The Front Page, Asset Management & Investment Funds: Irish Practice Developments
The Front Page, Asset Management & Investment Funds: Irish Practice Developments
Some Approaching Deadlines
30 June 2017. Sub-Fund Profiles. Deadline for filing the Investment Funds Annual Sub-Fund Profile Return on the Central Bank's ONR.
30 June 2017.FATCA/ CRS. Original deadline for FATCA and CRS reporting for 2016. Revenue may grant extensions in respect of FATCA reporting on a case-by-case basis. The CRS reporting date has been extended to 18th August 2017.
13 July 2017. SFTR. Deadline for prospectus/supplement updates to include disclosures under the Regulation on reporting and transparency of securities financing transactions (SFTR). Umbrella investment funds which use Securities Financing Transactions (SFTs) and total return swaps and which have been authorised since 12 January 2016 should have the requisite disclosures in their prospectus. Sub-funds have until 13 July 2017 to update their prospectus or supplement. UCITS and RIAIFs should allow sufficient time for the Central Bank to review documentation in advance of the deadline.
11 August 2017. ETF Discussion Paper. Deadline for responses to CBI discussion paper on Exchange Traded Funds.
This list does not cover ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include the annual FDI Return) and semi-annual accounts because these dates will vary to reflect the particular year end.
Revised Central Bank Guidance on Share Classes and updated Central Bank UCITS Q&A
The Central Bank of Ireland (Central Bank) has revised its guidance entitled "UCITS and AIF Share Classes" in order to ensure that the guidance is consistent with the ESMA Opinion which issued on 30 January 2017 on “Share Classes of UCITS”.
The Opinion sets out four high-level principles a UCITS should follow when setting up share classes in the a UCITS or sub-fund, in the case of an umbrella UCITS. These are:
Common Investment Objective (ESMA is of the opinion that derivatives-based hedging arrangements at share class level, other than currency risk hedging, are not compatible with this principle).
In addition, and in order to provide clarity for stakeholders, the Central Bank has published some additional Q&As in the eighteenth edition of the UCITS Q&A document.
Below are new Questions ID 1077 and ID 1078:
Q1077: "I am a UCITS with one or more share classes, approved by the Central Bank on or prior to 30 January 2017. Such share class(es) do not comply entirely with the principles set out in paragraph 9, Section 3.1 of ESMA’s Opinion ‘Share classes of UCITS’, dated 30 January 2017 and implemented in full by the Central Bank. Am I required to make any amendments to such share classes?"
A 1077: No. You are not required to make any amendments to share classes approved by the Central Bank on or prior to 30 January 2017. However, any such share classes should be closed for investment by new investors on or before 30 July 2017, and for additional investment by existing investors on or before 30 July 2018.
Q 1078: "I am a UCITS with one or more share classes, approved by the Central Bank on or prior to 30 January 2017. The UCITS employs derivatives in order to engage in currency hedging at the level of the share class. Am I required to make any amendments to these share classes?"
A 1078: You must determine if you meet with the provisions of the ESMA Opinion on Share Classes as reflected in the Central Bank’s guidance “UCITS and AIF Share Class Hedging”. If not and if you intend to continue to offer these share classes to investors you should make any necessary amendments at the earliest opportunity. Any amendments to your documentation arising out of such process should be made at the time of the next update of your prospectus and/or supplement(s), if applicable in the case of sub-fund(s).
Finally, the Central Bank notes that the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (as amended) (the Central Bank UCITS Regulations) may be amended in the future to reflect the Opinion.
As noted in May Front Page, as and from Monday 12 June all suspicious transaction reports (STRs) are to be submitted to the Financial Intelligence Unit (FIU) of an Garda Siochána by way of a new software solution, namely GoAML. GoAML is a software solution developed by the UN office of drugs and crime which allows rapid and secure exchange of information between the Financial Intelligence Unit (FIU), reporting entities and law enforcement and intelligence authorities. From 12 June, all communications (including STRs) between the FIU and reporting entities will be conducted through the message board function within the GoAML application. GoAML is expected to improve information flow on trends, typologies, alerts etc. Reporting Entities should register as a user so that they are prepared for filing STRs and so that they receive any alerts and communications on trends and typologies as soon as they issue. Helpfully, an Garda Siochána have also issued a Go-AML Fund Manager Go-live pack.
