The decision of the Irish Commercial Court issued on 10 January 2011 regarding the obligation for a depository to account directly to investors in a UCITS is being appealed to the Irish Supreme Court. On 10 January 2011, the Irish Commercial Court issued a decision regarding the obligation for a depository to account directly to investors in a UCITS in respect of its accounting and reporting obligations.

The judgment was the first relating to a substantive issue in the Madoff related proceedings instituted in the Irish High Court as a result of the Madoff fraud and is one of the first judgements of an Irish court relating to Irish domiciled investment funds.

The court noted that the UCITS Regulations impose an obligation on a trustee (which is, how a “depository” is described in the relevant Directives) to furnish a report to the investment company in time for inclusion in its report and that, if the investment company’s report is not made available to investors, it was noted that the trustee could still meet its obligation by making the report directly available.

The court declined to impose any additional duties on the trustee.

The Court also found that if a report is not circulated by an investment company, there is a resultant obligation on the depository to make the report directly available to relevant investors. In that latter respect, the court also indicated that a wide definition of investors should be adopted and this should not be strictly confirmed to those names appearing on the register of unitholders.

The ruling, which is now under appeal, gave useful guidance in respect of the very limited obligations of a depositary to provide information to investors. but it remains to be seen if this will be upheld in the appeal process. Furthermore other relevant issues, such as the extent of a fiduciary relationship, if any, between a depository and another party remains an issue for another day.