With 2017 fast approaching, financial service providers, including investment funds and fund management companies, are faced with a number of upcoming regulatory deadlines in a variety of areas. This briefing sets out the main regulatory deadlines for Irish funds and fund service providers in 2017, listed in alphabetical order.
Alternative Investment Fund Managers Regulations
Each Alternative Investment Fund Manager ("AIFM") must report to the Central Bank either quarterly, half yearly or annually, depending on (a) its level of assets under management, and (b) whether the alternative investment funds ("AIFs") the AIFM manages are leveraged or unleveraged. Each AIFM should also ensure that it obtains any appropriate annual confirmations that it may require from any relevant party to ensure compliance with the terms of the AIFM's programme of activity.
Beneficial Ownership Regulations
Non-listed companies and other legal entities (including ICAVs) should be in the process of establishing a Register of their Beneficial Owners, as required under the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (if they have not already done so). For further information, see our briefing here.
On 19 December 2016 the Central Bank published its Third Consultation and Feedback Statement on CP86. Existing fund management companies (being UCITS management companies, AIFMs, selfmanaged UCITS and internally managed AIFs) must comply with the new rules introduced by CP86 by 1 July 2018. These new rules relate to the streamlining of managerial functions to 6 managerial functions, the organisational effectiveness role, the retrievability of records rule and the effective supervision requirement.
Common Reporting Standard
The Common Reporting Standard ("CRS"), also known as the Standard for Automatic Exchange of Financial Account Information, requires participating jurisdictions to exchange certain information held by financial institutions regarding their non-resident customers. Legislation to implement the CRS in Ireland was introduced in the Finance Act 2014 and came into effect on 31 December 2015. Financial institutions must report CRS information to Revenue by 30 June each year, with the first returns due by 30 June 2017.
Directors' Compliance Statements
Under the Companies Act 2014, all public companies ("PLCs"), including UCITS PLCs must make an annual compliance statement in the directors' report, which forms part of the company's annual financial statements. In their compliance statement, the directors must acknowledge their responsibility for securing the company's compliance with specified provisions of the Companies Act, Irish tax legislation and additional market abuse requirements in respect of listed companies. They must also confirm certain other matters. This requirement does not apply to non-UCITS investment fund PLCs authorised under the Companies Act. For further information, see our briefing here.
Regulation (EU) 648/2012 on over the counter (OTC) derivatives, central counterparties and trade repositories imposes a number of obligations on EU derivatives market participants, including funds and fund managers. These include a) an obligation to clear certain derivatives via a central counterparty ("CCP"), and b) an obligation to impose margin requirements on all OTC derivative contracts that are not cleared by a CCP and which are entered into at a time when both parties are past the EMIR phase-in date applicable to them. The clearing obligation commenced on 21 January 2016 and is being gradually phased in over the course of the next few years. Fund and fund managers can find further information regarding these phase in dates in our recent briefing here.
The Commission Delegated Regulation setting out regulatory technical standards for margin requirements for uncleared OTC derivatives was published on 15 December 2016 in the EU's Official Journal. Consequently, all derivatives users will have to start exchanging variation margin from 1 March 2017. The requirement to exchange initial margin will then be phased in between 1 September 2017 and 1 September 2020. For further information see our briefing here.
Fitness & Probity Standards
Each regulated financial services provider ("FSP") must complete an Annual PreApproval Controlled Function ("PCF") Confirmation Return to the Central Bank via the Online Reporting System. In the Return, the FSP must list all of its active PCF holders and confirm that each such holder is compliant with the Fitness and Probity Standards and that they continue to agree to abide by those standards.
Under the Irish Funds Corporate Governance Code for Collective Investment Schemes and Management Companies ("Code"), the Board must carry out an informal review of its overall performance and that of individual directors at least annually. It must also review compliance with its procedures for dealing with conflicts of interest and the terms of reference of any board committees at least on an annual basis.
The Code also requires a Board to carry out a three year formal documented review and any Board that has not yet done so should complete this review as soon as possible, presuming this three year period has expired.
Key Investor Information Documents (KIIDs)
Commission Regulation 583/2010 requires UCITS to make an updated KIID available to investors within 35 business days of 31 December each year. Any UCITS that has not already updated its KIID to take into account amendments required pursuant to UCITS V should do so for its February update. For further information see our related briefings here and here.
Money Laundering/Terroist Financing
Funds and fund service providers will already be aware of their requirements under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 and 2013, including the need to ensure that staff receives appropriate training. The Fourth Money Laundering Directive 2015/849 must be transposed into Irish law by June 2017 and funds and fund service providers will need to ensure that they comply with the transposing legislation once it enters into force. For further information see our briefing here.
UCITS V requires that the UCITS prospectus include certain details regarding the remuneration policy and that it makes certain disclosures in relation to the depositary. Any prospectus that has not been updated to comply with the UCITS V requirements will need to be updated by 18 March 2017 at the latest.
Both UCITS Managers and AIFMs must put in place a remuneration policy and apply specific rules to any staff member whose professional activity has a material impact on the UCITS/AIF it manages. While the remuneration requirements applicable to UCITS have been in place since 18 March 2016, these have since been supplemented by ESMA's Guidelines on Sound Remuneration Policies under the UCITS Directive, which were published on 14 October 2016. These Guidelines apply from 1 January 2017 and UCITS Managers should ensure that they comply with these Guidelines. AIFMs should also review their remuneration policies and practices in light of ESMA's revised Guidelines on Sound Remuneration Policies under AIFMD, which were also published on 14 October 2016.
Securities Financing Transactions (SFTs)
Regulation 2015/2365 on transparency of securities financing transactions and of reuse, requires UCITS Managers and AIFMs to disclose specified information to investors about their use of SFTs and total return swaps. From 13 January 2017 UCITS Managers must disclose their use of SFTs and total return swaps in their half-yearly and annual reports, while AIFMs must disclose this information in their annual reports. ESMA has recently confirmed that the information should be included in the next annual or half-yearly report to be published after 13 January 2017, which may relate to a reporting period beginning before that date.
Investment funds must comply with a number of tax reporting requirements under the Return of Values (Investment Undertakings) Regulations 2013 and should contact their administrators to ensure that their funds are fully compliant with these Regulations for the year ending 31 December 2016.
A UCITS Management Company must submit its annual audited accounts to the Central Bank within four months of the relevant report period end as well as its minimum capital requirement report. It must also submit half yearly accounts. Like AIFMs, UCITS' ManCos must ensure that they get all annual confirmations relevant for compliance with their business plans.