Fund Management Companies

Fund Management Companies - Guidance

Fund Management Companies –

Guidance

December 2016

2016

Fund Management Companies - Guidance

Contents

Part I. Delegate Oversight 2

Part II. Organisational Effectiveness 24

Part III. Directors’ Time Commitments 26

Part IV. Managerial Functions 30

Part V. Operational Issues 102

Part VI. Procedural matters 109

Fund Management Companies - Guidance

Adherence to guidance

1. It should be evident from the fund management company’s board minutes that

the fund management company is acting in accordance with this guidance, if

this is the case.

PART I

Delegate Oversight

Scope

1. This Part sets out the Central Bank’s guidance for boards of directors of

investment companies, UCITS management companies, alternative investment

fund managers (AIFMs) and AIF management companies incorporated and

authorised in Ireland (referred to in this Part as “relevant companies”).

2. A board of a relevant company has ultimate responsibility for all aspects of

management that are not specifically reserved to the shareholders (whether by

constitutive documents or applicable law

). While boards may delegate tasks

internally, it is also common in Ireland for certain tasks to be delegated

externally. The focus of this document is on the role of boards where significant

tasks are delegated externally. It is not deemed necessary at this time to issue

guidance on other aspects of a board’s work. In those regards, boards are

recommended to exercise prudent judgement having regard to, but not

necessarily confining themselves to, widely accepted standards of good

governance and to have regard to the particular challenges of the relevant

company.

3. Such delegation, and the legal responsibilities of delegates, does not reduce the

board’s ultimate responsibility. It follows that the board must, notwithstanding

In particular, under the Companies Act 2014 or the Irish Collective Asset-management Vehicles Act

2015

Fund Management Companies - Guidance

any such delegation, at all times retain and exercise overall control of the

relevant company’s management.

4. There are also limits on the extent to which delegation is legally permissible. In

particular, under European legislation as transposed, AIFMs and UCITS

management companies are under an obligation not to delegate to the extent that

they become letterbox entities

5. The responsibilities of a UCITS management company and an AIFM, as set out

in applicable legislation, differ. A UCITS management company is defined as

a company whose regular business is the management of UCITS (defined as

including investment management, fund administration and distribution). An

AIFM may carry on all these functions but is required to perform investment

management (defined as encompassing portfolio management and risk

management). In this Part, no distinction is drawn between UCITS and AIFs,

but, in the application of the guidance it sets out, account should be taken of the

specific circumstances which prevail.

6. The scope of this Part covers:

A. investment management

B. distribution

C. risk management (both operational and investment risk)

D. operation and administration

E. support and resourcing

F. boards of externally-managed investment companies

7. The main body of this Part concerns the responsibilities of relevant companies

(and, by extension, of their boards, which have ultimate management

responsibility) which are authorised in Ireland as AIFMs or UCITS

management companies. This encompasses:

• self-managed UCITS and AIFs; and

Regulation 23(2) of the EC (UCITS) Regulations 2011 and Regulation 21(4) of the EU (AIFM)

Regulations 2013.

Fund Management Companies - Guidance

• UCITS management companies and AIFMs.

8. In some cases UCITS management companies and AIFMs will have been

appointed by investment companies (i.e. UCITS or AIFs). A further section F

therefore addresses issues specific to the responsibilities retained by such

investment companies (and, by extension, their boards).

9. In this Part the term:

• “delegate” means, in the context of any relevant company or the board

of any relevant company, the fund administration company, investment

manager, risk manager and distributor;

• “depositary”, in the context of an investment fund, includes reference to

any trustee or custodian, if applicable, of that investment fund;

• “investment company” means an investment company authorised in

accordance with Part 24 of the Companies Act 2014 or the European

Communities (Undertakings for Collective Investment in Transferable

Securities) Regulations 2011 (S.I. No. 352 of 2011) or an Irish

Collective Asset-management Vehicle (‘ICAV’) registered with and

authorised by the Central Bank under the ICAV Act 2015;

• “investment fund” means a collective investment scheme whether

structured as an investment company, unit trust, common contractual

fund, investment limited partnership or otherwise

;

• “fund management company” means an entity regulated as an AIFM or

a UCITS management company

in each case incorporated or otherwise

organised, and authorised under the laws of Ireland. In the context of

section F, however, it may encompass a management company

organised and authorised in another EU member state or an AIFM

established outside the EU; and

Investment funds may be organised and authorised under the laws of jurisdictions other than Ireland.

The laws applicable to such an investment fund may impose on a management company additional, or

alternative, obligations to those imposed in the case of an Irish investment fund. The Central Bank has

focussed only on investment funds organised and authorised under the laws of Ireland and has assumed

that nothing in the laws of such other jurisdictions would affect the recommendations made in this Part.

Of course, the board of a management company must be satisfied that the management company has

complied with all applicable legal and regulatory requirements. It follows therefore that it should also

be satisfied that there is no conflict between the respective requirements of each relevant jurisdiction.

This includes any self-managed investment company which is itself regulated as an AIFM or UCITS

management company

Fund Management Companies - Guidance

• “investment management” means that which, in an AIFMD context,

would be encompassed by the portfolio management aspects of

investment management.

10. The provisions set out in this Part are intended to assist relevant companies by

providing an overview of the approach recommended by the Central Bank. This

Part does not purport to address every aspect of such practice in detail. The

overriding approach should be that the board should design its governance

practices so as to be appropriate and commensurate to the business of the

relevant company and, where applicable, the investment funds it manages.

General observations

Relationship between fund management company and delegates

11. Good governance requires clarity as to the allocation of responsibilities,

documented policies and procedures, structures which foster constructive

challenge, and the effective provision of appropriate information to boards. The

adoption by a board of the general approach identified in this Part will not in

itself achieve the objective of good governance. The environment and culture

in which such an approach operates are also key.

