The long awaited Regulations transposing the UCITS V Directive into Irish law have finally been published (the “UCITS Regulations”) with significant implications for UCITS Managers, particularly regarding remuneration requirements and depositaries.
By way of background, UCITS established in Ireland are authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, which transpose the UCITS Directive 2009/65 (“UCITS Directive”) into Irish law.
The UCITS V Directive 2014/91 (“UCITS V”) entered into force in September 2014. It amends the UCITS Directive to provide for:
- new requirements for depositaries dealing with depositary eligibility, duties, delegation, liability and disclosure;
- rules governing remuneration policies and principles applicable to staff members with a material impact on the risk profile of the UCITS Manager or the UCITS that it manages (“material risk takers”) as well as new disclosure requirements; and
- the harmonisation of the minimum administrative sanctions regime across Member States.
UCITS V also provides for several empowerments for the European Commission to adopt delegated acts relating to the new requirements and requires the European Securities and Markets Authority (“ESMA”) to publish guidelines on the persons comprising material risk takers for the purpose of the remuneration rules and the application of the remuneration principles. On 1 February 2016 ESMA published a new UCITS Q&A which sheds welcome light on a number of UCITS V issues regarding associated documentation updates for UCITS funds (see our related briefing here).
The UCITS Regulations amend the existing Irish regulatory framework for UCITS by transposing the UCITS V requirements into Irish law. This timely transposition of UCITS V underscores Ireland’s position as a domicile of choice for UCITS products seeking access to both European and international markets. It follows a number of other legislative developments impacting on UCITS, including, in particular, the adoption of the Central Bank UCITS Regulations, which entered into force on 1 November 2015 (see our related briefing here).
UCITS Managers should now make appropriate arrangements with their depositaries and put in place a UCITS V compliant remuneration policy, if they have not already done so. However they should also be aware that the UCITS V regulatory framework is not yet complete and that further changes may need to be made to these arrangements/policies over the coming months. In particular, the draft Delegated Regulation on the obligations of depositaries is still being considered by the European Parliament. If the Parliament does not object it will be published in the EU’s Official Journal, enter into force on the 20th day following its publication and apply six months after that day. Meanwhile, we expect ESMA’s final guidelines on sound remuneration policies to be published shortly.
The UCITS Regulations will be published on the Department of Finance website over the next couple of days.