Dual reporting of STRs remains a requirement and all Reporting Entities must submit STR’s to both the FIU and the Office of the Revenue Commissioners. The Office of the Revenue Commissioners will accept a printed copy of the STRs submitted on GoAML and this printed copy can be posted to the Office of the Revenue Commissioners directly.
Companies (Accounting) Act 2017
The Companies (Accounting) Act 2017 came into operation on the 9 June 2017. The below provisions (including mandatory CRO filing of UCITS and AIF annual accounts) apply to any financial year which commenced on or after 1 January 2017. The main purpose of the Companies (Accounting) Act 2017 is to transpose the EU Accounting Directive 2013/34/EU (as amended) into Irish law. The provisions which are of particular interest to Investment Funds are set out below.
Filing of financial statements by an investment company. Section 86 of the Accounting Act 2017 amends the Companies Act, 2014 by the insertion of a new section 1401A(1) which obliges AIF investment companies to file financial statements and directors' reports with the CRO.
Amendments to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011. Section 100 of the Accounting Act 2017 amends the 2011 UCITS Regulations by the insertion of a new Regulation 42A which obliges UCITS investment companies to file financial statements and directors' reports with the CRO. Moreover, section 100 also substitutes a new Regulation 93 so that the auditors' report should comply with section 336 of the Companies Act, 2014 and the Statutory Audit Regulations 2016.
Amendments to the European Union (Alternative Investment Fund Managers) Regulations 2013. Section 101 of the Accounting Act 2017 amends Regulation 23 of the 2013 Regulations, by inserting a new paragraph 4(A) after Regulation 23(4) so that the auditors' report should comply with s. 336 of the Companies Act, 2014 Act and the Statutory Audit Regulations 2016.
Heretofore, investment companies (whether UCITS or AIFs) have not been obliged to file accounts with the CRO in addition to their filing obligations with the Central Bank. This exemption from filing is not available under the EU Accounting Directive 2013/34/EU (as amended). Some investment funds which are constituted as investment companies may consider converting to an ICAV which is not obliged to file annual accounts in CRO.
Speech by Derville Rowland, Central Bank Director of Enforcement to the Banking Payments Federation of Ireland
Derville Rowland, Central Bank Director of Enforcement delivered an address to the Banking Payments Federation of Ireland which looked at the Central Bank AML supervisory framework, supervisory engagement, expectations, opportunities and challenges.
Pan European Personal Pension products
Irish Funds published a White Paper on the Pan European Personal Pension product (PEPP). The development of a common European framework for personal pensions forms part of the EU’s Capital Markets Union (CMU) agenda and the European Commission advised in its mid-term review of the CMU Action Plan that a legislative proposal on the PEPP is planned for the end of June. The Irish Funds White Paper aims to help inform policy discussions on the PEPP by providing a funds industry perspective. The White Paper sets out:
How the PEPP will benefit the EU
Key enabling factors fundamental to the PEPP’s success
Proposed key features of the PEPP
How the PEPP will work
The importance of consumer education and awareness
How to build on the positive experience of UCITS
The role of taxation
Please speak with your usual contact on the A&L Goodbody Asset Management & Investment Funds team if you wish to see the Irish Funds White Paper on the PEPP.
Irish Funds Response to Commission Consultation on FinTech
Irish Funds responded to the European Commission’s recent consultation paper on FinTech: "A more competitive and innovative European financial sector". This consultation is intended to determine whether the EU regulatory and supervisory framework fosters technological innovation in line with the core principles of the Commission. The responses to the consultation will help the Commission to gauge how FinTech can make the Single Market for financial services more competitive, inclusive and efficient.