Cayman Islands: Funds - Ireland - Quarterly Update Q4 | October - December 2015

1 Legal & Regulatory

1.1 UCITS Update

There have been a number of developments over the quarter:

Central Bank UCITS Regulations 2015

The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 ("Central Bank UCITS Regulations 2015") which came into effect on 1 November 2015 consolidate all requirements which the Central Bank of Ireland ("Central Bank") imposes on UCITS, UCITS management companies and depositaries of UCITS. They also supplement existing requirements, in particular, the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011. The Central Bank restructured its UCITS guidance to reflect the publication of these Regulations. A comprehensive set of forms relating to UCITS applications and post authorisations have also been updated.

For more information see our client update, Introducing a New Regulatory Framework for Irish UCITS.

Feedback Statements

On 5 October 2015, the Central Bank published feedback statements on CP77 – Consultation on publication of UCITS Rulebook and CP84 – Consultation on adoption of ESMA's revised guidelines on ETFs and other UCITS issues.

In relation to CP84 the Central Bank had concerns about whether all UCITS should be able to derogate from the collateral diversification requirement where collateral consisted of securities issued or guaranteed by a State Issuer. In its consultation it stated that there were grounds for limiting the derogation set out in the European Securities and Markets Authority's ("ESMA") Guidelines to UCITS money market funds only. In the context of the new UCITS Rulebook (which took effect on 1 November 2015), the Central Bank has decided to implement the Guidelines in a modified manner to address these issues.

UCITS Q&A and Guidance on Permitted Markets, FDI and EPM and Management Companies

On 5 and 23 October 2015, the Central Bank published its seventh and eight editions of its UCITS Q&A. New questions were added to reflect the introduction of the Central Bank UCITS Regulations 2015 and certain transitional arrangements in place. On 4 November 2015, the Central Bank issued a ninth edition with further questions relating to the Central Bank UCITS Regulations and ID 1043 was amended (prospectus disclosure long/short positions).

On 30 November 2015, the 10th edition issued which adds a new Q&A ID 1058 on the publication and submission to the Central Bank by a UCITS of its first annual/half-yearly reports. ID 1050 on high concentration indices has also been amended. On 22 December 2015, an eleventh edition issued with a new question ID 1059 which corrects an error that internally managed investment companies must comply with Regulation 100(1)(7) of the Central Bank UCITS Regulations, (ensuring that an organisational effectiveness role is performed by an independent chairman or board member) rather than Regulation 100(1)- (6).

On 5 October 2015, the Central Bank published guides to Financial Derivative Instruments and Efficient Portfolio Management and UCITS - Organisation of Management Companies. On 4 November 2015, it issued revised UCITS guidance in respect of Permitted Markets and UCITS FDI and EPM. The relevant revisions are in Paragraph 1 of the EPM Guidance on Permitted Markets and revisions to paragraphs 126-128 of the UCITS FDI and EMP Guidance.

UCITS V Regulation on Obligations of Depositaries

On 17 December 2015, the European Commission adopted a Delegated Regulation supplementing the UCITS IV Directive (2009/65/EC), as amended by the UCITS V Directive (2014/91/EU) on the obligations of depositaries (C(2015) 9160). There are few changes between the official draft and the draft leaked in mid-2015. The next step will be for the Council of the EU and the European Parliament to consider the Delegated Regulation. If neither object, it will be published in the Official Journal of the EU and enter into force on the 20th date following its publication. It is to apply six months after the date of its entry into force. If this is the case there will be a divergence between the application date of the UCITS V Level 1 Directive (18 March 2016) and this regulation.

For more information see our client update, UCITS V Update - Level 2 Emerges

1.2 AIFMD Update

The European Union (Alternative Investment Fund Managers) Regulations 2013 (No. 257 of 2013) gave effect to Alternative Investment Fund Managers Directive ("AIFMD") in Ireland in July 2013. There have been a number of developments over this quarter:

(a) Central Bank AIF Rulebook Consultation, Reporting Guidance and Q&As

On 5 October 2015, the Central Bank's sixteenth edition of the AIFMD Q&A was published. New questions ID 1097 (Directed Brokerage), ID1098 (Board Composition) and ID1099 (Non-material Change) are included. This version clarifies that, following on from the Central Bank's feedback statement to CP86, only newly authorised alternative investment fund managers ("AIFMs") are subject to the authorisation process which requires the rationale for the board composition to be documented in the programme of activities. However, the Central Bank views it as "good practice" for the director performing the organisational effectiveness role for each authorised AIFM (new or existing) to document the rationale for the board composition and to include this in the programme of activities when it is next updated.

On 4 November 2015, the Central Bank published the latest version of the AIF Rulebook and a seventeenth edition of its AIFMD Q&A. A revision was made in the Q&A to question ID 1030 (Non-EU AIFM) and a new question ID 1100 (which states that the Central Bank is working on guidance concerning the holding subscription and redemption monies for individual sub-funds, as fund assets, within a single account in the name of the umbrella fund) is included.

