Central Bank of Ireland launches review of UCITS Regulations and performance fee guidance

The Central Bank of Ireland (CBI) has launched Consultation Paper 161 (CP161), containing proposals to update the CBI UCITS Regulations[1] which supplement the general UCITS Regulations[2] in Ireland. They also propose to update certain regulatory guidance issued for UCITS funds.

The proposals are designed to update the CBI’s own requirements in light of Q&As and other guidance issued for UCITS funds as well as proposed changes that will come into force as a result of changes to the UCITS Regulations included in AIFMD II.

Key proposals

• Performance fees. Updating the rules relating to performance fees for UCITS and retail investor AIFs to fully implement the ESMA Guidelines on performance fees which was more flexible.  This will allow for performance reference periods of less than the full life of the fund in question (with a minimum of 5 years) as well as permitting fulcrum and symmetrical fee models. The CBI’s consultation also includes consideration of whether it is appropriate for an entity other than the depositary to verify the calculation of the performance fee.
• Redemption gates. Removing the requirement that a redemption gate could be no more restrictive than 10% of NAV on a dealing day as redemption gates will be dealt with in the general liquidity management section and the proposed EU wide rules do not have such a limitation.
• Side pockets. Side pockets to be allowed in Irish UCITS funds.
• Mandatory liquidity management tools (LMTs). Incorporation of new requirements for the selection, disclosure, and operation of LMTs. All UCITS will have to disclose, in the prospectus, at least two LMTs, with a recommendation that at least one is a quantitative based LMT (redemption gate, extension of notice period) and at least one anti-dilution tool (such as swing pricing, redemption fee, dual pricing, anti-dilution levy). Policies and procedures will also be needed regarding the activation and deactivation of LMTs. Activation or deactivation of an LMT outside the ordinary course of business must be reported to the CBI.
• ETFs. Including in the updated CBI UCITS Regulations the flexibility around certain dealing requirements and the naming of funds and share classes provided for in the CBI’s recent Q&As.
• Money Market Funds (MMF). Updates to remove obsolete references and linking with the Money Market Fund Regulation particularly regarding stress testing obligations.
• Connected Party Transactions. Shareholders in a fund will now be considered “connected parties” for the purpose of the connected party transaction rules but the provisions will exclude transactions relating to their own shares.
• Reporting. The CBI will require reporting as “specified on the Central Bank’s website”, enabling agile updates rather than embedding templates in the CBI UCITS Regulations.
• Other typographical changes.

Implications for industry

For fund sponsors, the consultation is largely positive. It removes Irish specific hurdles and ensures greater consistency and affords broader tools to manage liquidity stress. Managers that engage early will be best placed to capitalise on the new regime when it goes live.

Next steps

Stakeholders have eight weeks to respond up to 5 November 2025. The CBI will review all feedback received and publish a feedback statement, with final rules likely to likely take effect alongside the transposition of the revised UCITS Regulations.

For more information, please any member of the Asset Management & Investment Funds team or your usual ALG contact.

Date published: 15 September 2025