the CBI (discussed below).
- Generally amending terminology to align with other regulated fund legislation and the AIFMD.
Separately, the CBI is expected to consult on changes to its AIF rulebook. These changes are expected to impact AIFs that invest in private equity, credit and other private asset investment strategies. The consultation will of interest to those who are considering using the ILP structure.
The ILP Bill will update the ICAV Act 2015, discussed below.
The ILP Bill will make provision in respect of the beneficial ownership of ILPs, including a central register of beneficial ownership, which will be maintained by the CBI. The ILP Bill will also make provision in respect of the beneficial ownership of Common Contractual Funds (CCFs), including a central register of beneficial ownership which will be maintained by the CBI. This is discussed further below.
The Investment Limited Partnerships (Amendment) Bill 2019 (which we discussed in our June 2019 update) lapsed with the dissolution of the Dail and Seanad in March 2020.
The ILP Bill is likely to be subject to some further amendment before becoming law.
Read our In Focus briefing on the ILP, which is one of our series of briefings on Irish fund structuring vehicles.
Update of the ICAV Act 2015
The ILP Bill will make some amendments to the ICAV Act 2015. These include:
- supplementary provisions regarding ordinary and special resolutions (as well as written resolutions)
- a clarificatory amendment regarding the principal object clause of UCITS ICAVs
- matters relating to the corporate powers of an ICAV
- matters relating to powers of attorney
- matters relating to intra-group transactions
- further provisions relating to the use of a corporate seal by an ICAV
- confirmation that the registration of an investment company as an ICAV does not affect the priority of charges created by that investment company
Read our In Focus briefing on the ICAV, which is one of our series of briefings on Irish fund structuring vehicles.
Register of beneficial ownership of ILPs and CCFs
The ILP Bill will introduce beneficial ownership rules for ILPs and CCFs which are fairly closely aligned with the rules which apply to companies, including variable capital companies, ICAVs and unit trusts. In particular, the definition of beneficial ownership in the case of an ILP or CCF has a 25% threshold as well as a control prong.
The ILP Bill will require the general partner of an ILP and the management company of a CCF to establish and maintain a register of beneficial ownership and to submit that information to the CBI's central register of beneficial ownership.
The ILP Bill also provides for the validation of information on beneficial owners by use of Personal Public Service (PPS) number.
ILPs and CCFs in existence at the date of commencement of the provisions will have 6 months to file their beneficial ownership information on the CBI's central register. ILPs and CCFs created after the provisions come into force will have 6 months from the date of their formation to file their beneficial ownership information on the CBI's central register.
CBI expects full compliance on liquidity stress testing in UCITS and AIFs from 30 September 2020
As highlighted in our July Asset Management and Investment Funds bulletin, the CBI expects full compliance with the ESMA Guidelines on liquidity stress testing in UCITS and AIFs from 30 September 2020. You can also read our In Focus paper for more information on this topic.
SFTR: Reporting for Investment Funds from 11 October
As highlighted in our January bulletin, the Securities Financing Transactions Regulation imposes reporting obligations on counterparties on a phased basis. The reporting on UCITS and AIFs with authorised/registered AIFMs will commence on 11 October 2020, with the UCITS Management Company or AIFM being responsible for reporting on behalf of the UCITS or AIF. The content of this reporting was discussed here and here. Moreover, as discussed in our July Bulletin, counterparties to derivatives and securities financing transactions and issuers of financial instruments with a UK CSD need to assess the consequences of Brexit and act to ensure compliance with requirements.
CBI markets update
The CBI published issue 9 2020 of its markets updates. It contains updates from the CBI, the European Securities and Markets Authority (ESMA) and the International Organization of Securities Commissions (IOSCO). CBI updates include:
- The Central Bank publishes Money Market Fund Regulation Reporting Guidance Note. On 31 August 2020, the Central Bank published a Guidance Note on Money Market Fund Regulation (MMFR) Reporting. The purpose of this Guidance Note is to provide information and direction on the completion of MMFR Reporting by UCITS Management companies and Alternative Investment Fund Managers regarding:
- the “Money Market Fund Returns” for authorised Money Market Funds under Article 37 of the MMFR including related provisions as per the “ESMA Guidelines on the reporting to competent authorities under Article 37 of the Money Market Fund Regulation”
- ad-hoc stress test reporting under Article 28 of the MMFR
- other ad-hoc reporting under MMFR
- additional reporting required by the Central Bank
Companies (Miscellaneous Provisions) (Covid-19) Act 2020
The Commencement Order for the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 issued. The Act in its entirety was commenced on 21 August 2020.
It remains in force until 31 December 2020 unless extended by Ministerial Order upon consultation between the Minister for DBEI and the Minister for Health (in accordance with section 12A of the Companies Act 2014, inserted by section 4 of the 2020 Act).
Here you can read our commentary on the impact of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020.
The CBI's flexibility measures for Securities Markets, Investment Management, Investment Firms and Fund Service Providers issued in in April 2020 are discussed here. These include flexibility on the remittance dates for Financial Statements of Investment Funds and flexibility on deadlines for the submission of certain regulatory returns.
Government legislation programme for Autumn 2020
The Government published its legislation programme for Autumn 2020 with:
- 30 priority Bills. These include the:
- Investment Limited Partnership (Amendment) Bill – discussed above
- 50 Bills that are expected to undergo pre-legislative scrutiny. These include the:
- Central Bank (Amendment) Bill - to support the advancement of an improved culture in the Irish Financial System through greater accountability in the regulated sector
- Protected Disclosures (Amendment) Bill - to provide amendments to the Protected Disclosures Act 2014 to transpose the EU Whistleblowing Directive
- 87 Bills where preparatory work is underway. These include the
- Limited Partnership Bill – to modernise the Limited Partnership Act 1907 which is concerned with the registration of Limited Partnerships
- Screening of Investment into Ireland Bill – discussed below
- EU Restrictive Measures Bill – to create Ministerial authority to add SIs giving effect to EU regulations on 'restrictive measures' to the lists of designated SIs and enactments
- Cybercrime Bill - to give effect to those provisions of the Council of Europe Convention on Cybercrime 2001 not already provided for in national law in order to enable ratification of the Convention
- 14 Bills which are currently before the Oireachtas. These include the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 discussed in last month's Asset Management and Investment funds bulletin and here.
The EU Foreign Direct Investment Regulation
The EU Foreign Direct Investment Regulation (FDI Regulation) applies from 11 October 2020. The FDI Regulation facilitates EU Member States in screening or scrutinising FDI by third countries (or non-EU Member States) on the basis of public order or security. The legislation also enables EU Member States to co-operate between themselves including sharing information.
On 13 September 2020, Ireland announced that it will introduce primary legislation to provide for a domestic Irish legislative screening mechanism under the FDI Regulation.
Irish Funds Financial Reporting Brief 2020
Irish Funds issued its annual Financial Reporting Brief for 2020. It contains updates on:
- Legislation and Regulation
- EU Sustainable Finance and reporting update
- Liquidity Stress Testing (LST)
- European Single Electronic Format (ESEF)
- Shareholder Rights Directive II (SRD II)
- Accounting Updates
- IFRS updates
- COVID-19 Considerations
- US GAAP updates
Please speak with your usual contact on the A&L Goodbody Asset Management and Investment funds team if you would like a copy of this brief.
Date published: 29 September 2020