Some approaching compliance deadlines
- 9 December 2020 - UK TPR - Fund Managers must email the Financial Conduct Authority by the end of 9 December 2020 to notify it of the intention to update their existing applications (e.g. to add further sub-funds) previously submitted by UCITS and AIFs for the TPR in the UK. The window for updating existing applications will open on 14 December 2020.
- 25 December 2020: Central Register of Beneficial Ownership of ICAVs and Unit Trusts - The deadline for filing beneficial ownership information on the central register for ICAVs and unit trusts in existence before 25 June 2020 is 25 December 2020.
- 31 December 2020: Brexit - The UK left the EU on 31 January 2020 and is now in an 11 month transition period. From 1 January 2021, the UK will be a third country as regards the implementation and application of EU law. The clock continues to count down the time to agree complex arrangements to govern EU-UK relations.
- 31 December 2020: 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. Once every three years a formal documented review and a review of the chairperson must take place.
- 31 December 2020: 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 2020: 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 (albeit remotely), ensure adoption of valuation policy and make disclosure in respect of connected party transactions.
- 31 December 2020: Fitness & Probity – Where they have not already done so, RFSPs 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.
- 29 January 2021: AIFMD consultation - Deadline for responses to the EU Commissions consultation on AIFMD (which will likely also affect UCITS).
- 31 January 2021/ 28 February 2021: 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 31/12/20) for UCITS ManCos and for AIFMs is likely 31 January 2021. The submission due date for investment funds will likely be 28 February 2021. 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 2021: UCITS ManCo and AIFM ownership confirmation - UCITS ManCos and AIFMs need to file the annual ownership confirmation by 31 January 2021.
- 19 February 2021: 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 2021 (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 must then be 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 2021: 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 2020, with a submission deadline (via the ONR) of 28 February 2021. 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.
- 10 March 2021: Sustainable Finance Disclosures - Obligations under the Sustainable Finance Disclosures Regulation come into effect (see below for more detail).
- 31 March 2021: MMFR quarterly reporting - MMF managers must continue to send their quarterly reports to national regulators by quarter end.
- 31 March 2021: CP86 analysis and action plan - Fund management companies (which include UCITS management companies, authorised AIFMs, self-managed UCITS investment companies/ICAVs and internally managed AIFs which are authorised AIFMs) must complete their assessment of their operations against the requirements of CP86 and agree an action plan by end Q1 2021.
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. The CBI set out the reporting requirements for UCITS management companies and the reporting requirements for AIF management companies.
CBI deadlines for pre-Christmas/ year-end applications 2020
The Central Bank of Ireland (CBI) issued details of its deadlines for receipt of applications:
- for approval of fund and sub-fund applications that have pre-Christmas or pre year-end approval deadlines (this includes self-managed/internally managed investment company/ICAV applications)
- for approval of post-authorisation amendments that have pre-Christmas or pre year-end approval or noting deadlines
- for revocations, Individual Questionnaire filings, investment manager registrations and conversion/migration applications that have pre-Christmas or pre year-end deadlines
CBI to provide a fast-track process for SFDR prospectus updates
The CBI advised Irish funds that it will put in place a fast-track process to deal with prospectus updates due to be filed under the EU Sustainable Finance Disclosure Regulation (SFDR) by 10 March 2021.
- Updates will need to comply with the SFDR on a high level and principled basis. The CBI will provide for a fast-track filing process for prospectus updates based on the SFDR Level 1 text, whereby UCITS management companies/AIFMs will certify their compliance with the SFDR.
- Prospectus updates limited to SFDR compliance will not be subject to post authorisation review by the CBI under this process.
- The CBI will review prospectus updates when the RTS become applicable and anticipates that the quality of disclosures and implementation of SFDR will increase over time.
- The CBI emphasises that the fast-track regime should not be seen as providing scope for a lesser quality of disclosures than would otherwise be produced.
