The Central Bank has issued CP 77, concerning the proposed issue of a UCITS Rulebook to replace the current UCITS Notices and Guidance Notes. The format of the proposed UCITS Rulebook follows the current Central Bank AIF Rulebook and will similarly be accompanied by guidance on the Central Bank website. The draft UCITS Rulebook which is included in CP 77 contains chapters on Product Requirements, Management Company Requirements and Depositary Requirements. Proposed changes to the current regime include;
- abolition of promoter approval requirement; the Central Bank proposes to eliminate the promoter requirement for UCITS and to instead rely on the regulatory regime for UCITS management companies and on explicitly detailing the responsibilities of directors when a UCITS gets into difficulties. This mirrors the approach adopted under the AIF regime. This should streamline the process of UCITS authorisation for new entities. The proposal will also be welcomed by existing UCITS promoters who have been required to maintain net shareholder funds of €635,000 to satisfy Central Bank Promoter requirements.
- new approach to regulated markets. UCITS are permitted to invest in transferable securities and exchange traded derivatives which are listed or traded on stock exchanges or regulated markets. The Central Bank currently sets out its requirements for regulated markets in Guidance Note 1/96. There is some overlap between Guidance Note 1/96 and the Eligible Assets Directive and so the Central Bank proposes to withdraw the Guidance Note. As a result, the Central Bank will no longer publish a list of permitted markets for UCITS or review submissions on proposed regulated markets. It will be for the UCITS to determine whether a particular market meets the requirements. Again this should streamline matters for UCITS.
- half yearly management accounts for UCITS management companies and depositaries. The Central Bank is proposing to supplement current financial reporting requirements. Currently UCITS management companies and depositaries must submit half-yearly management accounts covering the first six months of the financial year as well as audited annual accounts. It is proposed to require the additional submission of half-yearly management accounts covering the second six months of the financial year, (to be filed within 2 months of year-end). This will, of course, add to the reporting burden.
The Central Bank has also invited submissions on the proposed UCITS Rulebook and on any aspects of the current regime which are within its discretion and which may no longer be necessary or appropriate. The consultation will close on 28 March 2014.