The Central Bank of Ireland (the Central Bank) permits Irish authorised investment funds to acquire Chinese shares via the Shanghai-Hong Kong Stock Connect programme. The Central Bank has set the following conditions:

  • The depository must to satisfy itself that the manner in which the shares are to be held meet with the requirements of the UCITS/AIFM Regulations and any conditions imposed by the Central Bank.
  • The depository or an entity within its custodial network (i.e. a sub-custodian) must ensure that it retains control over the shares at all times.
  • The depository (or its sub-custodian) must be a participant in the Hong Kong Securities Clearing Company Ltd (HKSCC) (arrangements where the broker of the investment fund is a participant of HKSCC but not an entity within the depositary's custodial network, will not satisfy the provisions of the relevant legislation).
  • The depository or a member of its custodial network can be a General Clearing Participant, Direct Clearing Participant or Custodian Participant as appropriately determined by the depositary in line with its legal obligations as depositary.
  • The depository must keep under review the Stock Connect infrastructure arrangements to ensure that its legal obligations can be met.

This clarification is set out in an updated UCITS Q&A (6th edition dated 15 July 2015) at Q&A 1015, pg. 6 and an updated AIFMD Q&A(14th edition dated 15 July 2015) at Q&A 1094, pg. 7.