On 12 August 2014, the European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2014 (the “Amendment Regulations”) were published in ‘Iris Oifigiúil’. The Amendment Regulations introduce a number of changes which will be of interest to alternative investment fund managers, UCITS management companies and Irish investment funds.

Investor Compensation Act 1998 (“ICA”)

The Amendment Regulations make a number of amendments to the ICA. The effect of these amendments is to confirm that the Investor Compensation Company Limited may impose a levy on Irish alternative investment fund managers (“AIFMs”) and UCITS management companies who offer additional non-  core services of individual portfolio management, investment advice, safekeeping and administration of collective investment schemes and, in the case of AIFMs, receipt and transmission of orders.

Credit Ratings Agencies Directive (“CRAD”)

The CRAD seeks to restrict the reliance by AIFMs and UCITS management companies on ratings provided by credit ratings agencies. The Amendment Regulations amend the European Union (Alternative Investment Fund Managers) Regulations 2013 (“AIFMR”) and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS Regulations”)   to prevent fund managers ‘solely or mechanistically’ relying on ratings provided by a credit ratings agency to assess the creditworthiness of the assets of a fund. This requirement should be reflected in a fund manager’s risk management system. Taking into account the nature, scale and complexity of the activities of the relevant fund, the Central Bank of Ireland (the “Central Bank”) will assess the use of references to credit ratings in the fund's investment policy. Where appropriate, the Central Bank will encourage the  fund manager to reduce the impact of such references. The CRAD amendments must be transposed into Irish law by 15 December 2014 and the effective date of these amendments coincides with the transposition  deadline.

Marketing Requirements for Non–EU AIFMs

The Amendment Regulations clarify that Non-EU AIFMs must apply to the Central Bank for approval before marketing units  or shares to retail investors in Ireland. Such marketing may only commence once prior approval from the Central Bank has been received by the Non-EU AIFM.

Client Asset Requirements

The Amendment Regulations clarify  that AIFMs offering individual portfolio management services must comply with MiFID client asset requirements and that AIFMs may maintain client asset accounts for processing "subscriptions and salesperson moneys" provided these client accounts comply with MiFID client asset requirements.

Amendments to AIFMR

The Amendment Regulations also seek to correct a number of errors contained in AIFMR.

The Amendment Regulations are available here.