Funds Quarterly Legal And Regulatory Update: 1 October 2012 To 31 December 2012 - UCITS, Non-UCITS & Hedge Funds

Author:Ms Mary Canning, Breeda Cunningham, Michele Barker and Matthew Ryan
Profession:Dillon Eustace
 
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(I) UCITS SELF-MANAGED INVESTMENT COMPANIES

Background

On 30 November, 2012 the Central Bank of Ireland (the "Central Bank") announced that it will begin accepting submissions of the revised Directive 2009/65/EC ("UCITS IV") compliant business plans for self-managed investment companies ("SMICs") in three separate tranches in 2013.

The three tranches are: 31 January 2013, 31 March 2013 and 31 May 2013. The Central Bank has asked the law firms acting for the SMICs to split their SMIC client list over the three tranches so as to avoid a situation whereby the vast majority of the SMIC applications are not left until 31 May 2013. All new SMIC applications from 1 January 2013 will be required to comply in full with the UCITS IV requirements.

UCITS IV Requirements for SMICs

In terms of what SMICs can be expected to have to comply with under UCITS IV and document accordingly in their business plans, the Central Bank has previously clarified in a letter to the industry on 10 August, 2012 that both UCITS management companies and SMICs should be subject to the same basic regime under UCITS IV bearing in mind the 'nature, scale and complexity' of the SMIC.

At a high level, we can take from this that while all of the requirements of UCITS IV should apply to SMICs, on the basis that most are less complex than UCITS management companies, the implementation of the full requirements should be considered in light of the 'nature, scale and complexity' of the SMICs and any decision not to implement any of the requirements must be capable of justification on that basis. In addition, it is worth noting that the Central Bank has advised that the requirement to have a permanent compliance function and a permanent internal audit function will not apply to SMICs.

The Central Bank has confirmed that a revised version of the UCITS management company application form (which also applies to SMIC authorisations) containing these updated requirements will be issued by 1 January, 2013.

Filing Process

The submitted business plans will be reviewed by the Central Bank on a spot check basis. While the Central Bank will not issue individual confirmation of receipt for submitted business plans, a list will be issued to the law firm at the end of each tranche noting the revised business plans that have been received. Provided no correspondence has been received by the SMIC (for example with comments arising as a result of a spot check) the Central Bank has stated that the SMIC can assume that their business plans and ancillary documents are in order.

(II) IFIA PUBLISH RESPONSE TO UCITS VI PROPOSALS

On 26 July, 2012 the European Commission (the "Commission") published a consultation paper entitled "Product Rules, Liquidity Management, Depositary, Money Market Funds, Long Term Investments" (the "Consultation Paper"). The Consultation Paper focuses on eight topics under consideration by the Commission and which may form the basis of a UCITS...

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