Thursday August 4 2016

News Source: Fund Regulation

Focus: Other

Type: General

Country: Ireland




The Central Bank of Ireland (CBI) has published its third and final CP86 Consultation on fund management company effectiveness (the Consultation) relevant to:

  • UCITS management companies;
  • Self-managed UCITS investment companies/ICAVs;
  • Authorised AIFMs; and
  • Internally managed AIF investment companies/ICAVs

The Consultation has considered three key areas, outlined below:

  • Governance
  • Compliance
  • Supervisability

Governance: Part 1 of the Consultation summarises the guidance published by the CBI in November 2015 on governance in relation to delegate oversight, organisational effectiveness and directors’ time commitments. The CBI streamlined the managerial functions for Fund ManCos into: J Investment Management; J Fund Risk Management; J Operational Risk Management; J Regulatory Compliance; J Distribution; and J Capital and Financial Management (Managerial Functions).

Compliance: A Fund ManCo which delegates activities is required to identify a designated director or other designated person who will have responsibility for monitoring and overseeing the managerial function assigned to him/her (Designated Persons or DP(s)). This part of the Consultation focuses on the role of the DP and the interaction between the DP and the board of a Fund ManCo. The Consultation includes draft guidance on managerial functions which describes in detail who may be a DP, the CBI’s expectations of DPs and how they should carry out their roles, as well as setting out measures to be employed by a Fund ManCo to ensure compliance with its regulatory obligations.

Supervisability: The Consultation includes a proposal to introduce requirements regarding the location of directors and DPs based on the CBI’s Probability Risk and Impact System (PRISM) rating of a Fund ManCo.

The Consultation proposes that a Fund ManCo which has a PRISM impact rating of Low would 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 DPs in the EEA.

A Fund ManCo which has a PRISM impact rating of Medium Low or above would be required to have: at least three Irish resident directors or at least two Irish directors and one DP based in Ireland; and at least two thirds of its directors in the EEA; and at least two thirds of DPs in the EEA.

All Fund ManCos which are self-managed UCITS or internally managed AIFs have a PRISM rating of Low.

The CBI envisages providing a one-year transitional period for Fund ManCos to become compliant with the final guidance and requirements to be issued following completion of the Consultation. Accordingly, it may be Q4 2017 before Fund ManCos will need to be in compliance with such final guidance and requirements.

Responses to the Consultation must be submitted to the CBI by 25 August 2016

Click the link at the top of the page for more information.