Some Approaching Compliance Deadlines

  • 22 November 2019. Central Register of Beneficial Ownership of Companies - The deadline for filing beneficial ownership information with the RBO for companies incorporated before 22 June 2019 is 22 November 2019.
  • 9 December 2019. CBI consultation paper CP130 on the treatment, correction and redress of errors in investment funds - consultation closes on 9 December 2019.
  • 31 December 2019. Corporate Governance – completion of reviews of board and individual director performance. Under the Irish Funds Corporate Governance Code, the overall Board's performance and that of individual members must be reviewed annually with a formal documented review and a review of the chairperson taking place at least once every three years.
  • 31 December 2019. Anti-Money Laundering/Counter Terrorist Financing - collective investment schemes and management companies should be aware of the regulatory expectation to offer training to their boards on the law relating to AML/CTF on an annual basis (and at such other times as may be appropriate). Boards should also ensure that they have considered whether to adopt a board level AML/CTF policy. Where the board has adopted such a policy, it should ensure that it receives appropriate confirmations from relevant persons and that it is subject to periodic review.
  • 31 December 2019. Business Plan/Programme of Activity - UCITS ManCos, self-managed UCITS, AIFMs and internally managed AIFs, where they have not already done so, may need to complete their annual performance review on service providers. They should also obtain annual confirmations from service providers and relevant persons in accordance with their business plan/programme of activity, complete onsite visits with service providers, ensure adoption of valuation policy and make disclosure in respect of connected party transactions.
  • 31 December 2019. Fitness & Probity - RFSPs, where they have not already done so, will need to obtain their annual certification from persons performing PCFs (e.g. directors) and CFs (e.g. money laundering reporting officer and company secretary) that they are aware of the Fitness and Probity Standards, agree to continue to abide by those Standards and will notify the board if they no longer comply. This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards.
  • 31 January/ 28 February 2020. Fitness & Probity - RFSPs will need to submit their annual PCF Confirmation Return to CBI. The submission due date for the annual PCF Confirmation Return (for the year ending 31/12/19) for UCITS ManCos and for AIFMs is 31 January 2020. The submission due date for investment funds will likely be 28 February 2020. The current annual PCF Confirmation Return and associated reporting date and submission deadline for each entity will be detailed on the ONR system.

The Annual PCF Confirmation Return is made via the ONR system and involves a mandatory declaration to confirm that the CEO or equivalent, has confirmed in writing that:

  • the RFSP has brought the Standards to the attention of all PCFs
  • the RFSP is satisfied on reasonable grounds that all PCFs comply with the Standards
  • the written agreement of all PCFs to abide by the Standards has been obtained
  • all necessary due diligence has occurred
  • the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the CBI of any action taken without delay
  • 31 January 2020. UCITS ManCo and AIFM ownership confirmation - UCITS ManCos and AIFMs need to file the annual ownership confirmation by 31 January 2020.
  • 19 February 2020. UCITS KIID - A UCITS must update its KIID on an annual basis for each sub-fund / standalone fund within 35 business days of the end of each calendar year. The annual update of the KIID must be filed no later than 19 February 2020 (where required). Any update to the KIID filed with the CBI must be translated (as necessary) and filed in any other host jurisdictions where the UCITS is registered to market its shares and uploaded on the UCITS' website. AIFs which have issued a PRIIPs KID must review KIDs regularly, when there is a significant change, and at least annually. The KID must be revised as necessary. Unlike the UCITS KIID, there is no annual refresh deadline. UCITS are currently exempt from the obligation to produce a PRIIPs KID until 31 December 2021.
  • 28 February 2020. Fund Profile Return - The annual Central Bank Fund Profile Return is required for all Irish authorised sub-funds. It is to be prepared for the period up to 31 December 2019, with a submission deadline (via the ONR) of 28 February 2020. The CBI does not anticipate that the fund profile will change from year to year, as changes would most probably reflect changes within the fund's offering documents. Therefore, year-to-year updates to the fund profile are expected to be minimal and reflect significant changes. The CBI issued guidance and a template.
  • 31 March 2020. Thematic review of closet indexing - CBI requires documentation updates triggered by its thematic review of closet indexing to be completed by 31 March 2020.
  • 31 March 2020. MMFR quarterly reporting - MMF managers must send their first quarterly reports to national regulators by the end of Q1 2020 (as clarified by ESMA).

The above list does not cover tax, FATCA or CRS filings, ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include any annual FDI Return) and semi-annual accounts or other similar returns which deadlines vary to reflect the particular entity's year end. By way of example, the Companies (Accounting) Act 2017 obliges UCITS investment companies and AIF investment companies to file annual accounts with the CRO within eleven months of their financial year end.

CBI Christmas and year-end deadlines for:

  • fund and sub-fund applications that have pre-Christmas or pre year-end approval deadlines including self-managed/internally managed investment company/ICAV applications
  • approval of post-authorisation amendments that have pre-Christmas or pre year-end approval or noting deadlines

Go to publication for more detail.

