1 Legal & Regulatory

1.1 UCITS and AIFMD Update

Ireland

On 1 November 2023, the Central Bank of Ireland ("Central Bank") published the 48th Edition of its AIFMD Q&A. It includes a new Q&A (ID 1156) which sets out the circumstances in which the Central Bank may exempt, under section 15(1) of the Investment Limited Partnerships Act 1994, an investment limited partnership from the provisions of European Union (Qualifying Partnerships: Accounting and Auditing) Regulations 2019. It also extends the exemption from the loan origination regime currently available to AIFs who grant loans to subsidiaries (in Q&A ID 1084) to AIFs who grant loans to co-investment vehicles in which they have a majority interest.

Under the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2023 the new requirements will not apply to UCITS Management Companies authorised for discretionary portfolio management services on or before 27 November 2023 until 27 May 2024. Similarly, the new requirements will not apply to AIFMs authorised for discretionary portfolio management services on or before 27 November 2023 until 27 May 2024 (see Part B of Chapter 3, Alternative Investment Fund Manager Requirements in the AIF Rulebook.) UCITS Management Companies and AIFMs which obtain authorisation for discretionary portfolio management services after 27 November 2023 will be subject to these new requirements on authorisation.

On 27 November 2023, the Central Bank updated its UCITS Q&A and AIFMD Q&A on filing PRIIPs KIDs. For more detail see "New PRIIPs KID Filing Requirements" below. The AIFMD Q&A also contains three new Q&As (IDs 1157, 1158 and 1159) which considers what is permissible when a RIAIF / QIAIF invests through a subsidiary.

The European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2023 came into force on 12 December 2023 and amend the European Union (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 to ensure those regulations to provide that "in the event of the insolvency of the depositary and any third party, or of the depositary or any third party, located in the Union to which custody of UCITS assets has been delegated, the assets of a UCITS held in custody shall be unavailable for distribution among, or redistribution among, or realisation for the benefit of, creditors of that depositary and such third party, or that depositary or such third party, as the case may be". Similar amendments are made by the European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2023 which revoke paragraph (7A) of Regulation 22 of the European Union (Alternative Investment Fund Managers) Regulations 2013.

Luxembourg

On 15 November 2023, the Commission de Surveillance du Secteur Financier ("CSSF") announced new notification and denotification arrangements applicable to Luxembourg UCITS which market their shares in another EU member state. All marketing notifications and denotifications must now be made via the CSSF's e-Desk platform and additional information is set out in the updated CSSF guidelines on cross-border marketing notification and de-notification procedures.

On 30 November and 29 December 2023, the CSSF issued updates to its FAQ on the law of 17 December 2010 on undertakings for collective investment. Newly inserted FAQ 6.7 (ii) and (iii) set out the CSSF's suggested approach on the annual update of PRIIPs KIDs and the publication of updated past performance. It recommends that updated PRIIPs KID(s) are submitted to the CSSF and updated past performance is published within 35 business days after 31 December each year.

EU

On 10 November 2023, the Council of the EU published a note from its General Secretariat to the Permanent Representatives Committee ("COREPER") with the final compromise text for the proposed Directive amending AIFMD and the UCITS Directive 2009/65/EC relating to delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services, and loan origination by AIFs. The text reflects the provisional political agreement that was reached between the Council and the European Parliament in July 2023.

On 15 December 2023, the European Commission adopted the following draft legislation on the UCITS Directive and AIFMD:

  • Delegated Regulation supplementing the AIFMD with regard to regulatory technical standards ("RTS") specifying the information to be notified in relation to the cross-border activities of managers of AIFMs. It sets out the information that should be communicated by managers to competent authorities under Article 33 of AIFMD.
  • Delegated Regulation supplementing the UCITS Directive with regard to RTS specifying the information to be notified in relation to the cross-border activities of management companies and UCITS. It sets out the information that should be communicated by managers to competent authorities under Articles 17, 18 and 20 of the UCITS Directive.
  • Implementing Regulation laying down implementing technical standards ("ITS") for the application of AIFMD to the form and content of the information to be notified in respect of the cross-border activities of AIFMs and the exchange of information between competent authorities on cross-border notification letters.
  • Implementing Regulation laying down ITS for the application of the UCITS Directive with regard to the form and content of the information to be notified for cross-border activities of UCITS, UCITS management companies, the exchange of information between competent authorities on cross-border notification letters, and amending Regulation (EU) 584/2010.

The Council of the EU and the European Parliament will now scrutinise them. If neither object, they will enter into force 20 days after publication in the Official Journal of the EU ("OJ") and apply 30 days later.

1.2 Progress Update on Review of Funds Sector in Ireland

The Minister for Finance, Michael McGrath, on 21 December 2023, published a progress update on the review underway of the funds sector in Ireland - Funds Sector 2030: A Framework for Open, Resilient & Developing Markets. As part of the review, a public consultation took place over the summer months and closed on 15 September 2023. The progress update highlights the main trends, risks, challenges and opportunities facing the funds industry in Ireland out to 2030, as identified in the responses.

A report will be presented to the Minister by summer 2024.

The progress update notes that it will now focus on (1) an unauthorised product structure and other structures for private assets; (2) the impact of technological change; (3) the savings landscape in Ireland; (4) reviewing tax-advantaged savings and investment schemes in other jurisdictions, such as the UK and Sweden; (5) the structured finance / asset holding company regimes in other countries; (6) the existing IREF and REIT regimes; and (7) the impact of the institutional sector, including investment funds, on the property market.

The Funds Review Team will consider further progress updates, consultations and industry events. A number of meetings with stakeholders have occurred and will likely continue. Maples is involved through all relevant industry groups and has assisted clients preparing for meetings and consultation as part of this process.

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