The Central Bank of Ireland ("Central Bank") has published updates to its website including guidance relating to fund authorisation processes and procedures ("Guidance"). The publication of the Guidance forms part of the Central Bank's broader project to review fund authorisation processes, which will be completed during the course of 2022.

Approval of Non-EU Investment Managers

The Guidance amends the process for the approval of UCITS and AIF investment managers and investment advisers by setting out a new online process for the clearance of non-EU based investment managers. The new process now involves:

  • submission of applicant details (as required under the pre-existing process) via the Central Bank's online reporting system (ONR);
  • an attestation from the fund manager as to the due diligence that has been carried out on the application, including, at a minimum:
    1. confirmation of the regulatory status and background of the investment manager to ensure they are appropriately regulated and supervised and are not subject to legal proceedings;
    2. confirmation that a review of the financial information has been completed to ensure the investment manager has the required level of share capital and has no contingent liabilities;
    3. confirmation that a review of the resources, systems and procedures of the investment manager have been completed to ensure that they are sufficient to adequately carry out all the functions delegated to it; and
    4. a confirmation that they are in a position to effectively monitor the investment manager's compliance with the relevant fund documentation and all regulatory and legislative requirements in this regard.

Where the management company cannot provide the confirmations at (a) and (b) above, but is of the view that this does not affect the suitability of or the performance of the investment management activities by the investment manager, such applications will be considered on a case by case basis as part of the a more detailed review process. The application should include a full explanation as to why the relevant confirmation(s) cannot be provided.

Amendments to Pre-submission Process

Irish qualifying investor alternative investment funds ("QIAIFs") can avail of a fast-track authorisation process allowing authorisation in one day, subject only to various advance approvals of the relevant parties to the fund and the certifications to be given in respect of compliance with the Central Bank's requirements. In recent years, the Central Bank has taken the view that, where a proposed QIAIF intends to hold uncommon asset types or has unusual features, authorisation in one day may not be possible, as it will be necessary to file a pre-submission with the Central Bank. The Central Bank had previously required pre-submissions with respect of funds with high levels of leverage, property funds, life settlement funds and loan originating funds.

The Central Bank has now confirmed in new website guidance that a pre-submission will only be required with respect to:

  • QIAIFs proposing to invest in Irish property assets; and
  • QIAIFs proposing to invest in cryptoassets.

Pre-submission Requirements for QIAIFs investing into Irish Property Assets

QIAIFs which propose to invest into Irish property assets must submit the following to the Central Bank:

  • copies of prospectus / supplements;
  • a model portfolio template;
  • details of loan-to-value and leverage limits and the rationale for such limits;
  • information on the liquidity status of the QIAIF and the redemption provisions that will apply; and
  • an indication of the expected target market.

The Central Bank has indicated that this is a non-exhaustive list.

Pre-submission Requirements for QIAIFs investing in Cryptoassets

QIAIFs which propose to invest into cryptoassets must submit the following to the Central Bank:

  • information in relation to how the cryptoassets are capable of being appropriately risk managed, including liquidity risk; credit risk; market risk; operational risk (including fraud and cyber risks); money laundering / terrorist financing risk; and legal and reputation risks; and
  • in the case of direct investment in cryptoassets, the submission should include details from the proposed depositary, demonstrating how it is satisfied that it can provide for the safe-keeping of the assets of the QIAIF.

The Central Bank has indicated that this is a non-exhaustive list.

QIAIF which propose to invest no more than 10% of its net asset value into cash-settled Bitcoin futures traded on the Chicago Mercantile Exchange, no pre-submission is required, provided that:

  • the cover letter accompanying the QIAIF application refers to the inclusion of crypto-asset exposure; and
  • in the case of an application for post-authorisation amendment, shareholder approval is obtained for the revision to the QIAIF's investment strategy to introduce exposure to cryptoassets. This must also be set out in the cover letter.

The Central Bank will continue to monitor the type of QIAIF that may be subject to pre-submission and may add to or remove QIAIFs from the list of funds requiring pre-submissions over time. The Central Bank has not committed to a timeframe for the consideration of pre-submissions but it expects this process to operate with increased efficiency in light of the reduction in the number of instances where a presubmission is required.

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.