The Front Page, Asset Management & Investment Funds: Irish Practice Developments

Some Approaching Deadlines

  • 30 June 2016. Sub-Fund Profiles. Deadline for filing the investment funds annual sub-fund profile return on the Central Bank's ONR is 30 June 2016.
     
  • 3 July 2016. Revised Market Abuse Regime. As detailed below, the revised Market Abuse Regime will come into effect on 3 July 2016.
     
  • 1 July 2016. Investor Money Regulations. The Investor Money Regulations come into effect on 1 July 2016. Many UCITS and AIFs now operate umbrella cash accounts for holding subscription, redemption and dividend monies in accordance with Central Bank Guidance.
     
  • 25 August 2016.  CP86 – Third consultation paper. CP86 – Third consultation paper closes on 25 August 2016 (as detailed below).
     
  • 25 August 2016.  CP105- Consultation on amendments to the Central Bank UCITS Regulations. CP105- Consultation on amendments to the Central Bank UCITS Regulations closes on 25 August (as detailed below).
     
  • 1 September 2016. Companies Act 2014. The majority of the Companies Act 2014’s provisions commenced on 1 June 2015 (Commencement Date). If a UCITS management company (UCITS ManCo) or AIFM (or s.110 subsidiary) is converting to a company limited by shares (CLS), the shareholder(s) of the UCITS ManCo or AIFM (or s. 110 subsidiary) must pass a special resolution to adopt a new constitution, which must be filed with the Irish Companies Registration Office (CRO) by 30 November 2016. If the UCITS ManCo or AIFM (or s. 110 subsidiary) is converting to a designated activity company (DAC), the shareholder(s) of the UCITS ManCo or AIFM (or s. 110 subsidiary) must pass an ordinary resolution resolving that the company be registered as a DAC by 1 September 2016. Variable Capital Companies may choose to update their Memorandum and Articles of Association to reflect the provisions of the Companies Act 2014 and other regulatory changes when planning their Annual General Meetings. Please see our In Focus document for more detail.
     
  • 1 September 2016. FSB consultation on recommendations to address structural vulnerabilities arising from asset management activities.The  FSB consultation on recommendations to address structural vulnerabilities arising from asset management activities closes on 1 September 2016.
     
  • 2 October 2016.  EU consultation on cross-border distribution of investment funds. European Commission consultation on the capital markets union (CMU) action on cross-border distribution of investment funds (UCITS, AIFs, ELTIFs, EuVECAs, EuSEFs) across the EU closes on 2 October 2016 (as detailed below).
     
  • 1 November 2016. Redemption Gates. Deadline for existing UCITS to remove provisions whereby redemption requests carried over from a prior dealing day as a result of the application of a gate receive priority.  Many UCITS provide for priority rights of redemption for investors on subsequent dealing days in respect of the balance of redemption requests that had been subject to a gate. The Central Bank believes that applying priority to redemption requests which have been subject to a gate may materially prejudice investors, particularly small investors.  This is notwithstanding the fact that the original gate would have had to have been applied pro rata to all investors, large and small, who had submitted redemption requests. This change (which will likely require a change to the UCITS' constitution) should be completed by all UCITS by 1 November 2016.

This list does not cover ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include annual FDI Return) and semi-annual accounts because these dates will vary to reflect the particular year ends.

Brexit

The UK referendum held on 23 June 2016 resulted in a majority voting in favour of the UK leaving the EU. As of now, the UK is still a part of the EU notwithstanding the vote on 23 June.  It is up to the UK parliament to decide if and, if so, when to formally start the process to leave the EU.  Michael Barr, partner in the A&L Goodbody Asset Management & Investment Funds team considers the possible impact of a Brexit on a variety of Irish regulated fund structures that a UK asset manager may currently have established in Ireland or may look to put into place in light of a looming Brexit. Read more here.

Central Bank Markets Update: CP99 (AIF Rulebook), Amending Central Bank UCITS Regulations, CP105 consultation on further amending the Central Bank UCITS Regulations, AIFMD Q&A, UCITS Q&A, Market Abuse

The Central Bank of Ireland (Central Bank) published a Markets Update (Issue 3 2016 dated 2 June) which includes:

  • Further consultation on CP86: Fund Management Company Effectiveness. As expected, the Central Bank has issued a further consultation paper on Fund Management Company Effectiveness. Consultation Paper CP86 – Third consultation paper which addresses managerial functions, operational issues and procedural matters. It sets out the work already undertaken by the Central Bank in relation to governance of fund management companies and outlines the proposed approach to Compliance and Supervisability issues. The consultation period closes on 25 August 2016.
     
  • Feedback on CP99: Consultation on Amendments to the AIF Rulebook. This summarises the responses received along with the Central Bank’s comments and decisions.
     
  • Publication of first set of Amending Central Bank UCITS Regulations 2015. The Central Bank UCITS Regulations 2015 require amendment as a consequence of the implementation of UCITS V. The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (UCITS)(Amendment) Regulations 2016 were in the process of being finalised at the date of issue of the Markets Update and the amending Regulations were published shortly thereafter.
     
  • CP105: Consultation on amendments to the Central Bank UCITS Regulations. The Central Bank issued a consultation on a second set of amendments to the Central Bank UCITS Regulations. CP105 sets out the draft amending Central Bank UCITS Regulations in its schedule. Section 1 details amendments consequential on the implementation of UCITS V and section 2 details technical amendments. The consultation period for CP105 closes on 25 August 2016.
     
