1 Legal & Regulatory

1.1 UCITS and AIFMD Update


On 16 May 2022, the Central Bank of Ireland (''Central Bank'') published a Notice of Intention on its approval process for Irish UCITS side-pocketing arrangements in relation to Russian, Belarusian and Ukrainian assets that have been impacted by Russia's invasion of Ukraine and / or by sanctions imposed as a result of the invasion.

For more information, please see our update, Central Bank of Ireland Approval Process for UCITS Side-Pocketing Arrangements.

On 1 July 2022, the Central Bank published new guidance regarding its pre-submission requirements for certain types of Qualifying Investor AIF ("QIAIF") products, and confirming the 24-hour approval process for all other QIAIFs, including loan-originating QIAIFs.

For more information, please see our update, Welcome Enhancements to the QIAIF Pre-Submission Process.


On 20 May 2022, the European Authorities and Securities Markets Authority ("ESMA") published an updated version of its Q&As on the application of the UCITS Directive 2009/65/EC. The Q&A on the performance reference period for the benchmark model has been updated and there is a new Q&A on the performance reference period for the hurdle rate model.

On 20 May 2022, ESMA published an updated version of its Q&As on the application of AIFMD. ESMA has updated Q&As, and added a new Q&A, relating to ESMA's guidelines on performance fees in UCITS and certain types of AIFs.

Proposed Amending Directive

On 17 June 2022, the Council of the EU announced that it had agreed its general approach on the proposed directive amending AIFMD and the UCITS Directive relating to delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services, and loan origination by alternative investment funds ("AIFs"). The general approach:

  • Emphasises the importance of consistent harmonisation in liquidity risk management. In particular, the need to improve the availability of liquidity management tools, with new requirements on fund managers to provide for the activation of these instruments. This is to ensure fund managers are well-equipped to deal with significant outflows in the event of financial turbulence.
  • Supports the European Commission's proposed EU framework for loan-originating funds supplemented with requirements to alleviate risks for financial stability and ensure an appropriate level of investor protection.
  • Further clarifies the rules on outsourcing and the delegation of certain functions by fund managers to third parties. It also increases the supervisory co-operation in this area and introduces new reporting requirements on delegation arrangements.
  • Considers other key issues on the framework for the provision of cross-border services by depositaries, new reporting obligations for UCITS for risk monitoring and new transparency rules to enhance investor protection.

On 21 June 2022, the Council published a note containing the final Presidency compromise text of the proposed directive.

The Council will now enter into trilogue negotiations with the European Parliament to agree on the final text of the proposed directive.

1.2 Cross-Border Distribution of Investment Funds

The EU's regulatory framework for facilitating the cross-border distribution of UCITS and AIFs came into effect on 2 August 2021. It comprises Regulation (EU) 2019/1156 ("CBD Regulation") and Directive (EU) 2019/1160 ("CBD Directive"). The European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2021 and the European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2021 give effect to the CBD Directive in Ireland. The law of 21 July 2021 gives effect to the CBD Directive in Luxembourg.

On 17 May 2022, ESMA issued a consultation on the information and templates to be provided, and used by firms, when they inform regulators of their cross-border marketing and management activities under the UCITS Directive and AIFMD.

The purpose of the draft implementing technical standards ("ITS") and regulatory technical standards ("RTS") is to facilitate the process for notifying cross-border marketing and management activities in relation to UCITS and AIFs. This will be achieved by defining harmonised information to be notified to competent authorities, and developing common templates to be used by management companies, UCITS and AIFMs.

The closing date for responses is 9 September 2022. ESMA expects to publish a final report by the beginning of 2023. Once the RTS and ITS drafts are finalised, ESMA will submit them to the European Commission.

For more information, please see our update, ESMA Consultation on Notifications for Cross-Border Marketing and Management of Funds.


On 12 May 2022, the Commission de Surveillance du Secteur Financier ("CSSF") published circular 22/810 informing Luxembourg undertakings for collective investment ("UCI") and investment fund managers ("IFMs") that a number of pre-marketing and cross-border marketing procedures will now only be available on the CSSF's electronic portal ("eDesk"). Additional procedures will be made available on the eDesk over time and the CSSF will notify UCIs and IFMs when these become available.

On 20 June 2022, the CSSF issued a press release noting the various marketing notification and denotification procedures that will be exclusively available on the eDesk from 1 July 2022. The list of procedures available will be updated on the eDesk home page and should be regularly checked. In addition, a user guide with detailed information on the procedures and the required documentation to be submitted via the eDesk was also published. Russian Invasion of Ukraine and Investment Funds From 13 April 2022, EU sanctions prohibit EU investment funds (that invest in Euro-denominated transferable securities) from accepting new investments from Russian or Belarusian persons (unless they are EU nationals or have EU residency).

