The UCITS IV Directive is required to be implemented in Ireland by 1 July 2011. The Central Bank has issued guidance in relation to the timelines with which existing UCITS must comply and those which will apply to new UCITS.

Disclosure of Policies and Procedures in Business Plans

UCITS IV introduces enhanced organisational and conduct of business requirements for UCITS management companies and self managed investment companies (“SMICs”).

The following is a summary of the timelines and transitional arrangements in place for both UCITS management companies and SMICs.

UCITS management companies

UCITS management companies must comply with the new UCITS IV requirements from 1 July 2011. In order to ensure that all necessary arrangements are in place on time, the Central Bank will require all existing UCITS management companies to submit revised business plans for review. Originally, the deadline for submission of these business plans was 29 April 2011, however following representations from the industry, the Central Bank agreed to consider two submission dates: 29 April and 31 May.

In relation to how this would work in practice, it was suggested that each firm should discuss with their clients whose plans should be sent on which date, taking into account the complexity of the client’s business and the volume of amendments being made and, if possible, working toward a 50/50 submission volume.

The CB also agreed that they would provide comments as quickly as possible so as to allow for amendment and re-submission.

UCITS Self-managed investment companies (“SMICs”)

SMICs seeking authorisation from 1 July 2011 must comply with all UCITS IV requirements.

SMICs authorised before 1 July 2011 must comply with Level 2 measures relating to Article 14 (rules of conduct) and Article 51 (risk measurement) of the UCITS IV Directive from 1 July 2011. Accordingly, they will be required to confirm that their business plans have been amended to ensure compliance with draft Notices UCITS 10.6 and UCITS 16.2 before 1 July 2011. These revised business plans do not need to be submitted to the Central Bank before 1 July 2011. The Central Bank may request these business plans at a later stage for review and approval. SMICs must comply with all UCITS IV requirements (akin to full MiFID compliance) by 1 July 2013.

Key Investor Information Document (“KIID”)

UCITS IV introduces the Key Investor Information Document (“KIID”) as the replacement for the simplified prospectus.

The following is a summary of the timelines and transitional arrangements in place for the introduction of the KIID:

  • UCITS seeking authorisation from 1 July 2011 must draw up a KIID.
  • In accordance with the Irish UCITS Regulations the Central Bank will allow UCITS authorised prior to 1 July 2011 to continue to publish a simplified prospectus until 30 June 2012. Draft Policy Note 1/2011 explains and clarifies the various provisions which apply to UCITS (including sub-funds of umbrella UCITS) which avail of this transitional arrangement.

Risk Management Process (“RMP”)

RMPs currently in place will need to be updated before 1 July 2011 to reflect the revised requirements concerning RMPs and FDIs as set out in the draft UCITS Notices (10.6) and Guidance Notes (3/03).

UCITS Notice 10.6 has been updated to reflect requirements set out in CESR’s Guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS which were published in July 2010.

A revised RMP must be submitted to the Central Bank if a UCITS proposes to amend its investment policy in relation to its usage of FDIs. In all other cases, revised RMPs do not need to be submitted to the Central Bank before 1 July 2011.

The Central Bank may request these RMPs at a later stage for review and approval.

UCITS and Non-UCITS Money Market Funds

UCITS and non-UCITS money market funds must comply by 1 July 2011 with the European Securities and Markets Authority’s (“ESMA”) Guidelines on a common definition of European money market funds.

The majority of Irish authorised money market funds already comply with these guidelines in respect of investment policies, the Central Bank will require an amendment to the prospectus of each money market fund, to indicate whether it is a “short-term money market fund” or a “money market fund” to be made before 1 July 2011.

Draft prospectuses should be submitted to the Central Bank for review before Friday, 29 April 2011.