Ireland: CP86 And Central Bank Regulatory Developments, June 2015

As anticipated in our last briefing, the Central Bank of Ireland ("Central Bank") has issued guidance for industry on a number of aspects of corporate governance for fund management companies. For these purposes, fund management companies include UCITS management companies, alternative investment fund managers ("AIFMs"), self-managed UCITS investment companies and internally managed alternative investment funds. We have summarised these below for you, together with additional updates on Irish regulatory developments which will be of interest.

Our asset management partners are available to speak with you should you require any further detail in relation to these matters. We will be contacting our clients shortly in relation to the impact of some of the more imminent developments outlined in this note.

Central Bank Issues Guidance on Directors' Time Commitments

In parallel with its consultation on fund management company effectiveness issued in September 2014 ("CP86"), the Central Bank conducted a thematic review last year in order to assess the number of directorships held by individuals on the boards of corporate investment funds, fund management companies and AIF management companies and the impact on fund governance. The Central Bank has also engaged in dialogue with fund management companies on these matters. Following on from this, the Central Bank has now published guidance to assist boards and directors in assessing the time commitment of directors in fulfilling their roles (the "Guidance").

The Guidance does not set a hard limit on the number of board appointments which a director may hold, however it is intended that high numbers of directorships combined with high aggregate levels of professional time commitments will be regarded as a risk indicator by the Central Bank. Additional supervisory attention will apply under the Central Bank's risk-based approach to supervision where a risk indicator is triggered. Read more.

Central Bank Issues Guidance on Organisational Effectiveness

Arising from CP86, the Central Bank has decided that the "organisational effectiveness" role which it consulted on will not constitute a managerial function, but instead will constitute a task to be performed by one of the independent directors. The independent director with responsibility for the organisational effectiveness role may not perform any of the six managerial functions.

In order to provide more clarity on the organisational effectiveness role, specific guidance for industry has now been issued in this regard by the Central Bank. Existing management companies and self-managed investment companies are required to update business plans / programmes of activity with regard to the organisational effectiveness role by 30 June 2016. Read more.

CP86: Central Bank Issues Feedback Statement to Industry

CP86 set out a number of proposed initiatives to enhance and promote fund management effectiveness. In its feedback to the industry on CP86 published on 12 June 2015, the Central Bank has provided clarification in response to certain issues raised in submissions received, and has confirmed its position on a number of matters which had formed part of the CP86 proposals.

The general feedback on CP86 is contained in Part I of the Central Bank publication dated 12 June 2015 which may be accessed here.

Matters dealt with in the feedback include clarification of the designated person role, streamlining of managerial functions, documenting the rationale for board composition, the requirement for Irish resident directors and the measurement of residency. The Central Bank has also indicated that it intends to develop further guidance for management companies on managerial functions, ongoing control, operational and procedural matters this year.

We have provided an executive summary available at the link below with respect to each of these matters. Read more.

Central Bank Launches Industry Consultation on Delegate Oversight

The Central Bank has launched a consultation on its proposed guidance for industry on delegate oversight (the "Delegate Oversight Guidance"). This is directed at boards of directors of investment companies, UCITS management companies, alternative investment fund managers ("AIFMs") and AIF management companies incorporated and authorised in Ireland. It focuses on the role of boards where significant tasks are delegated externally and describes good practice in the supervision of delegates and monitoring and oversight of delegated tasks, and sets out principles which boards should follow regarding the tasks which are delegated and which should be retained. Specific guidelines on the supervision of delegates in relation to investment management, distribution, risk management and investment operations and administration are included. The Delegate Oversight Guidance also considers support and resourcing and matters to be considered by boards of externally managed investment companies.

As the content of the Delegate Oversight Guidance formed part of the CP86 consultation, it is subject to a shortened consultation timeline and, as such, responses are requested by 24 July 2015. The Delegate Oversight Guidance is contained in Part II of the Central Bank publication which may be accessed here.

CP86 and Key Dates

In summary, the following are the key dates by which action is required under the above guidance and consultations:

Immediately: New management company and self-managed investment company applications must include: (a) letters of appointment for each designated person; and (b) a documented rationale for board composition within the business plan / programme of activity.

