Cayman Islands: Consultation Paper 86 – DMS Solution To Meet The Increased Regulatory And Governance Focus And Challenges
Last Updated: 10 October 2017

Revision to Key Management Functions

When the Central Bank of Ireland's (Central Bank) CP86 comes into full effect in July 2018, it will refine key management functions with increased focus on effective supervision and enhanced governance standards for UCITS management companies, alternative investment fund managers, self managed UCITS and internally managed alternative investment funds.

While the strengthening of governance within the Irish funds industry is to be welcomed, the new requirements will increase the regulatory burden in particular on self managed UCITS and internally managed alternative investment funds.

Increased Focus on Designated Persons

The description of the role of the designated person (as it relates to the discharge of each key management function) has been a compulsory concept for UCITS since 2011 and for AIFMs since 2013.

However, it is the enhanced focus on designated persons in CP86 that gives the industry a clear indication of the Central Bank's expectations.

Firstly it is important to note that the designated person role is distinct from the role of a director requiring day-to-day involvement in operations.

Secondly, there is significant focus on the suitability of candidates to fulfill the role.

Challenges

The challenge, for boards considering each key management function, is reconciling the answers to the following questions:

  1. Who can assume the designated person role?
  2. Who should assume the designated person role?
  3. Who will the Central Bank expect to assume the designated person role?

DMS Delegated Model Solution

As the worldwide leader in fund governance, DMS is uniquely placed to respond to these challenges. Through our Central Bank authorised AIFM and UCITS Management Company, DMS Investment Management Services (Europe) Limited ("DMS IMS") has introduced a range of solutions to assist clients in complying with CP86 requirements.

By utilising the latest forensic governance techniques and industry-leading technology, we are able to provide the experienced and skilled individuals required to fulfil any designated person role. In addition to providing key management functions, DMS IMS can also provide the necessary institutional support structure needed to assist with discharging all legal and regulatory duties and obligations.

Our team of experienced and industry-recognised professionals has expertise in fund governance, risk management, portfolio management, distribution, finance and operations, regulatory compliance and reporting requirements.

The DMS global infrastructure and market insight means we are best placed to support you and your business with the Central Bank's changes to the governance and the evolving and ever increasing regulatory requirements. Our highly experienced Designated Persons will assume the day-to-day responsibility for the 6 management functions and for the continuous monitoring, reviewing, reporting and escalating of all matters and issues to the board.

Our market leading offering is fully supported by the latest development in Fintech and Regtech and delivered by industry experts to meet the 6 Management Functions.

Supporting Operational Effectiveness

In addition to the key management functions, an independent director must be appointed to the overarching organisational effectiveness role. DMS provides a governance toolkit to support independent directors in this role allowing them to review, analyse and oversee the fund's operational processes by utilising:

  • Board evaluation pack
  • Supervision of delegates reporting
  • Conflicts of interest reporting
  • Internal audit support

In addition an independent director must undertake the overarching organisational effectiveness role.

As the full implementation date draws closer, we would welcome the opportunity to provide a demonstration of our systems and introduce you to our dedicated CP86 Team to help you find the best solution for your needs.

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