- The SFDR imposes new disclosure requirements on all funds and additional requirements on funds that are classified as ‘Light Green’ (Article 8) or ‘Dark Green’ (Article 9). The CBI clarified that the decision regarding this classification will rest with the relevant manager. The CBI notes that this also applies with respect to the disclosures required under Article 6 and Article 7 of the SFDR which are applicable to all funds – the responsibility rests with the relevant fund manager to ensure that their disclosure is appropriate to their particular funds. The CBI may, at a future point, review the classifications made by managers.
The European Commission wrote to the ESAs noting that the application of the Regulatory Technical Standards (RTS) for SFDR will be delayed and that all application dates in the Level 1 text are being maintained. In the absence of the RTS, financial market participants will need to comply with the SFDR on a high level and principled basis. The ESAs are working to deliver the final RTS by end-January 2021.
CBI finds shortcomings in compliance with its Fitness and Probity regime
The CBI issued a letter to the management of all Regulated Financial Service Providers (RFSPs) setting its expectations following significant issues in Fitness and Probity (F&P) compliance identified by thematic inspections of the insurance and banking sector. The CBI is concerned to observe that a number of RFSPs not take any action following its 2019 letter to perform a formal “gap analysis” of their policies, processes and procedures. The CBI finds that: “it is wholly unacceptable that such shortcomings continue to exist in circumstances where the F&P regime was introduced almost 10 years ago”. The CBI expects all RFSPs to take appropriate action to address the significant issues outlined in this letter and to be able to evidence such action if requested.
Key issues include:
- board awareness of Fitness and Probity obligations
- lack of due diligence on incoming staff
- failure to assess outsourced providers when outsourcing controlled functions
- absence of processes to identify, escalate and notify the CBI about F&P concerns
- lack of compliance testing for F&P processes and procedures
Fund management companies, SMICs and externally managed funds, as well as other RFSPs, need to review their compliance with the findings and observations and, where necessary, take steps to remediate any identified issues or weaknesses in their compliance with F&P requirements.
CBI consultation on share class features of closed-ended QIAIFs
The CBI issued a consultation (CP 132) on its proposed regulatory guidance relating the establishment of differentiated share classes in a closed-ended QIAIF. The establishment of such share classes will be permissible to reflect:
- the issue of shares at a price other than net asset value
- excuse and exclude provisions
- stage investing
- management participation
The draft guidance will provide clarity in relation to the operation of ILPs under the CBI's regulatory framework. The consultation response deadline is 22 December 2020.
CBI eases requirements for the general partner of Irish Investment Limited Partnerships
The CBI announced the discontinuation of its requirement for the general partner of an Irish Investment Limited Partnership (ILP) to be authorised as an AIF management company. The CBI updated its AIFMD Q&A with two new Q&As (1134 and 1135) in respect of the requirements applicable to the general partner of an ILP. This change streamlines the ILP structure by removing authorisation and capitalisation requirements inconsistent with the role of the general partner of an ILP, and improves speed to market. Directors or partners of a general partner of an ILP will be subject to the same pre-approval process and fitness and probity regime as directors of CBI-regulated corporate funds such as the ICAV, and other regulated entities in Ireland.
This announcement comes at a time when the ILP legislation is also being updated and adds to the attractiveness of Ireland as an EU jurisdiction for establishing AIFs pursuing private equity, venture capital, infrastructure, real estate, debt and other alternative strategies investing in illiquid assets. See our more detailed update here.