  • Nineteenth Edition of the AIFMD Q&A. The new questions added are: Q&A 1104 (Fund Management Company - organisational effectiveness); Q&A 1105 (Rules - significant Influence in the context of certain types of AIFs) and Q&A 1106- 1107 (Companies Act 2014). Q&A 1106 was previously issued in the form of a general information note and included in the Markets Update published on 12 June 2015.
     
  • Thirteenth Edition of the UCITS Q&A. The new questions added are: Q&A 1063 (UCITS Management Company - organisational effectiveness); Q&A 1064 (share class hedging) and Q&A 1065- 1066 (Companies Act 2014). Q&A 1065 was previously issued in the form of a general information note and included in the Markets Update published on 12 June 2015. An existing question - Q&A 1013 - which deals with past performance data has been amended and the title of this section has been revised accordingly.
     
  • Market Abuse Regulation: The Central Bank has amended its website guidance on the Market Abuse Regime (please see below).

Update on CP86

As detailed on our Front Page newsalert, the latest consultation on CP86 has issued. It addresses managerial functions, operational issues and procedural matters.  While there is a lot of detail in the consultation, we highlight the following proposals which are likely to be of particular interest.

  • A fund management company (which includes a UCITS ManCo, an AIFM, a SMIC and an internally managed AIF) which has a PRISM impact rating of Low will be required to have:
    • at least two Irish resident directors; and
       
    • at least two thirds of its directors in the EEA; and
       
    • at least two thirds of designated persons in the EEA.
  • A fund management company which has a PRISM impact rating of Medium Low or above will be required to have:
    • at least three Irish resident directors or at least two Irish resident directors and one designated person based in Ireland; and
       
    • at least two thirds of its directors in the EEA; and
       
    • at least two thirds of designated persons in the EEA.

The consultation proposes a one year transitional period (after final guidance issues) for existing fund management companies to become compliant. The consultation period will close on 25 August 2016. The A&L Goodbody Asset Management & Investment Funds team will be reviewing the consultation in detail. Please contact us if you would like more information or if you would like to contribute to the consultation. 

Revised Market Abuse Regime

Regulation (EU) 596/2014 on market abuse (MAR) and the EU Market Abuse Directive 2014/57/EU, which update the existing Market Abuse Directive 2003/6/EC, will come into effect on 3 July 2016.

This will have a number of implications for investment funds listed on the Main Securities Market (MSM) and the Global Exchange Market (GEM) of the Irish Stock Exchange.  The Central Bank will act as Competent Authority in respect of the implementation of MAR.

The aim of MAR is to establish a common regulatory framework on insider dealing, the unlawful disclosure of inside information, market manipulation and market abuse as well as measures to prevent market abuse to ensure the integrity of financial markets within the EU and to enhance investor protection and confidence in those markets.

The scope of the Market Abuse Directive was limited to financial instruments admitted to trading on a "Regulated Market" within the EU.  However, the scope of MAR is broader and applies to the following:

  • financial instruments admitted to trading on a regulated market or for which a request for admission to trading on a regulated market has been made;
     
  • financial instruments traded on a multilateral trading facility (MTF), admitted to trading on an MTF or for which a request for admission to trading on an MTF has been made;
     
  • financial instruments traded on an Organised Trading Facility.

This means that MAR will now apply to all securities listed on the MSM and will also apply to securities listed on GEM.

The revised regime expands on the requirements of the Market Abuse Directive 2003/6/EC and provides more detailed requirements in relation to the following:

  • Insider dealing;
     
  • Market manipulation;
     
  • Inside information and the disclosure of inside information;
     
  • Insider lists;
     
  • Managers’ transactions.

MAR also provides for "Market Soundings" which means that an issuer, a secondary offeror of a financial instrument and any third parties acting on their behalf will be permitted to communicate information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and the conditions relating to it, such as its potential size or pricing.  Market Soundings will only be acceptable under MAR provided that certain conditions are met and detailed records on the process must be maintained for a period of at least five years.

For further information please speak with Christina Fahey, Mary McKenna, or Brian McDermott.

Irish Stock Exchange ISIN codes

The Irish Stock Exchange (ISE) has commenced a new process for the application of International Security Identification Numbers (ISIN) for Irish domiciled debt securities and investment funds listing on the ISE’s markets from 27 June 2016. For more detail read here.

Government's Legislation Programme Summer 2016

The Summer 2016 Legislation Programme sets out the legislation that the Government will seek to publish over the next few months. In an investment funds context, the third list, which sets out the bills which each Department plans to introduce in the long term (with a status update), includes

  • the Investment Limited Partnership (Amendment) Bill which will amend certain existing CIS legislation, the Investment Limited Partnership Act, 1994 and the Limited Partnership Act, 1907 (work on this bill is underway); and
     
  • the Criminal Justice (Money Laundering & Terrorist Financing ) (Amendment) Bill which will give effect to the 4th EU Anti- Money Laundering Directive (heads of this bill are expected to be published by end 2016).

For more information please contact Nollaig Greene or a member of the Asset Management & Investment Funds Team.

Date published: 29 June 2016