IRELAND: Ireland to scrap minimum fund activity requirements

Wednesday December 22 2010

The Central Bank of Ireland has published two series of Notices, the UCITS Notices and the NU Series of Notices, which explain and clarify various aspects of investment fund legislation and set down conditions with which investment funds and their service providers must comply.

UCITS Notice 2 (paragraphs 15-19) and NU Notice 5 (paragraphs 35-39) currently require that certain minimum activities in relation to investment funds authorised by the Central Bank of Irelandmust be undertaken in Ireland. Essentially this requires that administration firms who provide services to these funds must carry out activities such as the calculation of the fund `s Net Asset Value (NAV), correspondence with unit holders, maintenance of books and records and shareholder register in Ireland.

The Central Bank of Ireland is therefore undertaking a review of the minimum activity requirements for Irish authorised investment funds. This review includes considering whether it is still practical to require that specific activities in relation to the operations of investment funds must be carried out in Ireland.

A new approach is being considered as follows:

As a result of the changes being introduced by UCITS IV in relation to the UCITS Management Company Passport, the Central Bank is proposing that the UCITS and NU Notices be amended to replace the minimum activity requirements that apply to Irish authorised investment funds with outsourcing requirements which will apply to administration companies. These requirements will be imposed as conditions under Section 14 of the Investment Intermediaries Act, 1995 and are consistent with the Committee of European Banking Supervisors (“CEBS”) Guidelines on Outsourcing published on 14 December 2006.

As a separate measure, the Central Bank also intends to place more focus on the role of the boards of Irish authorised investment funds to ensure that all existing and new regulatory requirements are met.

CP48 includes, inter alia, details of the proposed amendments to the UCITS and NU Notices. The Consultation also contains the draft requirements on outsourcing.

All interested parties are required to provide comments on all matters set out in this consultation paper no later than 31 December 2010.