IRELAND: IFSRA Consultation on Annual Management Fees within CIS

Wednesday August 16 2006

In June 2006 the Financial Regulator issued a consultation paper to request feedback on a proposal to allow retail collective investment schemes (“CIS”) calculate their annual management fees based on initial issue price per share. In particular, the Financial Regulator sought specific information on any global trends in relation to annual management fee calculations, and the ability of investors to understand and compare charging structures across CIS.

On the basis of the information provided to the consultation, the Financial Regulator has now issued a response in which it confirms that it will permit retail CIS to charge the annual management fee calculated based on the initial issue price, subject to the following:

*The CIS is a structured product, which provides a pre-defined return to investors.

*The fee charged is a percentage of the initial issue price per share, i.e. it will be adjusted to take account of dealing activity in the CIS.

*The prospectus of the CIS will disclose the fee paying arrangement and provide a clear warning that the fee is fixed and not subject to the performance of the CIS.