12. The relationship between a fund management company and a delegate must be

such as to enable competent and appropriate management of the fund

management company and a shared understanding as to how to achieve it. The

following features are essential to such a relationship:

• Openness: Full, frank and open dialogue between the board and the

delegates is essential. A delegate should provide all information that the

board needs in order to discharge its responsibilities. The scope of that

information should be clearly identified by the board and agreed with

the delegate;

• Engagement: Directors should be attentive to their duties as directors

and dedicate sufficient time to their discharge. The Central Bank’s

guidance on directors’ time commitments is relevant in this regard. A

Fund Management Companies - Guidance

delegate should recognise the directors’ duties and facilitate the

discharge by the directors of their ultimate responsibility for the

delegated tasks;

• Co-operation: A fund management company and its delegates should

recognise their common interest in a well-run fund management

company that serves the interests of investors in the funds that it

manages.

• Dialogue: A delegate should accept that directors, in order to discharge

their duties, may need to seek further information on proposals and

performance, ask probing questions and provide constructive criticism.

The relationship between the delegate and the board should be such that

directors are encouraged to do so. Nothing in the way directors are

appointed or support is provided to directors should signal any

reluctance on the part of delegates to support open board-level

challenge.

13. The relationship between the fund management company and its delegates

should be such as will support and facilitate the exercise by the board of its

ultimate responsibility for, and control over, the management of that fund

management company.

Retained tasks and delegated tasks

14. A fund management company may, notwithstanding the ultimate management

responsibility of its board, delegate in whole or in part certain specific tasks

which form part of the fund management company’s management functions.

While the tasks may be delegated, however, ultimate responsibility for those

management functions themselves cannot be delegated. Delegation is permitted

but responsibility is retained. The terms of any delegation should, therefore, be

such as will facilitate the discharge by directors of:

• their duties to the relevant fund management company (including those

relating to that company’s discharge of its obligations in respect of

investment funds it manages); and

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• any other responsibilities assumed by them to other persons, for example

to shareholders (investors) pursuant to the prospectus, where it is a self-

managed investment company.

Retained tasks

15. The board should, notwithstanding any delegation of tasks, take all major

strategic and operational decisions affecting the fund management company and

any investment funds it manages

16. Examples of key responsibilities that should be retained by the board include

the following:

• issue of the prospectus, where the fund management company has

responsibility in this regard;

• review and approval of financial accounts and investment fund

documentation, where the fund management company has responsibility

in this regard;

• temporary suspension of redemptions, or other measures taken in

response to adverse financial developments, where the fund

management company has responsibility in this regard;

• approval and periodic review of the business plan or programme of

operations, as the case may be, and compliance with it;

• its own internal governance, including the appointment and retention of

directors and any staff, the capacity of directors to fulfil their roles and

conflict of interest policies;

• adoption and review of a comprehensive suite of policies and procedures

and, to the extent that reliance is placed on the policies and procedures

of delegates, periodic review of the appropriateness of such reliance;

• satisfying itself that arrangements are in place to enable compliance with

applicable legal and regulatory requirements;

Subject always to any matters reserved to its shareholders (in the case of decisions affecting it), or to

the shareholders (or other investors) or board (or other internal management) of any externally-managed

investment fund (in the case of decisions affecting such an investment fund). The below comments on

retained tasks should be read subject to this.

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• appointment, oversight and removal of delegates (including the basis on

which delegates may further delegate tasks);

• investment approach (see section A below);

• launches or closures of sub-funds and share classes; and

• distribution strategies including the jurisdictions into which the

investment funds are marketed.

17. The board may of course discharge these responsibilities with the benefit of

advice and recommendations from delegates. Given the nature of its

responsibilities, however, it should consider any such advice and

recommendations and reserve the right not to act on such advice and

recommendations where appropriate. Decisions on matters reserved to the

board should be minuted in precise, unequivocal and directive terms.

Delegated tasks

18. The main body of this Part deals with the oversight of tasks which are delegated.

19. The delegation of a task does not release the board from its ultimate

responsibility for the relevant management functions. The board should satisfy

itself that the manner of delegation is such that the relevant board

responsibilities can be discharged, that management roles delegated internally

can be effectively performed (see Part III on organisational effectiveness) and

that the external delegate performs the relevant task to an appropriate standard.

20. A board should exercise skill, care and diligence when identifying and

approving the appointment of a delegate for any task. It should satisfy itself as

to the capacity of the prospective delegate to undertake such task to the required

standard.

21. It should continue to exercise skill, care and diligence in its continuing oversight

of delegates. To this end the board should receive and be satisfied with periodic

reports from appropriately authorised personnel of the delegate.

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22. Such reports should address compliance with relevant legal and regulatory

requirements and with relevant policies and operating procedures (including

those of the fund management company and the delegate as relevant), noting

the extent of any breaches; error reporting should be included. The board should

identify when standards fall short of the required levels and require remedial

action to be taken.

23. In addition, boards should receive and be satisfied with reports or presentations

from their delegates addressing significant developments in the delegate’s

business, including development plans or changes in organisation, business mix

or client base, outcomes of regulatory inspections and external and internal audit

reviews, and business continuity programmes.

Fund Management Companies - Guidance

A. Investment management

24. The board should seek a report or presentation from the investment manager

prior to the issue of the prospectus and launch of the investment fund or sub-

fund (the “relevant fund” in this Part) to inform it of the investment approach

the investment manager proposes to take. It should approve the proposed

investment approach, taken as a whole. For this purpose, the board should be

provided with information about at least the following matters:

• the investment objective and policies;

• any benchmark against which the relevant fund’s performance will be

presented to investors and/or used in the calculation of performance

fees;

• the range of assets into which it is proposed the relevant fund should

invest;

• the portfolio management team’s credentials for the task;

• the investment processes to be adopted by the portfolio management

team;

• the type of restrictions and limitations imposed on the management of

the relevant fund, additional to those specified in the prospectus, for

example those dealing with large exposures or leverage, and the related

control arrangements;

• frequency of unit dealing, the basis for pricing relevant fund units, and

any anti-dilution measures;

• the investment manager’s trading protocols, including order

management, best execution, allocation of business to brokers and

commission sharing;

• the basis on which any securities lending is undertaken, including fees,

counterparty risk and collateral management;

• the extent to which it is proposed to use financial derivative instruments,

the controls to which such use will be subject and applicable policies in

respect of collateral management, counterparty risk and leverage

management; and

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• processes for the management of liquidity risks, including the potential

for liquidity mismatches between assets and liabilities, and the actions

to be taken to mitigate them.

25. Once the relevant fund has been established and launched, the board should

oversee the investment manager’s compliance with the approved investment

approach. While it is not the role of the board to take day-to-day investment

decisions that are properly within the remit of the portfolio manager, it should

put in place processes under which it monitors, and the investment manager is

accountable for, the delegated tasks.

26. The board should receive and be satisfied with comprehensive annual

presentations from the investment manager detailing developments affecting the

manager itself, the investment process and strategy, the investment team,

progress and performance (including strategy for responding to any

underperformance) and any proposed development of the investment approach.

Changes to the investment approach at any time should be subject to approval

by the board. A suitable representative of the investment manager should be

available to answer questions in advance of and at the board meeting where such

changes are being discussed.

27. The board should also receive and be satisfied with regular (at least quarterly,

unless the particular circumstances indicate otherwise) reports during the year.

These should include details of any departures from the investment approach

approved by the board or breaches of the investment manager’s internal

policies, and any remedial action taken.

28. All directors should have a good understanding of all relevant aspects of the

investment manager’s business and policies. This might require site visits

and/or meetings with senior management, in addition to the regular

presentations and reports from the personnel working directly on the account

where practicable. Such site visits are often beneficial and should be given

positive consideration.

Fund Management Companies - Guidance

B. Distribution

29. At the time of the launch of a new investment fund (including any sub-fund),

the board should approve the proposed distribution strategy, including:

• who will undertake the tasks associated with distribution and any

proposed delegation;

• the marketing strategy and approach;

• target markets and channels, including the competitive landscape;

• the jurisdictions into which distribution is proposed, whether

immediately or in due course;

• the control framework for compliance with any local legal, regulatory,

tax or other compliance requirements; and

• the control framework for marketing in a manner consistent with the

terms of the prospectus.

30. The board should receive and be satisfied with regular reports on distribution,

including:

• patterns of distribution, current progress and development, and

resourcing;

• sales flows in the period and current pipeline;

• any proposed new developments and initiatives; and

• any local legal, regulatory, tax or other compliance issues

31. The arrangements with any distributor should be structured so that marketing

activities are required to be consistent with the agreed distribution strategy. The

board should be entitled therefore to receive on request any marketing materials

prepared by the distributor, including fact sheets and generic presentations to

prospective investors. Boards should seek such marketing material whenever

they have reason to believe that such material includes significant elaborations

on the matters covered in the investment approach. The board should also

examine such material if there is a perceived risk that its content conflicts with

the prospectus.

Fund Management Companies - Guidance

C. Risk management

32. The board should adopt a risk management framework which:

• identifies the applicable risks;

• confirms the risk appetite;

• identifies any appropriate risk mitigants; and

• incorporates appropriate policies for the measurement, management and

monitoring of risk, including the implementation as appropriate of any

risk mitigants.

33. The risk appetite statement should be appropriate and proportionate to the

nature, scale and complexity of the activities of the fund management company

and the investment fund(s) under management. The risk policies should include

clear procedures (with thresholds where appropriate) for reporting to the board,

and considering breaches of any limits.

34. The board should keep the risk management framework, and its constituent

elements, under periodic review.

35. The board should agree how its responsibility for risk oversight and

management is discharged, given any delegations of tasks, and establish a

shared understanding with each delegate as to their respective roles. The board

should determine the quality, type and format of risk-related information which

it requires and put in place arrangements to receive it.

36. While the board may obtain advice and recommendations on risk issues,

including periodic review of the risk management framework, it should retain

the ultimate decision-making capability. While it may seek advice relating to

risk management and delegate tasks relating to the implementation of the

policies, it should ensure that it receives and reviews comprehensive reports

from any such delegate.

Fund Management Companies - Guidance

Investment risk

37. A fund management company’s risk management framework should address all

significant investment risks to which any investment fund it manages is

exposed, which may include some or all of the following:

• market risk, including major external developments which could impact

investments

• portfolio risk, including quantitative analysis

• liquidity risk, including the risk of investor redemptions requiring the

disposal of assets of limited liquidity

• country or regional risk

• credit risk

• counterparty risk

• leverage

38. Investment risk appetite should be set having regard to:

• the investment objective and strategy and product design of the

investment fund(s) under management;

• the likely nature of potential investors in the investment fund(s) and the

appropriate disclosure of risks; and

• the liquidity of the assets in which the investment fund(s) invests and

the potential for any asset/liability mismatch

39. The board should receive and be satisfied with regular reports assessing risk

levels relative to the risk appetite(s) for the investment funds under

management.

Operational risk

40. A board should satisfy itself that the business of delegates is effectively

managed and controlled, and that appropriate operational risk policies and

procedures of the delegates are in place and subject to regular review by the

delegates. It should receive and be satisfied with regular reports on the

performance of the delegate, including the following as they relate to the

investment fund under management:

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• significant IT incidents

• fraud

• complaints

• outsourcing

• dealing errors

• pricing errors

• other breaches

Operational risk - Enterprise risk and business continuity

41. Boards should receive and be satisfied with reports on risks which could impact

the fund management company and the investment funds that it manages. These

would include:

• large dealing risk

• key person risk

• failure of a delegate or sub-delegate

• reputational risk

• regulatory risk

• continued capacity of systems and personnel

42. In respect of delegated tasks, a board may consider it appropriate to rely upon

business continuity programmes maintained by delegates. It should however

satisfy itself that

• those programmes are sufficient to discharge the board’s own

obligations for the relevant tasks; and

• the delegates’ programmes, taken together with any maintained by the

board (for example where tasks have been retained rather than

delegated), encompass all relevant activities of the company and the

investment funds under management.

43. Such reliance should be the subject of periodic review.

Fund Management Companies - Guidance

D. Investment operations and administration

44. When appointing a delegate to take on operational and administrative tasks, a

board should establish in particular that the delegate has:

• operational resilience (the ability to provide an uninterrupted service to

the required standard even in adverse circumstances);

• robust risk management policies and procedures;

• sufficient capacity and flexibility to manage varying levels of business

including potential variations in the fund management company’s

requirements over time; and

• suitable procedures for maintaining confidentiality and security of

information.

45. The board should receive and be satisfied with regular reports on operational

matters, including but not limited to:

• depositary reports, where the board considers that they are necessary for

the discharge by the fund management company of its responsibilities;

• fund administrator reports;

• performance, including appropriate error and breach reporting;

• oversight by delegates of any outsourcing arrangements they put in

place, and performance of sub-delegates;

• operation of anti-money laundering policies;

• IT systems issues, including significant changes and developments of

relevance to the board;

• resourcing of the provision of services to the fund management

company.

46. The board should adopt and keep up to date an appropriate valuation policy. It

should receive and be satisfied with regular reports on exceptional valuation

items, such as stale prices and fair valued securities, and appropriate error

reporting. The board should receive reports covering material and non-material

pricing errors which identify patterns in causation and satisfy itself that those

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errors have been mitigated. In the case of illiquid assets, it should satisfy itself

as to the process by which values are set.

47. The board should approve and keep under review a budget for payments over

and above the investment management fee which may be charged to the

investment fund and receive periodic reports.

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E. Support and resourcing

48. Fund management companies need to have sufficient resources at their disposal

to enable them to carry out their functions properly, taking into account the

nature, scale and complexity of their business. It is the responsibility of the

board to determine in the light of its particular circumstances the appropriate

resourcing of these functions and to satisfy itself that responsibilities for

undertaking delegated tasks are allocated accordingly.

49. The matters on which the board will require support and resources (in addition

to the support of the official company secretary, the duties of which are

prescribed by law) may include, without limitation, the following:

• proactive monitoring of developments between board meetings,

assessing which if any require the immediate attention of the board, and

arranging any necessary action;

• management of board meetings including adequate planning and

preparation, preparing the agenda, managing the attendees, actioning of

board decisions, briefing of directors on developments and preparation

where appropriate of executive summaries for directors;

• management of other meetings and visits of directors which may include

training sessions, due diligence visits, board evaluation meetings or

planning and strategy sessions;

• management of documents, including meeting minutes, business plan,

policies, procedures, offering documents, material contracts, registers

and correspondence;

• preparation of reports, summaries and other material relevant to the

board’s considerations and decisions;

• timely preparation of half-yearly and audited annual financial accounts;

• managing an annual calendar, so that all matters required to be

considered by the directors through the year are dealt with in an orderly

fashion, and facilitating the timely preparation and circulation of papers

to the board to enable directors to give proper prior consideration to all

relevant matters;

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• regular review of the fund management company’s suite of policies and

procedures, and preparing any required revised drafts for consideration

and approval by the board, including collecting relevant information

from delegates, monitoring regulatory and other external developments

and evaluating the need for changes.

50. There is a variety of potential resourcing models for the necessary support

including, without limitation, models based on employees of, and/or secondees

to, the fund management company and/or services provided by external

delegates. The appropriateness of any proposed model will depend on the

circumstances of, and any legal and regulatory requirements applicable to, the

relevant fund management company. The board should satisfy itself that the

model selected is appropriate in the relevant circumstances.

51. Individual directors may be designated as having particular managerial

functions. Such designation should not, however, be taken to affect the board’s

overall collective responsibility for the function, and procedures should be

adopted so that matters continue to be escalated for consideration by the full

board where appropriate. When designating an individual director for such a

managerial function, boards should be satisfied that:

• the individual has the requisite skills and experience for the role;

• sufficient support and resources are available to the individual to enable

the role to be discharged; and

• the designation does not compromise the ability of the individual, or the

board as a whole, to satisfy any applicable independence requirement.

52. Where a board engages support in discharging its functions, it should retain

control at all times, and the respective responsibilities of the provider of that

support and of the board should be clearly documented so as to facilitate the

exercise by the board of its ultimate responsibility for, and control over, the

management functions to which that support relates.

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53. A director or directors may on occasion consider it necessary to obtain

independent advice on issues relating to the board’s functions and

responsibilities. It is desirable for a director’s contract to enable the director to

do so.

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F. Boards of externally-managed investment companies

54. The fund management company is responsible for ensuring that it and its

investment funds under management comply with regulatory obligations. The

board of an externally-managed investment company should ensure that it

supports the ability of the fund management company to comply with all

regulatory obligations. But it also needs to satisfy itself that the delegation to

the fund management company is working effectively for investors.

55. Externally-managed investment companies are not regulated as fund

management companies. Nevertheless the board of an externally-managed

investment company retains ultimate responsibility for its management

including the appointment and oversight of the fund management company,

which is its principal delegate.

56. The relationship between an externally-managed investment company and its

fund management company may be structured in a number of different ways.

The two entities should agree in the light of their particular circumstances the

appropriate and proportionate approach to the recommendations in this section.

57. The board of the externally-managed investment company retains responsibility

for issuing the prospectus. It should expect to receive information about the

investment approach of the fund management company, as outlined in section

A of this Part. It also retains responsibility for publishing audited financial

statements (a responsibility shared with the fund management company in the

case of an investment company authorised as an AIF).

58. The board of the externally-managed investment company should satisfy itself

that its relationship with the fund management company is such that the relevant

board responsibilities are discharged, and that the fund management company

performs the relevant tasks it is required to undertake to an appropriate standard.

It should receive and be satisfied with regular and appropriately detailed reports

Other than in respect of matters reserved to the shareholders

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from a senior representative of the fund management company in this regard.

It should further consider and identify any conflicts of interest that may arise

and should satisfy itself that such conflicts are being appropriately managed. In

general, it should hold the fund management company to the same standards of

accountability as the preceding sections of this Part recommend that a fund

management company should set for its delegates. It should also receive and

be satisfied with regular, direct reports from the depositary. It does not,

however, need to replicate the detailed oversight of delegates by the fund

management company.

59. The board of the externally-managed investment company should expect to

receive and be satisfied with regular reports from the fund management

company describing:

• its performance (whether directly or through delegates) of the

investment management tasks outlined in section A of this Part;

• significant developments in the distribution of the investment fund,

including any significant legal, regulatory, tax or other compliance

issues;

• its performance (whether directly or delegated) of the risk management

tasks outlined in section C of this Part;

• its performance (whether directly or delegated) of the operational and

administrative tasks outlined in section D of this Part;

• the extent of its delegation of any of the tasks and its control framework

for oversight of its delegates’ performance.

60. The board should also consider whether it should, in addition to reports from

the fund management company, require periodic direct reports from (including,

if appropriate, attendance at board meetings by) the delegates of the fund

management company.

61. A fund management company may include reports received from its delegates

in its reports to the board of an externally-managed investment company.

However, a fund management company’s report should not consist solely of the

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transmission of reports received from its delegates. The fund management

company’s report should include commentary from the fund management

company on how it has performed its role.

62. Some AIF “management companies” may appoint external AIFMs. These AIF

“management companies” are not regulated as AIFMs but retain responsibility

for the AIFs under management and the oversight of the AIFM. The board of

the AIF management company also retains responsibility for issuing the

prospectus (unless the AIF is itself an investment company) and for publishing

audited financial statements (unless the AIF is itself an investment company),

the latter responsibility being shared with the AIFM.

63. In such cases, the board of the AIF management company should apply the same

approach to the oversight of the AIFM as described above in the case of an

investment company.

64. For avoidance of any doubt, this section (F) is limited to externally-managed

investment companies and to AIF management companies with external

AIFMs, and does not apply to other forms of investment fund or fund

management company.

Fund Management Companies - Guidance

PART II

Organisational Effectiveness

1. One of the independent directors of a fund management company, which could

be the Chair if he or she is independent, should undertake an organisational

effectiveness role. The purpose of this role is to ensure that there is an

independent director within the fund management company who has the

specific task of keeping the effectiveness of the organisational arrangements of

the company under ongoing review, with his or her reports being submitted to

the board for discussion and decision.

2. The independent director who undertakes this task will be on alert for

organisational issues and will escalate these to the board. They will be change

leaders who bring proposals to improve effectiveness to the board. They will

champion these proposals and will drive through the change agenda to ensure

that agreed actions are implemented.

3. Having a person with responsibility for reviewing organisational effectiveness

should ensure that a fund management company does not continue to adhere to

agreed organisational arrangements when these are no longer appropriate

because, for example, the fund management company has grown and

developed, because market practice has moved on or because one of the

arrangements suffers from an unanticipated conflict of interests.

4. Some non-exhaustive examples of the types of matters which the independent

director undertaking the organisational effectiveness role will be involved in

are: monitoring the adequacy of a fund management company’s internal

resources to its day-to-day managerial roles; reviewing the organisational

structure of the fund management company and considering whether it remains

fit for purpose; considering the conflicts of interest affecting the fund

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management company and its investment funds under management and

initiating action, such as escalation to the board, where these are having or are

likely in the near future to have an adverse impact; reviewing the board

composition and reporting on this to the board; organising periodic board

effectiveness evaluations and overseeing how well the decision taken by the

fund management company and the arrangements for the supervision of

delegates are working in the interests of investors.

Fund Management Companies - Guidance

PART III

Directors’ Time Commitments

1. The Central Bank considers that a reasonable number of working hours

available for each individual is approximately 2000 per year. This is based on

a 9 hour day and 230 working days per annum. This ‘total’ time allocation

should be considered by individuals when taking on new directorship roles and

should include all professional commitments including other directorships and

employments held. Directors should satisfy themselves, and their boards, that

they have sufficient time to fully discharge their duties.

2. Directors and boards should agree a minimum time allocation for board meeting

attendance; this should include all necessary preparation, review of documents

and also, where appropriate, travel time. The agreed minimum time allocation

should be documented in the director’s letter of appointment in line with

paragraphs 5 and 6 of this Part.

3. Sufficient time should be set aside as a buffer for directors to deal with ad hoc

issues that arise from time to time. This should be in addition to the normal time

allocated to each director role.

4. Additional time should be allocated where a director carries out a Chairperson

role. This time allocation should be agreed with each board and be

commensurate with any additional work that this role requires.

5. A designated person role for managerial functions should be considered

separately to the role of director. A separate time commitment should be

allocated for each such designated person role and should be commensurate

with any additional work that this role requires, including remuneration

received. The time allocated should take into account, inter alia, the on-going

oversight role, daily availability, report review and onsite visits to delegates.

Fund Management Companies - Guidance

6. A separate letter of appointment should issue in respect of a designated person

role for managerial functions. This should include a written contract setting out

the job specifications, the time expectations and the fee arrangements for the

role. The separate letters of appointment should be subject to annual review by

the board and made available to the Central Bank upon request.

7. Individuals with multiple directorships should consider the conflicts which may

arise when sitting on a number of boards and the corporate interconnectivity

that is created. Conflicts which may occur between individuals with full-time

positions in a service provider to the board should also be considered and the

most appropriate action taken.

8. In addition to the number of directorships, individuals should consider the

additional time required to deal with the number of underlying sub funds within

one investment fund. The type and complexity of individual investment funds

and sub-funds should also be considered carefully by individuals when

assessing both the required time commitment and the necessary expertise

needed at board level to oversee the investment fund.

9. Individuals should also take into account the number of different client

relationships they have entered into when assessing time commitments.

10. Directors should be fully aware of the regulatory and legal obligations of

differing types of boards and legal structures prior to any board appointments.

11. Membership of board committees should also be regarded as a separate role and

should be included in any assessment of director time commitment and

availability.

12. The ultimate responsibility for compliance with all regulatory obligations rests

with the boards and the individual directors. Extensive director commitments

without sufficient awareness and consideration of the corresponding impact

may lead to significant governance risk.

Fund Management Companies - Guidance

Central Bank engagement

13. The Central Bank will directly engage with those individuals with high numbers

of directorships combined with high aggregate levels of annual professional

time commitments to ensure their legal obligations and responsibilities as board

members are being met and will monitor directors’ commitments so as to avoid

any potential risk that governance standards may be weakened.

14. The Central Bank intends to treat high levels of directorships combined with

high aggregate levels of annual professional time commitments as a risk

indicator. Where any risk indicator is triggered, additional supervisory attention

is appropriate under the Central Banks risk-based approach to supervision.

Accordingly, in the rare case of the proposed appointment of directors who

already hold in excess of a defined number of directorships (including

directorships outside of the investment fund industry and directorships within

the funds industry outside Ireland) and a defined number of annual hours

representing aggregate professional time commitments the Central Bank will:

• Request a letter from each board which will set out the proposed time

commitment for that director in accordance with paragraph 4.5 of the

IFIA Code;

• Withdraw from corporate Qualifying Investor AIF which propose such

a director, the option of the 24 hour authorisation time-frame. In each

such case the Central Bank will be considering additional enquiries

which will not be capable of being completed within that timeframe.

15. Previously authorised investment funds which continue to have individual

directors who hold more than the defined numbers of directorships and

aggregate hours representing annual professional time commitments after 1st

January 2016 will be given priority consideration for inclusion in Central Bank

thematic reviews where board effectiveness is being tested in any respect.

16. The Central Bank is initially setting that risk indicator in terms of a joint test of

(a) having more than 20 directorships and (b) having an aggregate professional

time commitment in excess of 2000 hours. These numbers may be reviewed

Fund Management Companies - Guidance

from time to time, having regard to the typical burden on directors and changes

in the environment impacting on regulatory risk. The fact that directors hold

less than the referenced numbers of directorships and annual hours of

professional time commitments does not, of course, obviate the need for the

whole of this guidance to be had regard to and the publication of this risk

indicator should not be read in that way.

PART IV

Managerial Functions

Fund Management Companies - Guidance

Purpose of this guidance

1. The purpose of this guidance is to set out the Central Bank’s expectations

regarding how persons who conduct managerial functions (“Designated

Persons”) should carry out their roles.

The role of Designated Persons

2. The Central Bank has identified six key managerial functions for fund

management companies – Capital and Financial Management; Operational Risk

Management; Fund Risk Management; Investment Management; Distribution;

and Regulatory Compliance. The Central Bank requires fund management

companies to identify an individual, known as a Designated Person, who will

be responsible for monitoring and overseeing the managerial function assigned

to him or her. It is possible for a Designated Person to oversee more than one

managerial function. Furthermore, the same Designated Person may carry out

the managerial functions of (i) fund risk management and (ii) operational risk

management. However, he or she may not perform the investment management

managerial function and either the fund risk management managerial function

or the operational risk management managerial function.

3. Designated Persons should receive separate letters of appointment from fund

management companies. The letter of appointment should include inter alia the

time commitment involved and the rate of payment. Where a director acts as a

Designated Person, he or she should receive two letters of appointment – one

for the role of director and one for the role of Designated Person.

4. Designated Persons are a fund management company’s line of management that

lies between the board of directors and delegates. They ensure that the

strategies, policies and directions issued by the board are acted upon and

complied with. Designated Persons monitor and oversee compliance by a fund

management company with its regulatory obligations. They report to the fund

management company’s board on a regular basis and escalate issues to the board

Fund Management Companies - Guidance

where pre-defined parameters are exceeded or where the Designated Person

judges that immediate escalation is warranted.

5. It is clear that the board of directors is not involved in managing a fund

management company on a day-to-day basis. This task is delegated to the

Designated Persons by the board of directors. If a fund management company

delegated tasks to third parties and did not have Designated Persons in place,

then the fund management company would have no-one within the fund

management company responsible for its management on a day-to-day basis. It

would be entirely dependent on the delegates to manage the tasks delegated to

them without sufficient managerial oversight by the fund management company

on a day-to-day basis. A fund management company that operated on this basis

could be one which had delegated to the extent that it might be a letterbox entity

within the meaning of the relevant legislation.

6. Designated Persons will not necessarily be the persons who are carrying out all

of the tasks which fall within their scope of responsibility. For example, the

Designated Person - Capital and Financial Management will not be the person

who prepares the accounts for the fund management company and the

investment funds under management. The Designated Person will likely

manage fund management employees or oversee delegates who carry out these

tasks. In managing those employees or overseeing those delegates, the

designated person will review their work on an on-going basis to ensure that it

is being carried out properly and that the policies and directions issued by the

board are acted upon and that regulatory obligations are being complied with.

7. Fund management companies are under regulatory obligations to act in the best

interests of the investors in the investment funds under management. This

obligation applies to any Designated Persons engaged by a fund management

company. Designated Persons should be mindful of this obligation when

carrying out their roles, particularly where the fund management company is

part of a larger group of companies or where the Designated Person is also

engaged by another entity within that group. The letter of appointment or other

Fund Management Companies - Guidance

contractual arrangements between a fund management company and a

Designated Person should specifically provide that the Designated Person must

put the best interests of investors in the investment funds under management

ahead of any other interests.

8. Designated Persons can be directors or employees of the fund management

company. Alternatively, they can be seconded to the fund management

company, on a full or part-time basis, from another firm such as the investment

manager or a firm which specialises in the provision of Designated Persons.

9. The organisational and structural arrangements put in place by a fund

management company should not create any obstacles to the supervision of that

fund management company and the investment funds under its management by

the Central Bank.

Fund Management Companies - Guidance

Capacity of Designated Persons

10. In order to assess whether work is being carried out properly, that instructions

are being followed and that no issues are arising, Designated Persons should

normally have experience and expertise in the managerial function they are

managing or, otherwise, evidence as would satisfy a reasonable person as to

their capability. For example and by way of analogy, the Central Bank would

not expect a MiFID firm to appoint a Head of Risk where that person had no

knowledge or experience in the field of risk management. A Designated Person

should have enough knowledge in the area they are managing to interrogate the

information being provided to them and constructively challenge their

employees or delegates.

11. Designated persons should understand the managerial function they have

responsibility for and should be up-to-date on latest developments in order to

perform their role effectively. They should be familiar with their managerial

function and with the investment funds under management. They should be

able to address queries raised, for example by boards or the Central Bank, in a

fashion which demonstrates reasonable knowledge of the operations of the fund

management company and those investment funds and any issues affecting

them.

12. Designated Persons should be sufficiently senior in their role such that their

challenge of delegates carries weight and authority and they are the appropriate

individuals to meet with the Central Bank as part of the Central Bank’s

supervisory engagement process. For example, if a Designated Person occupied

a role within the fund management company’s organisation which was more

junior than the delegates he or she was monitoring and overseeing, he or she

may be unable to challenge delegates effectively.

13. Designated Persons should have enough time available to them to carry out their

roles thoroughly and to a high standard.

Fund Management Companies - Guidance

Documenting the delegation of tasks

14. Where a fund management company delegates the performance of tasks, each

delegate should know precisely what is being delegated to them. This should

be documented in written contractual arrangements in a manner determined by

the fund management company. It is not enough to assume that because a

delegate is authorised, it will discharge the regulatory obligations placed on the

fund management company. The delegate may not be subject to equivalent

regulatory obligations. Where it is, it may not be carrying out these tasks to the

same standard as required by the fund management company’s regulatory

obligations. For example, an AIFM should not assume that because it has

delegated investment management to an authorised entity, the investment

manager is carrying out all of the liquidity management obligations placed on

the AIFM by Regulation 18 of the EU (AIFM) Regulations 2013. The written

contractual arrangement between the fund management company and the

investment manager should include one or more contractual provisions which

will ensure that the investment manager carries out its tasks in a manner

consistent with the EU (AIFM) Regulations 2013 and EC (UCITS) Regulations

2011, as applicable, and the parameters instructed by the fund management

company.

Policies and procedures

15. Fund management companies are required to maintain a number of documented

policies and procedures. In many instances, the fund management company

will rely on the policies and procedures of its delegates or its group to satisfy its

own regulatory obligations. Where this is the case, it is not appropriate for the

fund management company to rely on the fact that its delegate is an authorised

entity subject to its own regulatory obligations concerning policies and

procedures. The fund management company must maintain its own written

policies and procedures in each instance where this is required by regulation –

it cannot rely on the delegate’s written policies and procedures to satisfy the

fund management company’s obligation to have its own written policies and

procedures. Where a fund management company intends to rely on the

Fund Management Companies - Guidance

substance of its delegates’ policies and procedures, the fund management

company’s policies and procedures should document:

• that this is the case;

• how the fund management company has satisfied itself that relying on

its delegates’ policies and procedures will ensure that it is complying

with its regulatory obligations i.e. how the fund management company

has mapped its regulatory obligations against those of its delegates;

• how the fund management company will test that the delegates’ policies

and procedures are being complied with;

• the frequency with which the fund management company will review its

policies and procedures;

• the role of the relevant Designated Person.

16. A fund management company should also follow this approach where it

proposes to rely on its group policies and procedures.

Allocation of regulatory obligations to managerial functions

17. Each fund management company should review the regulatory obligations

placed on it and should identify precisely under which managerial function each

regulatory obligation falls. This systematic approach of allocating regulatory

obligations to managerial functions will ensure that a fund management

company has identified each regulatory obligation and that there is a Designated

Person with responsibility for overseeing each such regulatory obligation. It

will ensure that no obligations are unmonitored. It also helps Designated

Persons to understand the expectations placed on them so that they can allocate

and price their time accordingly.

18. Annexes I and II set out a framework of how the Central Bank believes the

regulatory obligations set out in the EU (AIFM) Regulations 2013 and EC

(UCITS) Regulations 2011 (including Level 2 measures) respectively could be

allocated to each managerial function. Fund management companies may

decide that, for that company, particular regulatory obligations should be

Fund Management Companies - Guidance

attributed differently. The precise allocation of regulatory obligations amongst

managerial functions is not as important as ensuring that the exercise is

undertaken and that each specific regulatory obligation is individually attributed

to a specific managerial function. Annexes I and II contain requirements

stemming from the EU (AIFM) Regulations 2013 and EC (UCITS) Regulations

2011 (including Level 2 measures). The fund management company must also

take account of other regulatory obligations (e.g. Central Bank UCITS

Regulations, AIF Rulebook, EMIR, MiFID, MAD, etc.) and may wish to

perform a similar allocation on an obligation by obligation basis for those other

regulatory obligations.

Coordination with boards

Delegate Oversight Guidance

19. The Central Bank’s Delegate Oversight Guidance identifies six distinct areas

where boards should direct specific attention in the oversight of delegates.

These areas are aligned with the key managerial functions for fund management

companies. Accordingly, fund management companies should ensure that

Designated Persons for the corresponding managerial function are responsible

for monitoring and oversight of the approaches and strategies approved by the

Board. This means that the Designated Person – Investment Management

should monitor and oversee compliance with the investment approach, the

Designated Person – Distribution should monitor and oversee compliance with

the distribution strategy and so on.

Reporting from Designated Persons to the board

20. Designated Persons should be satisfied with or be responsible for the production

of management information, or equivalent, for the board (or board sub-

committee as appropriate), so that the conduct of the Designated Person’s work

receives both appropriate monitoring by the board on a regular basis and on an

exceptional basis where issues arise.

Fund Management Companies - Guidance

Escalation to the board

21. Designated Persons should propose and agree with the board appropriate

thresholds and key performance indicators which trigger immediate escalation

from delegates and Designated Persons to the board. In addition, Designated

Persons should immediately escalate matters to the board where they judge that

this is warranted.

Performance of managerial functions

22. Designated Persons are responsible for performing the managerial functions

assigned to them. A large part of performing this role involves close monitoring

and oversight of employees and/or delegates. Fund management companies

should consider and agree with the Designated Person how it expects the

Designated Person to carry out this monitoring and oversight.

Performance of managerial functions - Monitoring and oversight of regulatory

obligations

Matters of fact

23. Some regulatory obligations are rules where compliance is a matter of fact. For

example, an internally managed AIFM must have initial capital of at least

€300,000 and an external AIFM must have initial capital of at least €125,000.

Compliance with this rule is objectively verifiable – either the AIFM has the

requisite capital or it does not.

24. Where a regulatory obligation – matter of fact falls within a Designated Persons’

remit, he or she should ensure that it is evident from the reporting he or she

receives that the fund management company is complying with the rule.

