With a continued evolution in requirements for self-managed funds, new and existing investment managers are now subject to important changes.
Investment managers continue to see substantial benefits in utilising Ireland's popular fund structures. Ireland has been a leading domicile for internationally distributed investment funds and according to the Irish Funds Industry Association, as of 2019, there were 7,707 Irish-domiciled funds with more than €3 trillion in assets with expectations for continued growth in 2020 and beyond.
The UK's exit from the European Union ("EU") has been a factor in the increased demand for Irish structures as UK and non-UK managers seek to establish funds in a recognised jurisdiction of choice that will remove potential barriers to marketing in the EU. However, similar to other jurisdictions, there has been a continued evolution in requirements for self-managed funds. New and existing managers are now subject to important changes to substance requirements that will need to be taken into consideration in the second half of this year.
Interest in establishing EU operations stepped up significantly as it became clear that the UK would be leaving the EU and that an alternative route into Europe would be needed, albeit under somewhat uncertain circumstances. As firms have become authorised by the Central Bank of Ireland ("CBI") and other European regulators, they have also become subject to additional substance requirements mandated by ESMA, with a particular focus on firms with less than three local employees.
In Ireland, stricter guidance is expected to be applied to firms established before July 2018 who may need assistance in building out local fund management activities. One particular area of focus is the second stage of CP86, the CBI's guidance to address the effectiveness of fund management companies in ensuring compliance with new and existing regulatory obligations, and is expected in the second half of 2020. Updated guidelines are set to include an increased time commitment for the designated persons these firms rely on to fulfil key management functions and increased fund risk requirements and reporting. Additionally, going forward, designated persons may be expected to be based in Ireland or another EU location. It also remains a possibility that self-managed funds and management companies previously authorised will need to establish a full presence in Ireland, with executives in place alongside support staff.
As such, AIF and UCITS fund managers will need to closely examine the updated requirements and may require assistance in establishing and / or evolving their fund management activities in Ireland. Many managers are opting to engage a third party management company who has the required structure to support meeting these increased regulatory requirements and who can alleviate the need for the manager themselves to implement a large team of people, systems and other resources in the EU. Further, many managers with a presence in the EU are also seeking to leverage the expertise of third party management companies to navigate the increased requirements and regulations.
MPMF Fund Management (Ireland) Limited ("MPMF"), the Maples Group's CBI-authorised UCITS management company and AIFM, provides full management company services and brings significant experience that can assist AIFs and UCITS funds in meeting the new substance requirements, in addition to performing local management and all ongoing regulatory obligations. External AIFM or UCITS management company solutions eliminate the need for additional substance and headcount, taking full responsibility for governance and compliance while continuing to facilitate access to EU capital. This allows for scale and efficiency while enabling managers to focus on investment management and distribution. Furthermore, MPMF's CBI-approved risk management framework and oversight mechanisms can provide investors with the reassurance they need.
MPMF's solutions are delivered by an experienced team of professionals with an in-depth knowledge of regulatory compliance, investment management, fund risk management, operational risk management, capital and financial management and distribution matters. Underlying this expertise is a seamless integration of market leading and proprietary technology and deep regulatory and industry knowledge that enables the delivery of optimal solutions to clients who can confidently rely on MPMF's customisable infrastructure in respect of the operation of their funds.
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