Tracker, Financial Services Regulation & Compliance - Funds



The Irish Collective Asset-management Vehicles Act 2015 (the ICAV Act) was signed into law on 4 March 2015. The ICAV Act allows for the establishment of a new Irish corporate investment fund structure (the Irish Collective Asset- management Vehicle or ICAV) that is tailored to the needs of the global funds industry. The ICAV sits alongside the other available fund structures in Ireland, namely the variable capital company (VCC), the unit trust, the common contractual fund (CCF) and the investment limited partnership (ILP). As with Irish VCCs, ICAVs may be set-up as a stand-alone structure or an umbrella structure. Key advantages include;

  • The ICAV benefits from being subject to a separate and distinct corporate governance regime which has been drafted specifically for use by the funds industry. As such, the ICAV is not subject to a number of the general Irish and European company law requirements which are applicable to VCCs by virtue of their incorporation under the Irish Companies Acts, but which are generally more appropriate to trading companies than fund vehicles. The ICAV represents a simpler and more cost effective choice of corporate vehicle for funds. This should also “future proof” the ICAV against future changes in Irish and European company law.
  • The ICAV is able to elect its classification under the US ‘check-the-box’ taxation rules (which is of particular interest to managers of funds targeting US investors). This allows an ICAV to be treated as a partnership for US tax purposes and thereby avoid certain adverse tax consequences for US taxable investors. This is in contrast to the status of the VCC which is unable to ‘check-the-box’ for US tax purposes, and gives rise to potential treatment as a Passive Foreign Investment Company (PFIC) for US investors which, depending on the precise status of the investor and the elections it makes, can give rise to a greater tax and administrative burden than if the fund is able to ‘check-the-box’. The Central Bank of Ireland acts as the incorporating, authorising and supervisory body for the ICAV. It has a page on its website with links to application forms for applications for registration and post-registration filings and an ICAV Q&A.  The Central Bank also updated its funds authorisation application forms and its AIF Rulebook to reflect the introduction of the ICAV.

Central Bank (Supervision and Enforcement) Act 2013 (s48(1) Investor Money Regulations 2015 for Fund Services Providers (SI 105 of 2015) was signed by Deputy Governor (Financial Regulation) Cyril Roux on 25 March 2015

This SI relates to the holding of investor money and how the fund service provider should segregate this money. It has the goal of ensuring that fund service providers will have stronger systems and controls in place to protect ownership rights of investors.  Fund service providers must also have in place a process which will facilitate the speedy return of clients assets or investor money in the event of insolvency. The Central Bank of Ireland (CBI) also published guidance for fund service providers to assist in the interpretation of the Regulation.

EU & International


MMF Regulation

The European Parliament's Committee on Economic and Monetary Affairs published its report (which includes the draft regulation) dated 4 March 2015 on the proposed Regulation on Money Market Funds. The EU Parliament is scheduled to consider the legislative proposal on 27 to 30 April 2015.


ESMA has published updated AIFMD Q&A dealing with new reporting issues and some additional guidance on marketing.


ESMA published updated KIID Q&A. The paper includes a new Q&A 4g on the treatment of past performance information in the event of fund mergers.


The European Parliament published its Texts Adopted document which includes the provisional versions of the texts of the Regulation on European Long-Term Investment Funds (ELTIF Regulation). The ELTIF Regulation now needs to be formally adopted by the Council of the EU. It will enter into force 20 days after it is published in the Official Journal of the EU (OJ) and is expected to apply six months after it has entered into force. ELTIFs are vehicles designed to boost non-bank investment in the real economy across the EU. ELTIFs will facilitate investors to invest into companies and projects that need long-term capital. Long-term capital finances tangible assets (such as energy, transport, communication infrastructures, industrial and service facilities, housing and climate change technologies), as well as intangible assets (such as education and research and development). The ELTIF Regulation lays down uniform rules on the authorisation, investment policies, and operating conditions of EU AIFs that are marketed as ELTIFs.

Shadow Banking Consultation (all MMFs and AIFs in scope)

The European Banking Authority is holding a consultation on draft guidelines on limits on exposures to shadow banking entities that carry out banking activities outside a regulated framework under Article 395 of the Capital Requirements Regulation. Under the current draft guidelines, all funds would be considered as falling in the scope of the definition of shadow banking entities except if they are non-MMF UCITS (and third country firms subject to equivalent requirements). All MMFs (being UCITS or AIFs), all AIFs and unregulated funds would fall in scope. The draft guidelines set out requirements for institutions to set limits to their individual exposures to shadow banking entities and to the shadow banking sector in its entirety (so as to minimise the risks from such exposures). The approach aims to ensure that institutions have sufficient information about their counterparties in the shadow banking sector so they can make informed decisions about their exposures. Those institutions without adequate information on their exposures to shadow banking or the capacity to use such information will set an aggregate limit of 25% of their eligible capital.

Conflicts of interest

The Hedge Fund Standards Board launched a consultation paper on managing conflicts of interest .The paper outlines a number of proposed amendments to existing Standards so as to ensure:

  • Disclosure to investors of similar funds, accounts or vehicles, including employee or partner funds (upon request). 
  • Disclosure of trade allocation policies to investors (upon request).
  • Sound internal arrangements to mitigate conflicts of interest.

The proposals are likely to be of assistance to all funds.

For further information please contact a member of the Financial Regulation team.

Date published: 2 April 2015