Central Bank speech on INEDs – The spirit of challenge and responsibility by CBI Director of Asset Management and Investment Banking, Michael Hodson,

On 7 October 2019, CBI Director of Asset Management and Investment Banking, Michael Hodson delivered a speech on INEDs – The spirit of challenge and responsibility

Role of INEDs

Michael Hodson noted that independent non-executive directors (INEDs) can bring objectivity to discussions and offer fresh ideas while also availing of their wide breadth of experience and knowledge to ensure a firm is effectively governed and operating a sustainable business model with a client-centric focus.

Three key elements that INEDs must demonstrate:

  • Challenge: INEDs must hold the board and senior management to account. They must challenge and ask the hard questions concerning:
    • the quality of information or reporting to the board
    • the strategic direction of the firm
    • the culture that prevails
    • the emerging risks to the business model and so on
  • Independence: INEDs must maintain their independence and avoid straying into executive territory. In that context Mr Hodson queried whether someone who has sat on a board for a considerable length of time still be considered independent.
  • Diversity: as previously referenced in CBI speeches, diversity is a key focus of CBI and can contribute to reducing the likelihood of groupthink, enhancing risk management and reducing overconfidence thereby improving decision making.

Management Companies

The board is the responsible body for ensuring that the fund manco is being run properly. While delegation is a part of the business model of the funds industry, no manco can ever delegate their responsibility. Therefore the fund manco will be held to account if the manco or its delegates fail to meet their obligations to the funds and their investors.

Accordingly, directors and in particular INEDs, must be able to demonstrate that they are satisfied that the fund manco for which they are responsible, is operating as it should be.

The board is responsible for ensuring that all the necessary processes, policies, procedures and resources are in place within the fund manco that they are operating as expected and delivering their intended outcomes. Mr Hodson emphasised that it is not just good enough to say that the manco had all the necessary policies and procedures in place, "you need to ensure that on a day to day basis they are being carried out".

CP86

Mr Hodson expects the CP86 thematic review to be completed in H1 2020 and to be communicating with industry in the second H2 2020. The review is a direct result of the uplift in authorisation cases since the Brexit vote in 2016. These applications for authorisation have given CBI a more detailed insight as to what is required of Designated Persons and boards under CP86.

This matters because Ireland must be in a position to demonstrate that the fund manco model can be operated successfully. Accordingly, it is necessary to show that any delegation, including the delegation to an investment manager, can be carried out in such a way that the management company is able to robustly oversee the activities of the delegate and challenge if any deviation from the requirements emerge.

Hot topics – from a regulatory perspective

  • Sustainable Finance: Mr Hodson referenced the ESMA advice on the integration of sustainability risks and factors into MiFID II, AIFMD and UCITS Directive. He noted that Directors must be alive to these developments and consider the implications in the performance of their roles and what steps need to be taken to contribute to the development of a more sustainable financial system.
  • Cyber Security: CBI completed a thematic inspection on cybersecurity risk. An industry letter will issue. Mancos should consider the issues and assess what actions need to be taken, if any.
  • Corporate Governance - compliance, risk and internal audit: CBI completed a thematic review to evaluate the approaches in use regarding compliance, risk and internal audit services which form part of two of the three lines of defence. One of the key findings is that boards are not spending enough time reviewing the control frameworks in place. The control framework must be reviewed frequently. Another finding was that the risk framework document was not complete or being kept up to date. Directors need to ensure that this document is reviewed on an annual basis and that it reflects not only the risk environment in which the manco operates but also has a clear outline on how these risks will be managed in line with the manco's risk appetite. An industry letter will issue in the coming months. Mancos should consider what actions need to be taken, if any.
  • Liquidity Management: referencing the CBI recent letter to Mancos. See our In Focus paper on this topic
  • Outsourcing: the manco remains responsible for outsourced activities. Outsourcing should never lead to a regulated entity becoming an empty shell with no substance. Directors must challenge management on the suitability of the outsourcing arrangements in place.
  • Benchmarks Regulation, AIFMD review, a new EU prudential regime for investment firms
  • Brexit: Mr Hodson expects that Brexit will be one of the main topics discussed at board meetings this month, underpinned by a clear focus on the material risks presented by a hard Brexit, business continuity post the 31 October and the duty of care to clients and investors.

Central Bank speech on CBI Regulatory Philosophy and Priorities in Funds by CBI Director of Securities and Markets Supervision, Colm Kincaid.

On 7 October 2019, CBI Director of Securities and Markets Supervision, Colm Kincaid delivered a Speech on CBI Regulatory Philosophy and Priorities in Funds

The speech gave insights on

  • Brexit; the CBI expectation that firms have dedicated the necessary time and planning to Brexit challenges
  • liquidity management
  • the use of leverage in funds
  • closet indexing
  • CP86 review (expected to complete in H1 2020 with communication to industry in H2 2020)
  • focus on investor disclosures in the prospectus and KIID
  • ETFs
  • convergence in the supervision of EU securities markets
  • sustainability in financial services
  • the role and operations of CBI