24 July 2015: Responses due to consultation on Delegate Oversight Guidance.

1 January 2016: From this date, previously authorised investment funds with directors triggering the directors' time commitment risk indicator will receive priority consideration for inclusion in Central Bank thematic reviews where board effectiveness is being assessed.

30 June 2016: Existing management companies and self-managed investment companies are required to update business plans / programmes of activity to reflect the revised managerial functions and the organisational effectiveness role.

Companies Act 2014: Central Bank Publishes New Q&A

The Central Bank has published Q&A guidance for industry on the application of the Companies Act 2014 (the "Act"). The Act requires existing private limited companies to convert to either the new form private company limited by shares ("LTD") or a designated activity company ("DAC"). One of the key differences between the two types of company is that a DAC is required to have an objects clause. In response to the question as to whether the Central Bank requires UCITS management companies, AIFMs, AIF management companies, fund administrators, depositaries and investment firms to convert to a DAC, the Central Bank has confirmed that it does not require these entities to convert to DACs, on the basis that the Central Bank is of the view that corporate structuring is a matter for each entity. Such entities may therefore determine to convert to either a LTD or DAC.

UCITS: Updates to Q&A

The Central Bank has updated its UCITS questions and answers document ("UCITS Q&A") to address whether a fund re-domiciling to Ireland as a UCITS can disclose its past performance relating to the period when it was domiciled outside of Ireland in its key investor information document ("KIID").

The Central Bank confirms that it will permit this, subject to confirmation by the management company of a number of matters, including no substantial alteration to the investment policy, strategy and portfolio composition as a consequence of the transfer to the UCITS regime; no change to the entities involved in the investment management of the UCITS; satisfaction as to the accuracy of the data; and inclusion of appropriate disclosure in the KIID with respect to the past performance data relating to a period when the fund was domiciled outside Ireland and was not authorised as a UCITS.

The updated UCITS Q&A may be accessed here.

UCITS: Proposed New Regulations

The Central Bank has indicated that the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (the "UCITS Regulations") will be published shortly. It is understood that the UCITS Regulations will set out the Central Bank rules applicable to UCITS currently contained in the UCITS Notices and will essentially be the new "UCITS Rulebook". We will keep you informed of further developments in this regard.

AIFMD: Central Bank Updates Q&A

The Central Bank has issued the thirteenth edition of its AIFMD questions and answers document (the "AIFMD Q&A"). The AIFMD Q&A has been amended to state that professional investor funds and QIAIFs can continue to be managed by non-EU AIFMs under the existing transitional arrangements until at least 22 October 2015. By way of background, ESMA is required to issue advice to the European Commission on, inter alia, the application of the AIFMD passport to non-EU AIFMs by 22 July 2015. If that advice is positive, the European Commission is required, by 22 October 2015, to adopt a delegated act specifying the date when the non-EU AIFM passport will be "turned on". This process is underway and the outcome is not yet known. Accordingly, the Central Bank has clarified that professional investor funds and QIAIFs can continue to be managed by non-EU AIFMs under the existing transitional arrangements until at least 22 October 2015.

The AIFMD Q&A has also been amended to clarify the rules that will apply to professional investor funds once their AIFMs have been authorised or registered. New questions and answers relating to the marketing of unauthorised AIFs have been added.

The updated AIFMD Q&A may be accessed here.

EU Venture Capital Funds and Social Entrepreneurship Funds

The European Union (European Social Entrepreneurship Funds) Regulations 2015 and the European Union (European Venture Capital Funds) Regulations 2015 were signed by the Irish Minister for Finance last month, and application forms for the registration of managers of European Venture Capital Funds ("EuVECA") and European Social Entrepreneurship Funds ("EuSEF") have now been published by the Central Bank.

Outsourcing of final NAV Calculation and the Treatment of NAV Errors

Over the coming weeks, we understand that the Central Bank proposes to consult with industry on new requirements for the outsourcing by fund administrators of certain tasks in relation to the net asset value ("NAV") calculation process. This is with a view to providing a coherent and transparent framework which will allow fund NAVs to be calculated and released in the affiliate offices of Irish fund administrators in limited circumstances. Later in the year, the Central Bank also plans to consult on rules for fund administrators and fund managers with regard to NAV calculation errors. We will keep you updated.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions