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Industry Updates
CBI Issues Consultation Paper on Fund Management Company Effectiveness
19 Sep 2014
The Central Bank of Ireland ("CBI") has today, 19 September 2014, issued a consultation paper ("CP86") on measures designed to enhance the effectiveness of fund management company boards. Within its scope of review are the boards of: (i) self-managed investment companies (UCITS or AIF); (ii) UCITS management companies; and (iii) Irish AIFMs.
This consultation follows a recently completed governance review initiated by the CBI with the participation of certain industry representatives. The consultation closes on 12 December 2014.
Based on Maples and Calder's initial review, it seems clear that the consultation, once complete, will result in new regulatory guidance measures in relation to the following areas:
(a) Delegation arrangements - New, prescribed requirements for: (i) initial and ongoing oversight of investment management functions; (ii) distribution and marketing activities; and (iii) risk management functions.
(b) Key management functions - Streamlining current 10/16 key management functions - to be consolidated (for both UCITS management companies and AIFMs) into six key management functions with more detail on what each function must entail.
(c) Board composition - Adjustments to Irish resident director/independence requirements; new requirements on board expertise and collective composition.
The CBI's aim in undertaking this review is to support the continuous improvement of fund management company effectiveness. We will consider the prudential merits of any measures that emerge from the consultation in due course. Of immediate concern will be the timing of this review. Coming so shortly after the successful, but operationally burdensome, implementation of AIFMD, this is unlikely to be welcomed by operators of Irish funds who were hoping for a period without further regulatory change.
A copy of CP86 is available here. If you would like to discuss the substance of the consultation in more detail, and get our insight and perspective, please feel free to contact any of the investment funds partners listed above, or your usual Maples and Calder contact.
This consultation follows a recently completed governance review initiated by the CBI with the participation of certain industry representatives. The consultation closes on 12 December 2014.
Based on Maples and Calder's initial review, it seems clear that the consultation, once complete, will result in new regulatory guidance measures in relation to the following areas:
(a) Delegation arrangements - New, prescribed requirements for: (i) initial and ongoing oversight of investment management functions; (ii) distribution and marketing activities; and (iii) risk management functions.
(b) Key management functions - Streamlining current 10/16 key management functions - to be consolidated (for both UCITS management companies and AIFMs) into six key management functions with more detail on what each function must entail.
(c) Board composition - Adjustments to Irish resident director/independence requirements; new requirements on board expertise and collective composition.
The CBI's aim in undertaking this review is to support the continuous improvement of fund management company effectiveness. We will consider the prudential merits of any measures that emerge from the consultation in due course. Of immediate concern will be the timing of this review. Coming so shortly after the successful, but operationally burdensome, implementation of AIFMD, this is unlikely to be welcomed by operators of Irish funds who were hoping for a period without further regulatory change.
A copy of CP86 is available here. If you would like to discuss the substance of the consultation in more detail, and get our insight and perspective, please feel free to contact any of the investment funds partners listed above, or your usual Maples and Calder contact.
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Peter Stapleton
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Stephen Carty
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Adam Donoghue
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