Article by Kevin O'Connor
UCITS IV legislation is signed into law
The European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ("UCITS Regulations") were signed into law on 1 July 2011. This statutory instrument consolidates all previous UCITS legislation and transposes the requirements of Directive 2009/65/EC, the "UCITS IV Directive".
Central Bank of Ireland issues revised UCITS Notices, NU Series of Notices and Guidance Notes
On 1 July 2011, the Central Bank of Ireland issued revised UCITS Notices, NU Series of Notices and Guidance Notes.
We set out below some of the key new developments.
Outsourcing rules introduced
The Central Bank has issued outsourcing rules to replace the minimum activities regime as Annex II to both the UCITS Notices & NU Series of Notices. The minimum activities regime applied to Irish funds (both UCITS and non-UCITS) from 1995 and required key fund administration functions to be carried out by the fund's administrator in Ireland. However, the introduction of EU cross-jurisdictional servicing capability (through the management company passport under UCITS IV) has led the Central Bank to reconsider this position.
The outsourcing rules will have a significant impact on the Irish fund administration industry, particularly given that they apply to the administration of non-Irish funds as well as Irish funds.
New Guidance Note 2/11 ("GN 2/11")
GN 2/11 entitled "Professional collective investment schemes: Appointment of prime brokers ("PBs") and related issues" has been introduced for professional investor funds ("PIF") and qualifying investor funds ("QIF") and replaces prior draft guidance. GN 2/11 now specifies that the minimum credit rating for a PB is A-1 or equivalent (previously this was A1/P1). The new guidance also specifies that the PB may return cash in lieu of assets in certain circumstances such as the default of the fund or the PB's inability to return assets provided that the PB agrees to indemnify the fund against any costs, losses etc. incurred as a result of such an election (other than in the exercise by the PB of the right of set-off upon default by the fund). For a PIF any cash...