FUNDS QUARTERLY LEGAL AND REGULATORY UPDATE
Undertakings in Collective Investments and Transferable Securities ("UCITS")
(i) ESMA publishes updates to the Q&A on application of UCITS Directive
On 11 July 2017, the European Securities and Markets Authority ("ESMA") published an updated Q&A on the application of the UCITS Directive (2009/65/EC), as revised by UCITS V (2014/91/EU) (together the "UCITS Directive"). The UCITS Q&A now includes two new questions and answers on:
- Issuer concentration – relating to 40% limit. See Section 1 Question 5a; and
- Group links and cooling-off periods – relating to when a person (being a person who served in a management body or supervisory body of an entity within a group or was employed by such an entity) deemed to fulfil the independence requirement. See Section 8 Question 1).
The updated Q&A document is available for download here.
(ii) Central Bank publishes revised UCITS Q&A
On 4 August 2017, the Central Bank published a nineteenth edition UCITS Q&A. The revised UCITS Q&A includes the following:
- New questions ID 1079 - ID 1083. These relate to the Central Bank UCITS (Amendment) Regulations 2017 and also concerns the initial capital requirement for depositary, computation of half of a board of directors where the number of directors is uneven; meaning of reverse leverage; and the holding of cash booked in accounts as ancillary liquidity; and
- New question ID 1084 - This relates to the governing law of management company agreement.
The revised UCITS Q&A is available for download here.
(iii) Central Bank publishes revised UCITS (Amendment) Regulations 2017
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2017, S.I. No. 344 of 2017, "(the "UCITS (Amendment) Regulations 2017") were signed into Irish law on 27 July 2017.
The amendments effected by the UCITS (Amendment) Regulations 2017 comprise mainly:
- Certain amendments and clarifications to the principal UCITS Regulations following the implementation of UCITS V; and
- Certain amendments and clarifications arising from the Central Bank's Feedback Statement to CP 86 as published by the Central Bank, together with further guidance ("Guidance") for fund management companies, on 19 December 2016. The Guidance covered managerial functions, requirements for director residency, operational issues and procedural matters.
The Central Bank subsequently published Issue 6 of its Markets Update on 4 August 2017 with an updated UCITS Q&A and updated Guidance on UCITS Financial Derivative Instruments and Efficient Portfolio Management.
The revised UCITS (Amendment) Regulations 2017 is available for download here.
(iv) Central Bank publishes updated Guidance on UCITS Financial Derivative Instruments and Efficient Portfolio Management
On 4 August 2017, the Central Bank published updated Guidance on UCITS Financial Derivative Instruments and Efficient Portfolio Management which includes an additional provision on disclosure requirements for financial derivative instruments in periodic reports and which is located on page 32 of the guidance.
The updated UCITS Financial Derivative Instruments and Efficient Portfolio Management Guidance is available for download here.
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