On 30 November 2012 the Central Bank published requirements relating to the business plans of UCITS self-managed investment companies ("SMICs"). Following the self-certification by existing SMICs in July 2011 of their compliance with the UCITS IV requirements, it had been expected that the Central Bank would carry out a review of the SMIC business plans at the beginning of 2012. Following submissions from industry stakeholders the Central Bank decided to reconsider its initial approach. The purpose of this client briefing is to highlight the requirements in relation to the submission of the SMIC business plans.

The Central Bank has confirmed its position on the applicability of the Level 2 organisational requirements to SMICs and the contents of SMIC business plans. The Central Bank requires that UCITS management companies and SMICs should be subject to the same basic organisational requirements. Consequently, the organisational requirements currently set down in UCITS Notice 2 for UCITS management companies will, for the most part, apply to SMICs. However, the Central Bank has acknowledged that consideration should be given to the less complex nature of SMICs and so it has confirmed that SMICs may seek to apply the "nature, scale and complexity" concept to any requirements which are not perceived to readily fall within the SMIC business model. In summary, SMICs are required to ensure they have appropriate administrative, accounting, internal control, record keeping, complaints handling and electronic data processing procedures in place. The Central Bank has agreed however that SMICs are not required to establish a permanent compliance function or a permanent internal audit function. For those SMICs currently operating on the basis of collective responsibility the key management functions will need to be allocated to individual directors.

The Central Bank requires submission of the following documents in advance of the transitional deadline of 1 July 2013:

  • full business plan – marked up to highlight UCITS IV changes;
  • full business plan – clean copy;
  • statement of responsibility – marked up to highlight UCITS IV changes;
  • statement of responsibility – clean and signed copy; and
  • letter from the board of directors, signed by the chairperson, confirming that each of the documents enclosed complies with the UCITS IV requirements, the UCITS Notices and Guidance Note 4/07. The letter must also make express reference to the SMIC's compliance with the relevant capital requirements.

The Central Bank proposes to accept submissions in three tranches at the end of each of the following months: January 2013, March 2013 and May 2013. In contrast to the initial submission timetable published by the Central Bank, whereby the timing was based on the authorisation date of the firm, the Central Bank has elected not to prescribe individual filing deadlines in this instance. Rather, the Central Bank has placed an onus on the SMIC's legal advisers to endeavour to submit one third of filings from their client list at each filing date so as to avoid a deluge of the submissions in May and June 2013.

The Central Bank does not intend to review all submissions received nor issue letters confirming UCITS IV compliance. It has indicated that it will rely on the letter of confirmation from the SMIC board to satisfy itself that the business plan and statement of responsibility are UCITS IV compliant. The Central Bank will, however, conduct spot checks as a means of determining the level of overall compliance.

Importantly, all new SMIC authorisation applications will be required to comply with the new organisational requirements from 1 January 2013.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.