EU Commission decision on temporary equivalence for Ireland’s Central Securities Depository
The CBI welcomed the announcement by the EU Commission of the temporary UK equivalence decision for the purposes of the Central Securities Depository Regulation until 30 June 2021. The Minister for Finance, Paschal Donohoe T.D. and Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming T.D. also welcomed the decision which will facilitate the continued operation of UK based Central Securities Depositories for EU entities until 30 June 2021. This will allow ESMA to begin a formal recognition process of Euroclear UK & Ireland which serves Euronext Dublin (formerly the Irish Stock Exchange). ESMA recognition will allow Irish securities to continue to be settled through Euroclear UK & Ireland until this market transfers to Euroclear Bank Belgium in the first quarter of next year. The migration of Irish securities from Euroclear UK & Ireland to Euroclear Bank Belgium is a complex technical and legal project involving Irish market participants and stakeholders.
CBI update on April's flexibility measures in response to COVID-19
The CBI updated its webpage on CBI flexibility for Securities Markets, Investment Management, Investment Firms and Fund Service Providers in certain areas (launched in April 2020 and discussed in April here).
- some measures which have since expired, will not be extended
- additional data requests will continue
- regulatory remittance dates for investment firms and fund service providers will not be extended
- updates to CBI Regulatory Policy Frameworks were paused and will now resume (CP130 feedback expected "by Q1, 2021")
- CBI expects firms to meet specific RMP submission dates (or talk to their supervisor)
Updated Irish Funds note on Brexit preparations
The Irish Funds Brexit Steering Group prepared a non-exhaustive list as a guide for identifying some of the main issues which may arise during Brexit planning.
The note covers:
- staff availability
- interaction with CBI
- CBI approach in relation to the UK's exit (including for example investment by UCITS and RIAIFs in UK investment funds)
- data (referencing Schrems II, EDPB recommendations and guidance from the Data Protection Commissioner in Ireland)
- staff eligibility to work and travel
- fund documentation and compliance
- segregated account investment management agreement requirements
- Share Trading Obligation (STO). In October 2020, ESMA published a final position on the STO to supplement their statement in May 2019. The latest position provides an exemption for any EEA ISIN being traded on a UK trading venue, but only where it is being traded in GBP. Early December, the FCA also issued a statement on their approach to the application of the STO following the end of the Brexit transition period. The FCA will allow UK firms to continue trading all shares on EU trading venues.
- Derivatives Trading Obligation (DTO). Absent the required equivalence decisions, EU counterparties subject to the DTO and UK counterparties wishing to trade derivatives with each other after the end of the transition period will face conflicting requirements where the derivatives fall within the scope of the EU and UK DTOs (in-scope derivatives). On 25 November, ESMA published a public statement clarifying that the DTO will apply, unchanged, following the end of the transition period on 31 December 2020.
- UK Temporary Permissions Regime (TPR). (In October, the UK published the financial services bill which contains provisions for the TPR period to be extended to 5 years).
- UK Overseas Funds Regime
- system updates
- regulatory environment in the UK
CBI markets updates
The CBI published issue 12 2020 of its markets updates. It contains updates from the CBI and ESMA. CBI updates include:
- Central Bank revises its expectations as regards regulatory flexibility for Securities Markets, Investment Management, Investment Firms and Fund Service Providers (discussed above)
The CBI also published issue 13 2020 of its markets updates. It contains updates from the CBI and ESMA. CBI updates include:
- Central Bank publishes the thirty-sixth Edition of the Central Bank AIFMD Q&A (discussed above)
- Issuance of the 36th edition of the Central Bank AIFMD Q&A (discussed above)
- Publication of CBI Consultation Paper 132 (discussed above)
- Closing Date for Submissions to Central Register of Beneficial Ownership for Certain Financial Vehicles ('CFV') - 25 December 2020, referencing the Central Beneficial Ownership Register website
- CBI speech: A financial sector better serving citizens and the economy: the role of Supervisory Inspections in driving improvements - Gerry Cross, Director of Policy and Risk and Investment Banking Supervision (Interim)
- CBI speech: Remarks at the Irish Funds Annual Global Funds Conference - Director General Derville Rowland
- CBI speech: "Sustainable Finance: the changing regulatory landscape" - Gerry Cross, Director of Financial Regulation: Policy & Risk