Arthur Cox recently participated in a committee which made various submissions to the Central Bank of Ireland (the "Central Bank") to ensure the ongoing competitiveness of Irish funds. As a consequence a number of important amendments have now been made to the notices and guidance notes issued by the Central Bank. The purpose of this briefing is to summarise the principal changes to the notices and guidance notes.
The stock exchanges and markets on which UCITS and non-UCITS retail schemes are permitted to invest are required to be listed in the prospectus and the constitutional document of a fund (typically the articles of association or the trust deed). Although this list in the constitutional document was lengthy the list would typically need to be amended from time to time to include additional stock exchanges and markets. The amendment to the list of regulated markets was an easy process in the case of a unit trust as any amendment to the trust deed is regarded as a non-material amendment and therefore can be effected without unitholder approval. However, any proposal to expand the list of regulated markets in the case of a fund established in corporate form required an amendment to the articles of association. This meant that a general meeting of the fund company needed to be convened to amend the articles to expand the list of regulated markets. Any amendment to the articles requires a special resolution to be passed by a three quarters majority of those attending and voting at the general meeting. Consequently the process to achieve a change to the list of regulated markets was time-consuming and costly.
The Central Bank has now accepted that a fund's constitutional document need only cross refer to the list of regulated markets contained in the prospectus. Individual stock exchanges and markets no longer need to be listed in the constitutional document. This amendment is particularly helpful for funds established as companies.
We would suggest that any retail fund established in corporate form consider at its next annual general meeting (or at an extraordinary meeting if one is being convened for other matters) whether to amend the articles to cross refer to the stock exchanges and markets listed in the prospectus so that any additions to the list can be made more easily in the future.
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