Management Company
A UCITS management company must be appointed in respect of all Irish UCITS.
All management companies must at all times maintain a minimum capital requirement of €125,000 or one quarter of its preceding year's fixed overheads, whichever is the greater. However, additional capital requirements apply to a UCITS management company which manages assets in excess of €250 million where the management company must maintain additional capital of 0.02% of the value of the assets under management in excess of €250 million, subject to a maximum level of capital of €10 million.
Administrator and Depositary
A UCITS management company must appoint an Irish administrator which is primarily responsible for calculating the UCITS net asset value and which also typically acts as the registrar and transfer agent.
A UCITS must also appoint an Irish depositary. The depositary is responsible primarily for safekeeping the UCITS assets, ensuring that the cash flows are properly monitored and carrying out oversight in relation to the management of the UCITS.
Approval of a Discretionary Investment Manager
A UCITS management company may appoint an investment manager to manage the investments made by a UCITS.
The discretionary investment manager is not required to be located in Ireland.
Any investment manager (including any discretionary investment adviser) to be appointed to a UCITS must first be approved to act as such by the Central Bank. Essentially, the Central Bank must be satisfied that the discretionary manager is authorised by an appropriate regulatory authority and is subject to ongoing supervision.
If a UCITS proposes to appoint either a UCITS management company, MiFID firm, EU bank authorised to provide portfolio management under MiFID or an EU-authorised AIFM to act as its discretionary investment manager, then this approval process involves a straightforward notification to the Central Bank to enable the Central Bank to verify the authorisation status of the proposed investment manager. Any other entity to be appointed as an investment manager which is not in one of the categories listed above must seek Central Bank approval to act as such. This approval process involves submitting to the Central Bank an application form which includes sufficient background information to enable the Central Bank to be satisfied that the applicant has the appropriate personnel, experience, financial resources and regulatory status to perform the role. This approval process typically takes three to four weeks. Once approved to act as a discretionary investment manager of a UCITS, and provided it remains subject to regulation in its home state, the entity has no further obligations to the Central Bank, other than to notify it in advance of any change in its regulatory status, name and registered address.
Service Provider Agreements
A UCITS will need to ensure that all agreements with the key service providers (i.e. depositary, administrator and delegate investment manager) contain certain provisions prescribed by the Central Bank. These agreements are required to be filed with the Central Bank.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
