We set out below a reminder of certain upcoming (and ongoing) deadlines which may be relevant for financial service providers including investment funds and fund management companies:
The Irish Fund Industry Association’s (“IFIA”) Corporate Governance Code for Collective Investment Schemes and Management Companies (the “Code”) introduced certain requirements which should be reviewed and monitored on an annual basis to ensure ongoing compliance with the Code. The Code became effective on 1 January 2012 with a twelve month transitional period. The requirements stipulated in the Code include an informal review of the overall performance of the Board, and that of the individual directors, to be conducted on an annual basis. The Code further stipulates that a formal documented review should take place once every three years. Accordingly, it will be necessary for Boards to undertake an informal review to ensure ongoing compliance with the Code, up to 31 December 2014 (in respect of this year). A formal documented review will be required to be completed after 31 December 2015.
In July 2014 the IFIA published a Corporate Governance Code for Fund Service Providers (the “Service Providers Code”) to apply to administrators, custodians and depositaries authorised and regulated by the Central Bank of Ireland (the “Central Bank”). Compliance with the Service Providers Code is voluntary however its adoption by all fund service providers is recommended by the IFIA and furthermore, is strongly encouraged by the Central Bank, as stipulated in the foreword to the Service Providers Code. A transitional period of 12 months for the adoption of the Service Providers Code is proposed by the IFIA, with disclosure as to compliance/level of compliance to be provided for years commencing on or after 1 January 2015.
Fitness & Probity Standards
The Central Bank requires an Annual Pre- Approval Controlled Function (“PCF”) Confirmation Return to be completed. This annual confirmation must be completed by each regulated financial service provider in respect of all PCF holders within the firm confirming that they are compliant with the Fitness and Probity Standards. The Annual PCF Confirmation Return must be submitted through the Central Bank’s online reporting system (“ONR”). The filing deadline for submitting the Confirmation Return has not, as of the date of this briefing note been finalised by the Central Bank, however, it is expected to be in Quarter 1 of 2015.
The Central Bank has recently introduced six new PCFs which will require regulated financial service providers to update their procedures and records. The new PCFs are as follows:
The office of Chief Operating Officer (PCF-42) for all regulated financial service providers
Head of Claims (PCF-43) for Insurance Undertakings
Signing Actuary (PCF-44) for Non-Life Insurance Undertakings and Reinsurance Undertakings
Head of Client Asset Oversight (PCF-45) for Investment Firms
Head of Investor Money Oversight (PCF- 46) for Fund Service Providers
Head of Credit (PCF-47) for Retail Credit Firms
Prior Central Bank approval will be required for appointments to any of these newly prescribed PCFs on or after 31 December 2014.
Collective investment schemes and management companies should ensure that they have complied with AML requirements on an annual basis - particular account should be taken of the requirement to offer training to Boards of Directors on the law relating to AML and counter terrorist financing.
Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”) came into force on 16 August 2012 and has direct effect through the EEA, although its provisions take effect on a phased basis. Many of the substantive EMIR obligations applicable to non-cleared OTC derivative contracts are now in effect. Reporting obligations have been taking effect on a phased basis since 12 February 2014, by reference to the information required to be reported and the contracts in respect of which reporting was required. Our recent briefing note provides an update on clearing obligations under EMIR and is available here.
The Irish EMIR Regulations (the “EMIR Regulations”) were introduced on 8 October 2014. The EMIR Regulations designate the Central Bank as Ireland’s national competent authority for the purposes of EMIR. Under the EMIR Regulations, the Central Bank has been afforded all the powers necessary for the performance of its functions and duties under EMIR and the EMIR Regulations including the power to request the submission of regulatory returns and reviewer’s reports. Further information on the EMIR Regulations is provided in our briefing note dated 15 October 2014, available here.
Ireland has entered into a Model 1 IGA (the “IGA”) with the United States in relation to the Foreign Account Tax Compliance Act (“FATCA”) and has enacted the Financial Accounts Reporting (United States of America) Regulations 2014 (the “2014 Regulations”) in order to implement the provisions of the IGA. The IGA provides for the automatic reporting and exchange of information on an annual basis in relation to accounts held in Irish ‘Reporting Financial Institutions’ (as defined in the 2014 Regulations) by U.S. persons, and the reciprocal exchange of information regarding U.S. financial accounts held by Irish residents. As a result of the IGA, Irish Reporting Financial Institutions will not be subject to the 30% withholding tax on U.S. source income provided they comply with the requirements of the 2014 Regulations. The Irish Revenue Commissioners published updated Guidance Notes on the implementation of FATCA in Ireland on 1 October 2014 (“Guidance Notes”). The updated Guidance Notes replace the previous draft Guidance Notes issued in January 2014, and reflect a number of suggestions and clarifications requested by various industry groups. The Guidance.
