Central Bank of Ireland Consults on an Draft UCITS Rulebook Including the Possible Removal of the Promoter Requirement

by Dechert LLP

The Central Bank of Ireland (“Central Bank”) has today issued a consultation paper (CP 77) on the publication of a draft UCITS Rulebook. The consultation period will close on 28 March 2014.

The UCITS Directive is implemented in Ireland by a Statutory Instrument – the UCITS Regulations, which designate the Central Bank as the competent authority for the authorisation and supervision of UCITS.

The UCITS Notices were developed by the Central Bank to explain and clarify various aspects of the UCITS Regulations and set down conditions not contained in the Regulations with which UCITS must conform.

Subsequently, the Central Bank commenced the practice of issuing Guidance Notes to provide direction on issues relating to the funds industry. As this guidance did not constitute a regulatory requirement, its standing was unclear. 

The Central Bank proposes to replace the existing series of UCITS Notices and Guidance Notes with a single consolidated document, to be called the UCITS Rulebook, containing all of the conditions that the Central Bank imposes on UCITS funds, their management companies and depositaries in addition to the requirements of the UCITS Regulations. 

The purpose behind the UCITS Rulebook is to create a consolidated, yet simplified set of rules that apply to UCITS, to facilitate greater certainty regarding UCITS requirements and to avoid any repetition or paraphrasing of relevant legislative provisions. The draft UCITS Rulebook follows the same approach adopted by the Central Bank in relation to its implementation of the Alternative Investment Fund Managers Directive which resulted in the publication of a single rulebook for Alternative Investment Funds (the “AIF Rulebook”) with the aim of creating a “more accessible and readable regulatory framework”.

Although the draft UCITS Rulebook principally transposes current provisions specified in the UCITS Notices and Guidance Notes, in some instances, the Central Bank is proposing to remove existing requirements. Dechert will produce a more detailed OnPoint that will examine the consultation in greater detail and, in particular, the changes to the existing regulatory framework that are being proposed. Despite the fact that the Central Bank will no longer publish Guidance Notes, it does intend to continue to provide guidance from time to time on its website.

The Central Bank has highlighted a number of questions upon which it is seeking industry feedback. It is interesting to note that two of these questions relate to the first two Guidance Notes issued by the Central Bank in 1996 on the Promoter Requirement and the Permitted Markets requirement.

1. Promoter Requirement
As stated in the consultation, the Central Bank has placed great reliance on the Promoter to ensure that only sizeable entities with relevant experience could establish UCITS in Ireland. Promoters were required to have shareholder funds of at least €635,000 based on latest audited accounts. These requirements caused difficulties for managers for whom the shareholder funds amount and audit requirement was in excess of their local regulatory requirements. The Central Bank now proposes to eliminate the promoter approval process for UCITS. Similar to the approach adopted by the Central Bank in relation to Alternative Investment Funds, the promoter approval process is expected to be replaced by reliance on the regulatory regime for UCITS management companies, with increased emphasis on the obligations of directors when UCITS get into difficulty.

2. Permitted Markets
The Central Bank proposes to withdraw Guidance Note 1/96 which sets out the Central Bank’s criteria for determining whether a market meets the definition of “regulated market” as set out in the UCITS Regulations. The withdrawal of Guidance Note 1/96 means that the Central Bank will not publish a list of permitted markets for UCITS and that it will not review submissions on proposed regulated markets. UCITS will be required to regularly review the list of stock exchanges and regulated markets to ensure that they continue to meet the regulatory criteria and they will be required to consult with the depositary to ensure that adequate custody arrangements are in place. The removal of current guidance on the criteria for regulated markets may serve to remove some of the uncertainty regarding the eligibility of certain markets that trade 144A securities and, in particular, convertible bonds.

3. Financial Reporting Requirements
In a move that will likely see some pushback from industry, the Central Bank is proposing to require UCITS management companies (including self managed investment companies) and depositaries to submit half yearly management accounts covering the second six months of the financial year (in addition to the current requirement to publish such accounts covering the first six months of the financial year and audited annual accounts). In a question that will surely be answered in the affirmative, the Central Bank requests feedback on whether the proposal would add significantly to the current reporting burden on UCITS management companies and depositaries. Using the conventional 31 December year end as an example, such a move will probably require the convening of an additional board meeting to approve these accounts by the end of February, with a further board meeting to approve the annual audited accounts being scheduled for the end of April. This will add significantly to the reporting burden at the busiest time of year for those involved in the financial reporting process.

The Central Bank requests all responses to the Consultation Paper to be submitted no later than 28 March 2014. Following the end of the consultation period, the Central Bank will carry out a technical examination of the draft UCITS Rulebook to refine its drafting and then issue a final UCITS Rulebook on a statutory basis.

The Consultation Paper and draft UCITS Rulebook can be viewed on the Central Bank’s website.

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.