The Central Bank of Ireland ("Central Bank") is proposing to repeal and replace its UCITS regulations to align the Irish domestic regulatory framework with the revised EU rules being introduced in April 2026. The new regulations will also address outstanding updates from previous consultations, clarify certain provisions, incorporate some pre-existing guidance and change existing domestic rules in relation to performance fees and the operation of redemption gates for UCITS.
The Central Bank has published a consultation paper ("CP161") setting out proposed changes to the Central Bank UCITS Regulations1 and the Central Bank Guidance on Performance Fees for UCITS and certain Retail Investor Alternative Investment Funds ("AIFs"). The impetus to revise the regulations arises from the transposition of amendments to the UCITS framework introduced under Directive (EU) 2024/927 – known as AIFMD 2.0 due to the significant amendments the directive makes to the Alternative Investment Fund Managers Directive ("AIFMD") alongside changes to the UCITS framework.
Liquidity Management Tools
The Irish regulations transposing AIFMD 2.0 will introduce new rules on liquidity management tools ("LMTs"), including harmonised descriptions and the requirement to select at least two LMTs from a prescribed list. The Central Bank is introducing a dedicated LMT section in the new Central Bank UCITS Regulations containing provisions on general operational requirements for LMTs along with rules for UCITS selecting, activating and deactivating side pockets, suspensions, swing pricing and redemption gates. The new regulations will clarify that:
- administrative charges applied to investor redemptions are distinct from LMTs; and
- in-specie / in-kind redemption as an LMT differs to the exchange of assets in the settlement of redemptions, which does not constitute an LMT.
Redemption Gates
The consultation paper acknowledges that primary responsibility for liquidity risk management remains with the manager of the UCITS. The Central Bank has proposed removing the requirement that a redemption gate may not be imposed on any dealing day unless the total redemption requests exceed at least 10% of the total number of units of UCITS or at least 10% of the net asset value of the UCITS. This will ensure that the Central Bank's domestic approach is aligned with the new provisions on liquidity management tools ("LMTs") set out in AIFMD 2.0.
Guidance on Performance Fees
The Central Bank's guidance on performance fees was published in 2021. The guidance clarified the Central Bank's expectations in relation to performance fees charged by Irish-domiciled funds following the publication of the European Securities and Markets Authority ("ESMA") Guidelines on performance fees in UCITS and certain types of AIFs ("ESMA Guidelines"). At that time, the Central Bank explained that, due to legislative constraints contained in the Central Bank UCITS Regulations, certain aspects of the ESMA Guidelines on performance fees were not fully implemented. It is now proposed to remove those legislative constraints so that the Central Bank's guidance will be aligned with the ESMA Guidelines and will permit:
- a performance reference period that is less than the whole life of the UCITS for high water mark ("HWM") or high-on-high ("HoH") fee models or where the UCITS employs a performance fee based on a benchmark index, subject to a minimum of five years;
- the adoption of fulcrum fee models and other models which provide for a symmetrical fee structure which can be adjusted up or down depending on the relative performance of the UCITS to a benchmark; and
- crystallisation of performance fees more than once a year where a UCITS employs HWM or HoH fee models provided that performance reference period is equal to the life of the fund and cannot be reset, or fulcrum fees and other models which provide for a symmetrical fee structure.
The Central Bank is also consulting on whether it is appropriate to permit an entity other than the depositary to verify the calculation of the performance fee.
Other Amendments
The other amendments proposed in CP61 include technical changes and the amendments set out below.
- New section on residency requirements for directors and designated persons - The current residency requirements for directors and designated persons for rated firms rated "low" will be retained as a minimum requirement for all management companies, while the Central Bank retains the discretion to provide for additional residency requirements at the point of authorisation.
- Removal of obsolete provisions now covered by the Money Market Funds Regulation.
- Incorporating existing guidance permitting the exchange traded fund ("ETF") naming requirement at share class level.
- Retaining the rule that all share classes must have the same dealing procedures, but providing for a derogation currently set out in guidance whereby a UCITS ETF can seek a waiver from this provision so that it may have different dealing deadlines for cash and in-kind dealing, and/or different deadlines where the UCITS ETF with hedged and unhedged share classes implements currency hedging at share class level.
- New prospectus disclosure of maximum fee payable for recurring fees based on the net asset value.
Comment and Next Steps
Some of the proposed changes, namely the provisions in relation to certain in-specie redemptions, reflect industry engagement with the Central Bank regarding ETFs and Authorised Participants in which Matheson was involved. We have successfully obtained derogations for existing clients to reflect the provisions around different dealing deadlines for ETFs. The consultation closes on 5 November 2025. We will be contributing to an industry response and may prepare our own response. Please get in touch with your usual Matheson contact if you would like us to include your views in our response.
Footnote
1. Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019
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