The Central Bank of Ireland (CBI) has issued a consultation (CP 119) proposing a number of changes to the CBI’s Undertakings for Collective Investment in Transferable Securities (UCITS) Regulations.
The European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended (Irish UCITS Regulations) transpose the UCITS Directive into Irish law. The Irish UCITS Regulations are complemented by the CBI’s UCITS Regulations which came into effect on 1 November 2015 and which consolidated requirements previously set out in the CBI’s UCITS Notices.
The CBI’s UCITS Regulations have since been amended on two occasions. The CBI is proposing to incorporate these amendments and the proposed amendments into a consolidated version. It is also proposing to make a number of amendments to the CBI’s UCITS Regulations, including the following:
- Annual Audit Report: under the CBI’s UCITS Regulations, the first annual audited report of each UCITS must be prepared within 18 months of the UCITS’ incorporation or establishment. CP 119 proposes clarifying that the 18-month requirement applies to the umbrella UCITS and the preparation of these accounts must include all sub-funds launched within the period to which the report relates;
- Redemptions: currently UCITS must notify the CBI when they temporarily suspend redemptions. Under CP 119, the CBI is proposing to require UCITS to notify it immediately when the temporary suspension has been lifted and to provide it with an update on the temporary suspension within 21 working days of the date the suspension takes effect;
- Accounts: UCITS management companies and depositaries must submit half-yearly accounts. CP 119 proposes amending the relevant provisions to state that the second set of accounts are to cover the full 12 months of the financial year and that they must be submitted within one month of the end of the relevant period;
- Structured Products: CP 119 provides that UCITS which are structured products may be permitted to charge an annual management fee based on the UCITS’ initial offer price, provided certain criteria are met;
- Share Class Provisions: the existing provisions on UCITS share classes will be amended to reflect ESMA’s ‘Opinion on Share Class of UCITS’ issued in January 2017 (see our related briefing here). In addition, annual and half-yearly reports will need to list all of a UCITS’ share classes and identify whether the relevant share class is hedged;
- Performance Fees: CP 119 proposes amending the CBI’s UCITS Regulations to set out provisions for UCITS performance fees which are currently set out in website guidance. In addition, it proposes inserting a new regulation which sets out disclosure obligations in relation to performance fees and to specify that the minimum period for performance fee crystallisation is once per annum; and
- Money Market Funds: a number of provisions set out in the CBI’s UCITS Regulations will be disapplied to remove any overlap with the Money Market Funds Regulation 2017/1131. The relevant provisions will continue to apply to money market funds authorised prior to 20 July 2018, until 21 January 2019.
Responses to the CP 119 consultation must be submitted to the CBI no later than 29 June 2018.