The Central Bank of Ireland has announced that it is changing its review process for certain UCITS and Retail AIF authorisations/approvals and post-authorisation amendments, with effect from 9 October 2018. The Central Bank is also introducing an application form for UCITS mergers. The changes are designed to ensure that the review process is as robust and efficient as possible and do not introduce any new requirements for UCITS or Retail AIFs.
Subject to receipt of the relevant Central Bank application form and relevant written confirmation, the Central Bank will no longer carry out a prior review of:
- the establishment of new Share Classes;
- Depositary Agreements, including amendments to the Depositary Agreement subsequent to authorisation of a fund;
- Trust Deeds, Deeds of Constitution;
- Investment Limited Partnership Agreements for Retail AIFs; and
- the use of an Index by a UCITS.
The written confirmation essentially confirms that the relevant share class, agreement, deed or Index, as the case may be, is in compliance with all regulatory requirements.
Quality Assurance Checks
The Central Bank will carry out quality assurance checks in relation to the above documentation submitted to it in accordance with the revised authorisation approval process.
It will also carry out quality assurance checks in relation to financial indices, which will require the management company or board of the UCITS, as applicable, to make available to the Central Bank, immediately upon request, material demonstrating that the Index is an eligible financial index for a UCITS. Note that the Central Bank published updated guidance on the use of financial indices by UCITS on 8 October 2018 (here), which contains more detailed information on quality assessments of financial indices.
The Central Bank will make available on its website shortly the application form for UCITS mergers, which should be submitted with a UCITS merger application. The purpose of the form is to streamline UCITS merger applications and to eliminate comments that frequently arise during the course of a merger review.
We expect that fund providers will welcome the Central Bank’s move away from prior reviews, particularly in the case of UCITS compliant indices on, for example, ineligible UCITS assets (eg commodity indices). Whilst fund providers will, as usual, be required to carry out the requisite due diligence on such indices to confirm UCITS eligibility, they will no longer have to factor in the Central Bank’s pre-investment approval process to the timeline for UCITS to gain exposure to such indices.