On 30 November 2015, the Central Bank published CP99, a consultation on amendments to the AIF Rulebook which closes on 24 February 2016. Many are of a technical and clarificatory nature and several aim to align with changes under the recently published Central Bank UCITS Regulations 2015. Some of the main changes proposed include:

  1. Extending the category of investors who are exempt from the eligibility criteria and minimum subscription amount required to invest in a qualifying investor alternative investment fund ("QIAIF");
  2. Amending the reporting requirement which applies to AIF depositaries where they provide services to non-Irish authorised AIFs;
  3. Amending the capital and reporting requirements which AIFMs and AIF Management Companies.
  4. Extending the list of requirements in the European Union (Alternative Investment Fund Managers) Regulations 2013 which apply to QIAIFs with registered AIFMs;
  5. Aligning the rules which apply to collateral received by retail investor alternative investment funds ("RIAIFs") under an OTC derivative or repo/securities lending contract and the rules which reference external credit ratings with those recently introduced for UCITS;
  6. Clarifying that the requirement to hold minimum capital as eligible assets and in a separate account does not apply to internally-managed AIFs;
  7. Removing references to bearer shares as this is no longer permitted by company law;
  8. Introducing a requirement that external AIFMs and AIF Management Companies produce a second set of half-yearly accounts.

The Central Bank also published the latest version of the 'Reporting Guidance for Alternative Investment Fund Managers'. This clarifies the reporting requirements for non-EU master AIFs not marketed in the EU that have either EU feeder AIFs or non-EU feeder AIFs marketed in the EU under Article 42 of AIFMD. The Central Bank now requires all AIFMs to report information on non-EU master AIFs from the 1 January 2016 reporting period. It should be noted, however, that this information is not required to be reported where the non-EU master AIF and feeder AIF do not have the same AIFM.

For more information see our client update, Ireland Funds - AIFMD (NPPR) Changes to Annex IV Reporting Obligations

(b) ESMA Q&As

On 1 October 2015, ESMA published its updated Q&A for AIFMD in relation to depositaries. It clarifies that when an alternative investment fund's ("AIF") depositary sub-delegates custody of the AIF's assets to either an EU or third-country central securities depositary ("CSD"), that CSD must comply with the delegation provisions in Article 21(11) of AIFMD. On 2 December 2015, ESMA published a further update updated which includes new questions and answers on reporting to national competent authorities.

On 15 December 2015, ESMA published another update which includes a new Q&A on the depositary liability regime.

1.3 Irish Collective Asset-Management Vehicles Act 2015

The Central Bank is the registrar for Irish Collective Asset-management Vehicles ("ICAVs") under the Irish Collective Asset-management Vehicles Act 2015. On 19 November 2015, the application forms for registration and post-registration filings were updated.

1.4 Revised Managerial Functions and Organisational Effectiveness Role:


On 4 November 2015, the Central Bank published another feedback statement on CP86: Fund Management Company Boards - Feedback statement on consultation on delegate oversight guidance and Guidance on Fund Management Companies. Managerial functions for both UCITS management companies and AIFMs are consolidated into six separate functions and a new organisational effectiveness role is being introduced.

Fund management companies authorised before 1 November 2015 were to provide for the revised managerial functions by 30 June 2016. Those authorised after 1 November 2015 must have these managerial functions in place upon authorisation. However work on the outstanding guidance is on-going and the Central Bank announced in December that it anticipates publishing it for public consultation by the end of Quarter 1 2016. To reflect this, the deadline for compliance by existing fund management companies (i.e. fund management companies authorised before 1 November 2015) with the revised managerial functions and new organisational effectiveness requirements will be at least six months after the completion of the consultation process. Therefore existing UCITS management companies and AIFMs will not need to update their business plan/programme of activity until then.

1.5 Programme of Themed Inspections in Markets Supervision

The Central Bank published its programme of themed-inspections for 2016 on 14 December 2015. The planned themed-inspections, which supplement day-to-day supervisory activities, for 2016 are:

  1. Outsourcing – inspection of service level agreements and operational arrangements with outsourcing providers for investment firms, fund managers and fund service providers.
  2. AIFM programme of activities – review of AIFMs adherence to their programme of activity.
  3. Risk function - focus on the risk culture within firms including governance arrangements, risk ownership and responsibility.
  4. Investment funds – analysis of the production costs of investment funds.
  5. Financial indices – review of the use of financial indices as eligible investments for UCITS.
  6. Director time commitments - continued focus on various issues.
  7. Client assets – focused review of client asset management plans for investment firms.
  8. Information technology risk – focus on resilience of firms' IT systems.
  9. Suitability – review of the suitability assessment of clients.
  10. Conduct – examination of the information provided to clients on an on-going basis.
  11. Hedging arrangements – review of hedging arrangements at share class level for investment funds.
  12. Market integrity – review of the practices of firms when dealing with insider information and their compliance with Market Abuse Regulations.

To continue reading this article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Peter Stapleton
Stephen Carty
Ian Conlon
Events from this Firm
28 Apr 2016, Webinar, George Town, Cayman Islands

A topical discussion on recent updates covering some of the more frequently asked questions around FATCA and CRS.

29 Jun 2016, Webinar, George Town, Cayman Islands

This webcast focuses on the impact FATCA and CRS are having on structured finance vehicles set up in the BVI, Cayman Islands and Ireland and covers in detail the impending reporting and notification deadlines in each of these jurisdictions.

11 Aug 2016, Webinar, George Town, Cayman Islands

Our panel of experts will reflect on the impact of LLCs in the month since the first available registration date and discuss why the LLC was introduced and how it can be used to help our clients.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.