For more information, please see our update, New EU Ban on Selling Investment Funds to Russian or Belarusian Persons.

On 16 May 2022, ESMA published a statement for fund managers on their obligations to investors in the light of the conflict in Ukraine. It provides overarching messages to fund managers, including highlevel guidance on:

  • The appropriate action in case of exposures to Russian, Belarusian and Ukrainian assets, given valuation and liquidity uncertainties.
  • The process fund managers should follow when evaluating these assets.
  • Whether fund managers may consider using liquidity management tools, such as side pockets or similar arrangements, to segregate these assets.

ESMA expects fund managers of investment funds with exposures to assets facing liquidity issues to assess whether a fair value of these assets can still be determined and adapt the valuation without undue delay.

On 20 June 2022, the Central Bank issued a letter to business and professional representative bodies providing information and requesting that the information be shared, in order to assist members in meeting their obligations under the EU Financial Sanctions. In particular, attention is drawn to the Central Bank's dedicated Russian / Ukraine Regulations webpage and a related FAQs section.

For more information, see CBI Issues Further Letter on EU Financial Sanctions Regarding Russian Invasion of Ukraine.

1.3 Sustainable Finance Update


On 23 June 2022, the Central Bank updated its guidance on how EU taxonomy-related precontractual disclosures are to be addressed following publication of the recent Commission Q&A response to ESMA. The guidance sets out three options for funds in scope of the disclosures as appropriate to their specific situation. These relate to funds that are not subject to Article 8 or 9 of Regulation (EU) 2019/2088 ("SFDR") where the manager decides to take into account the EU Taxonomy and where the manager decides not to take into account the EU Taxonomy. The Central Bank is not requiring disclosures for existing funds to be immediately updated but these updates must be carried out no later than 1 January 2023.


A range of new EU legislative measures on sustainable finance become effective on 1 August 2022. The various delegated directives and delegated regulations are designed to complement the obligations in SFDR and the Taxonomy Regulation and form part of the European Commission's package of measures to help improve the flow of money towards sustainable activities across the EU.

For more information, please see our update, New Mandatory Consideration of ESG Factors for EU Investment Fund Managers.

On 6 April 2022, the European Commission adopted final RTS to be used by financial market participants when disclosing sustainability-related information SFDR. They specify the exact content, methodology and presentation of the information to be disclosed, thereby improving its quality and comparability. Under these rules, financial market participants will provide detailed information about how they tackle any possible negative impacts that their investments may have on the environment and society in general. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. It is scheduled to apply from 1 January 2023.

On 29 April 2022, the European Financial Reporting Advisory Group published a consultation on draft EU sustainability reporting standards ("ESRS") that it is developing. The consultation closes on 8 August 2022. The ESRS will support the reporting requirements of the proposed Corporate Sustainability Reporting Directive ("CSRD") (the Council and the European Parliament on 21 June 2022 reached a provisional agreement on it). The consultation is on the first set of ESRS, which cover environmental, social and governance ("ESG") matters. The proposed CSRD will align with reporting obligations under SFDR and the EU Taxonomy and is due to apply from 1 January 2024.

On 6 May 2022, ESMA published a letter from the European Commission to the European Supervisory Authorities ("ESAs") (the EBA, EIOPA and ESMA) requesting that they propose amendments to the adopted Commission Delegated Regulation supplementing SFDR with regard to RTS on content and presentation of information (SFDR RTS).

On 25 May 2022, ESMA published a Commission Decision and Annex with answers about SFDR and the Taxonomy Regulation which the European Commission adopted on 13 May 2022. The answers focus on:

  • Principal adverse impact ("PAI") disclosures and whether a financial market participant is able to not consider PAI at entity level but still consider PAI under Article 7 of SFDR for some of the financial products it manages.
  • Financial advisers and recommendations of financial products.
  • The transparency of the integration of sustainability risks and rules for financial products that are no longer made available.
  • Good governance practices, including financial products investing solely in government bonds.
  • The scope of Articles 5 and 6 of the Taxonomy Regulation.

The answers respond to questions the ESAs forwarded to the Commission in December 2021, which ESMA published on 13 May 2022.

On 31 May 2022, ESMA published a supervisory briefing with guidance for NCAs on how they should approach supervision of sustainability-related disclosures and the integration of sustainability risks. The guidance is to be applied on a proportionate basis and covers the review of the mandated precontractual, periodic and website disclosures as well as consistency of sustainability-related disclosures across the fund documentation and marketing material. It also sets out expectations on the use of ESG-related names for funds, as well as clarity around investment policies and objectives.

For more information, please see our update, New ESMA Guidance on Sustainability Risks and Disclosures.

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