In response to industry submissions, the Central Bank has eased requirements for the QIF regime (the regime governing funds which are only marketed to sophisticated investors who fulfil the Qualifying Investor criteria set out below as well as minimum subscription requirements). The Central Bank have also introduced other refinements in revised UCITS and non UCITS Notices and Guidance Notes. The changes take immediate effect so that new funds can avail of the revised regime, while existing funds who wish to avail of the revised regime are likely to require amendment of their documentation in order to reflect the new requirements.

Qualifying Investor Fund Changes

  • the minimum subscription amount is reduced from €250,000 to €100,000 (this is a significant development, and is likely to be particularly helpful to non -Irish funds seeking to redomicile as QIFs into Ireland);
  • the definition of a Qualifying Investor is now more closely aligned with MiFID. A Qualifying Investor may be:
  1. an investor who is a professional client within the meaning of Annex II of Directive 2004/39/EC (Markets in Financial Instruments Directive); or
  2. an investor who receives an appraisal from an EU credit institution, a MiFID firm or a UCITS management company that the investor has the appropriate expertise, experience and knowledge to adequately understand the investment in the fund; or
  3. an investor who certifies that they are an informed investor by providing the following:
  • Confirmation (in writing) that the investor has such knowledge of and experience in financial and business matters as would enable the investor to properly evaluate the merits and risks of the prospective investment; or
  • Confirmation (in writing) that the investor's business involves, whether for its own account or the account of others, the management, acquisition or disposal of property of the same kind as the property of the fund.

(again, this development is helpful and is also likely to be of interest to non -Irish funds seeking to redomicile as QIFs into Ireland);

Permitted Markets for Retail UCITS and non UCITS Funds

The requirement to include details of Permitted Markets in documentation is satisfied by listing Permitted Markets in the Prospectus and including a cross reference in the constitutional documents (this will mean that funds will not require a shareholders' resolution in order to update their list of markets).

Fund Promoters

The requirement on promoters to maintain shareholder funds is clarified as applying only for so long as the promoter acts as promoter to an Irish fund. In addition the procedures involved in the approval process have been refined.

Valuation of Fund Assets

The minimum frequency at which dealing days must be provided for UCITS is clarified as twice per month at regular intervals. Frequency of valuation must be consistent with dealing arrangements. This clarification is welcome as removing any doubt on the topic.

Facilities Agents for UCITS and non UCITS funds marketing into Ireland

The requirement for a facilities agent for non Irish UCITS and non UCITS funds marketing into Ireland is clarified in that such facilities agents are not expected to receive and transmit redemption orders or redemption proceeds.

The revised UCITS and non UCITS Notices and Guidance Notes (which are available at www.centralbank.ie ) have also been updated to reflect changes which have previously been covered in The Front Page.

AIFM Directive

The AIFM Directive has been progressing slowly with the Belgian Presidency of the Council of the European Union publishing a further, compromise proposal draft AIFMD dated 15 October 2010. The Council published a press release on 19 October following a meeting of the Economic and Financial Affairs Council (ECOFIN), stating that there is a large degree of convergence between the Council and the Parliament and that the Council hopes to be able to conclude the negotiations in the near future. Michel Barnier, European Commissioner for Internal Markets and Services, issued a statement, also on 19 October and following the ECOFIN meeting, indicating that negotiations on the text of the Directive have progressed and that the Directive will contain provisions about a passport for third-country alternative investment funds and managers. We understand that the EU Parliament's plenary debate on the proposed Directive is now due to take place on 10 November 2010.