Central Bank implements ESMA Guidelines and Clarifies Requirements relating to the Management Company Passport and Organisational Requirements for SMICs
Guidelines on ETFs and other UCITS issues
The European Securities and Markets Authority's Guidelines on ETFs and other UCITS issues (the "ESMA Guidelines") come into effect today, 18 February 2013. The Central Bank has implemented the ESMA Guidelines through a series of amendments to the UCITS Notices. Related amendments have been made to Guidance Note 2/07 UCITS Financial Indices and Guidance Note 3/03 UCITS Financial Derivative Instruments. Please see our earlier update for further information on the ESMA guidelines, including transitional provisions. Any new UCITS created on or after 18 February 2013 must comply with the ESMA guidelines immediately.
A copy of the amended UCITS Notices may be accessed here: Amended UCITS Notices.
Guidance Note 4/07 – Operation of the Management Company Passport
The Central Bank has amended Guidance Note 4/07 in order to clarify the
requirements an Irish management company needs to fulfil in order
to avail of the UCITS IV passporting provisions. The amendments
will require management companies to assess how utilising a
management company passport would affect the nature, scale and
complexity of their business, particularly their organisational
structure and resources. The Central Bank will review each
management company passport proposal on a case-by-case basis to
determine whether the management company is adequately
The amendments are also designed to ensure that the Central Bank will have effective access to (a) records of any non-Irish administrator that the management company engages and (b) documents and information held by the trustee of a non-Irish UCITS, in order to allow the Central Bank to effectively discharge its supervisory duties in relation to the management company.
UCITS Notice 2 - Organisational Requirements for SMICs
The Central Bank has updated UCITS Notice 2 to reflect its
policy that UCITS management companies and self-managed investment
companies ("SMICs") should be subject to
the same basic regime while acknowledging that the requirements
applicable to SMICs should be considered in light of the less
complex nature of a SMIC. In a letter to the Irish Funds Industry
Association ("IFIA") dated
10 August 2012, the Central Bank specified the particular requirements that would apply to SMICs and clarified that SMICs would not be required to have a permanent compliance function or a permanent internal audit function. UCITS 2 has now been amended to reflect this correspondence. In particular, paragraph 95 has been updated to reflect the application of the broader range of requirements to SMICs.
The Central Bank has indicated that it will welcome submissions of updated UCITS IV compliant business plans by SMICs as far in advance of the 1 July 2013 deadline as possible and would like to avoid all submissions being received in the latter stages. The Central Bank will not review all submissions but will carry out a spot checking exercise to establish the level and extent of compliance.
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