Central Bank Updates for UCITS and Fund Management Companies

The Central Bank of Ireland published Issue 10 of its Markets Update on 5 July 2018 (here), which includes the 23rd edition of the Central Bank’s UCITS Q&A, as well as a notice regarding Fund Management Companies Guidance. We also understand that the Central Bank will shortly communicate with Fund Management Companies regarding filing updated Statements of Responsibility to comply with CP86.


The updated UCITS Q&A amend Q&A 1002 relating to Regulation 68(1)(e) of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, which, among other things, provides that a UCITS may invest in units of certain non-UCITS funds which meet specified conditions.  Under one of those conditions, not more than 10% of the assets of the non-UCITS fund whose acquisition is contemplated can “according to their trust deed, deed of constitution or articles, be invested in aggregate in units of other UCITS or other collective investment undertakings.”

According to the updated UCITS Q&A this means that the constitutional document of the non-UCITS fund in which the UCITS intends to invest must include a prohibition on investing more than 10% of its assets in other investment funds. The updated Q&A also provided that the relevant non-UCITS investment fund must either:

  1. be subject to requirements in its jurisdiction of domicile which are equivalent to UCITS investor protections in order to comply with Regulation 68(1)(e) or,
  2. the non-UCITS fund must have requirements of the same effect in its constitutional document or offering document - a statement of the intended investment approach does not constitute a rule for this purpose.

According to the Central Bank, UCITS should comply with the updated Q&A as soon as possible taking into account the best interests of the investors and in any event no later than 5 October 2018.

Notice on Fund Management Companies Guidance (Notice)

The Central Bank’s requirements in relation to the organisation of Fund Management Companies ("FMCs")  (being UCITS management companies, AIFMs, self-managed UCITS and internally managed AIFs) came in to full effect on 1 July 2018 (see our related briefing here).  According to the Notice, Central Bank supervisors will now be assessing how FMCs have implemented and embedded the new requirements and related guidance into their organisations.  The Central Bank will place specific emphasis on assessing the FMC’s resources and organisational structure.  The Central Bank will focus on the assessment work performed by the Organisational Effectiveness role holder and, in particular, how the FMC's board has implemented any proposals to improve organisational effectiveness.”

CP86 Compliance - Filing Statements of Responsibility

A number of existing FMCs which had availed of the grandfathering provisions regarding compliance with the CP86 regime were obliged to comply with the CP86 regime in full by 1 July 2018.  As part of CP86 compliance, the Central Bank issued a specific Q&A (ID1074) to confirm that updated Business Plans and Programmes of Activity which were being revised to comply with CP86 did not need to be filed with the Central Bank.  However, the Q&A was silent on whether this also extended to updated Statements of Responsibility (“SoRs”).  We understand that the Central Bank will be contacting FMCs shortly with regard to the position on filing updated SoRs and it is our understanding that updated SoRs will need to be filed with the Central Bank.  We would be happy to advise further on this issue, if required.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.