Proposed Changes To The Central Bank's Rules On Money Market Funds, Closed-Ended And Limited Liquidity Funds And Professional Investor Funds

Author:Mr Carl O'Sullivan, Kevin Murphy, Sarah Cunniff and Dara Harrington
Profession:Arthur Cox
 
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From our recent bulletin ("Central Bank launches Consultation, February 2011") you will be aware of the consultation process (CP 50) initiated by the Central Bank on the proposed changes to the UCITS Notices and Guidance Notes to implement UCITS IV. In addition to the UCITS IV-related changes, the Central Bank has taken the opportunity to propose a number of unrelated changes, in some cases of a significant nature, to the UCITS and non-UCITS Notices. Below is a summary of those changes. The deadline for the submission to the Central Bank of comments on the proposed changes is 15 March 2011.

Revised Guidance Note 2/97 - Proposed Changes to Closed-Ended Collective Investment Schemes

At present, the Central Bank's Guidance Note only addresses its requirements relating to the establishment of closed-ended funds. The Central Bank proposes to amend this Guidance Note to address changes to existing closed-ended funds. The draft amended Guidance Note sets out the criteria to be met where the following changes are proposed:

  1. A change to the duration of the fund

    The votes required to approve this change depend on the availability of redemption facilities to investors. Where there are no redemption facilities, votes in favour of the change must represent 75% of the shares in issue and where there are redemption facilities, at least 50% of the votes cast must vote in favour of the change.

  2. Amendments to the investment objectives and policies

    where amendments to the investment objective and/or material amendments to the investment policies are proposed and: no redemption facilities are available to investors, votes in favour of the amendments must represent at least 75% of the shares in issues; or redemption facilities are available to investors, at least 50% of the votes cast must be in favour of the amendments. where non-material amendments to the investment policies are proposed and: no redemption facilities are available to investors, at least 50% of the votes cast must be in favour of the change; or redemption facilities are available to investors, investors should be provided with a reasonable notification period prior to the implementation of the change. 3. Increases to redemption fees, management or investment management fees

    The level of votes required to approved this change depends on the availability of redemption facilities to investors. Where there are no redemption facilities, votes in favour of the increase must...

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