The Central Bank published on 17 February 2011 revised drafts of UCITS Notices, Non-UCITS Notices ("Notices NU") and Guidance Notes reflecting the changes to be implemented in accordance with directive 2009/65/EC ("UCITS IV"), and reflecting general amendments, in particular those relating to the definition of money market funds.
A consultation paper was published in addition to the revised UCITS Notices, Notices NU and Guidance Notes calling for responses to be submitted to the Central Bank by 15 March 2011 by the fund industry. We understand that it is intended that implementing legislation will be in place by Easter 2011.
As predicted, the provisions of UCITS IV, related implementing directives and European Securities and Markets Authority ("ESMA") guidelines were implemented without amendment by the Central Bank. The Central Bank has, in addition, elaborated on additional points on which this article focuses. It is clear, however, that there is still a great deal of clarification needed and this consultation is likely to reflect the start of intense dialogue with the industry to look at how many of these measures will be implemented in practice.
UCITS Management Companies
UCITS management companies will be required to comply with UCITS IV from 1 July 2011. To this end, the Central Bank requires all UCITS management companies to submit their revised business plans for review by 29 April 2011. In the UCITS Notices and Guidance Notes, the Central Bank has implemented the UCITS IV provisions but has also elaborated on the structure and organisation of UCITS management companies.
In accordance with the UCITS IV provisions, UCITS management companies must (i) establish, implement and maintain decisionmaking procedures and an organisational structure which clearly specifies reporting lines and allocates functions; (ii) take into account the nature, scale and complexity of the range of services and activities they undertake; (iii) establish a permanent compliance function to monitor and assess their risk management policies and procedures; (iv) maintain an internal audit system and risk management system; (v) maintain procedures and independence in the management of potential conflicts of interest; (vi) comply with rules of conduct to act honestly and fairly in all transactions, to act with due skill and care, to have and employ the appropriate procedures to ensure the proper performance of it business activities and to comply with the letter and spirit of all regulatory requirements; and (vii) to put in place a risk management process enabling it to...