Notes include a useful timetable demonstrating the phased approach to reporting over the next three years. They also provide details on the submission of reports to the Revenue Commissioners via Revenue’s Online Service (“ROS”). The Guidance Notes are available here. Irish Reporting Financial Institutions are also required to register with the IRS to obtain a ‘Global Intermediary Identification Number’ before 31 December 2014.
Return of Values (Investment Undertakings) Regulations 2013
The Return of Values (Investment Undertakings) Regulations 2013 (the “2013 Regulations”) came into effect in July 2013. The 2013 Regulations contain a number of tax reporting requirements which must be complied with by investment funds, particularly in respect of an update to be made to the fund’s application form to obtain a tax reference number and supporting documentation for Irish resident entities who make a new investment on or after 1 January 2014. Clients should contact their administrators to ensure that they are fully compliant with the 2013 Regulations.
The Markets in Financial Instruments Directive (2014/65/EU) (“MiFID II”) came into force on 2 July 2014. MiFID II significantly reforms the rules governing the trading of many types of financial instruments. MiFID II must be transposed into national law by 3 July 2016 and will apply from 3 January 2017. For more information on MiFID II, please see our briefing note published in July 2014, available here.
UCITS Business Plan
UCITS management companies and self- managed investment companies should, where relevant in accordance with the provisions of the relevant business plan, obtain annual confirmations from service providers and other relevant persons regarding compliance with the terms of the business plan.
All UCITS funds should ensure that an updated key investor information document (“KIID”) be made available to investors and a copy filed with the Central Bank by 19 February 2015. The European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 provide that a UCITS is required to keep the essential elements of its KIID up to date. Further, Commission Regulation (EU) No 583/2010 provides that a KIID, with duly revised presentation of past performance of the UCITS, must be made available no later than 35 business days after 31 December each year. Accordingly, all UCITS should ensure that a KIID with revised past performance information be made available to investors, and a copy filed with the Central Bank, within this timeframe (which is, by 19 February 2015).
The UCITS V Directive (“UCITS V”) was published on 28 August 2014 and came into effect on 17 September 2014. UCITS V amends Directive 2009/65/EC on undertakings for collective investment in transferable securities (“UCITS”). UCITS V will reform the existing UCITS regulatory framework in three key areas: (i) the role of the depositary; (ii) administrative sanctions; and (iii) remuneration. In particular, UCITS V addresses issues surrounding the depositary function. UCITS V will also align the legislation with certain aspects of the Alternative Investment Fund Managers Directive (“AIFMD”). Member States must transpose UCITS V into national law by 18 March 2016.
On 28 November 2014, ESMA published its technical advice to the European Commission on two implementing measures which are required by the UCITS V. ESMA’s advice concerns (i) the insolvency protection of UCITS assets when safekeeping is delegated (with relevance for the custody delegate and the depositary) and (ii) the independence requirement for depositaries.
Under Regulation 25 of the European Union (Alternative Investment Fund Managers) Regulations 2013 (the “Irish Regulations”), alternative investment fund managers (“AIFMs”) are required to report to the Central Bank either quarterly, half-yearly or annually, depending on the AIFM’s level of assets under management and whether the alternative investment funds (“AIFs”) the AIFM manages are leveraged or unleveraged. The Central Bank published a table in March 2014 detailing the relevant AIFMD reporting periods, together with the submission dates in respect of such reporting periods, applicable to AIFMs authorised under the Irish Regulations.
Click here to view the Central Bank’s AIFMD reporting matrix. The reports should be uploaded to the Central Bank’s ONR portal in XML format. Further details are available in our briefing dated 28 March 2014, available here.
In addition, the Board of an AIFM and each relevant designated person should ensure that where an AIFM delegates any of its activities, it obtains annual confirmation from the relevant parties regarding compliance with the terms of the AIFM’s programme of activity, in accordance with the provisions of the Central Bank’s AIF Rulebook.