Matters of judgement

25. There are a number of regulatory obligations where compliance is not a simple

objective matter and where a fund management company is required to exercise

judgement. For example, an AIFM must ensure a high standard of security

Fund Management Companies - Guidance

during the electronic data processing and integrity and confidentiality of

information.

26. Where a regulatory obligation – matter of judgement falls within a Designated

Persons’ remit, he or she should receive sufficient reporting and have sufficient

expertise to assess whether the judgement made is reasonable. This assessment

should be documented so that the rationale for it can be explained if it is queried

at a later time.

Matters requiring design

27. The regulatory frameworks set out a number of obligations for fund

management companies to have policies and procedures (‘P&Ps’) in relation to

a certain matter, have a particular organisational structure or establish a limit.

Appropriate P&Ps, structures and limits must be (i) designed, (ii) implemented

and complied with on an on-going basis and (iii) reviewed periodically.

Designated Persons should have a role in each of these three tasks proportionate

to being a key representative of the fund management company in meeting the

obligation.

(i) Design

28. Designated Persons, using their expertise, should advise on the design process

and should assist with the creation of the structure or preparation of the P&P or

the setting of the limit that is appropriate for the fund management company

and investment funds under management given nature, scale and complexity

considerations subject to the approval of the board. Boards should provide

input, should constructively challenge proposals where they see fit and should

approve structures, limits and P&Ps.

29. A fund management company may receive assistance from its delegates or

engage third parties to aid the design process. However, it will be ultimately

the board of the fund management company’s responsibility to ensure that it has

designed appropriate structures or limits or P&Ps and the Designated Persons

should provide assistance and advice in relation to this process.

Fund Management Companies - Guidance

30. The Designated Person should ensure that the fund management company

documents why the proposed structure, limit or P&P was reasonable and

appropriate.

(ii) Implemented and complied with

31. Once designed, the structure must be established, the P&P must be put into

action or the limit must be imposed and complied with on an on-going basis. It

is part of the Designated Person’s role to monitor and oversee this subject

always to the higher level of monitoring and oversight by the board itself, any

sub-committee and the person responsible for assessing organisational

effectiveness.

(iii) Reviewed periodically

32. Designated Persons should keep structures, limits and P&Ps under on-going

review to determine whether they remain appropriate. For example, increased

market volatility may mean that current leverage limits are not appropriate and

so a fund management company may wish to consider whether decreasing a

leverage limit is appropriate in the new environment. Designated Persons

should advise the board where they believe a change should be considered and

should make a proposal to the board for its review, consideration and approval.

Changes to structures, limits and P&Ps should be a matter for the board, and in

some cases unitholders, to decide upon.

Frequency of monitoring and oversight

33. Fund management companies should, among other things, review each of the

regulatory obligations attributed to each managerial function and consider the

frequency of interaction appropriate. The frequency of monitoring and

oversight, including the frequency of receipt of information from delegates,

should be determined based on the activities of the investment funds under

management. This includes but is not limited to:

• the complexity of the investment strategy;

• the markets in which the investment fund operates;

• the types of investment instruments utilised;

Fund Management Companies - Guidance

• the underlying investment activities (as positions are bought and sold);

• the frequency of investor subscriptions/redemptions;

• the utilisation, valuation and security of margin and/or collateral;

• the number of and functions provided by fund service providers; and

• the use of efficient portfolio management techniques.

34. For example, a proposal whereby the Designated Person – Investment

Management received monthly reporting in relation to an investment fund that

deals and trades in complex securities on a daily basis might not be viewed

favourably whereas a proposal to receive reporting on a monthly basis for an

investment fund that pursues a long-term buy and hold strategy may be

acceptable.

35. In addition to regularly scheduled monitoring and oversight, more frequent

review should occur on an ad hoc basis where circumstances demand this, for

example where breaches are occurring or where market volatility has increased.

36. Designated Persons should monitor the tasks for which they are responsible on

a day-to-day basis. This does not necessarily mean that monitoring and

oversight has to take place daily – although this might be the case. As described

above, the frequency of monitoring and oversight will be driven by the activities

of the fund management company and its investment funds under management.

Furthermore, the Designated Persons should have the capability to review

delegates on a continuous basis and should be available on a day-to-day basis.

Reporting from delegates to Designated Persons

37. It is important that the reporting received by Designated Persons provides them

with the information necessary to oversee and monitor compliance by the fund

management company with its regulatory obligations, limits, P&Ps and any

directions issues by the board. Accordingly, fund management companies

should create a monitoring and oversight framework that allows Designated

Persons to receive the information necessary to carry out their roles. Designated

Persons should assist in this process.

Fund Management Companies - Guidance

38. Fund management companies should be able to demonstrate compliance with

limits and P&Ps at all times. Accordingly, Designated Persons should ensure

the monitoring and reporting framework designed allows the fund management

company to comply with this obligation.

39. Designated Persons should have expertise in their managerial functions such

that they can review the information received and interrogate it to identify actual

or potential issues. Receiving reports which only identify exceptions would not

be sufficient in this regard. A summary of relevant information concerning each

investment fund under management would be more appropriate. This should

summarise the activity in the investment fund over the period, any breaches

which occurred or any flags raised and underlying trends.

Meetings between Designated Persons and delegates

40. Designated Persons should hold regular meetings with delegates. These could

be in the form of sub-committee meetings, conference calls, physical meetings

or a combination of these. Designated Persons should also perform on-site visits

of delegates.

41. These meetings could be less frequent than the regular reporting frequency but

more frequent than the board meeting schedule. For example, an arrangement

whereby the Designated Person – Investment Management for an investment

fund with activity on a weekly basis had regular reporting on a weekly basis,

meetings with delegates on a monthly basis and attended quarterly board

meetings might be appropriate.

Approach to information received from delegates

42. Designated persons should approach information received from delegates with

healthy scepticism. They should not necessarily accept such information at face

Fund Management Companies - Guidance

value and should interrogate information received. Designated persons should

constructively challenge employees and delegates and should follow up on

issues raised to ensure that they are concluded satisfactorily.

43. Designated persons may be relying on confirmations from employees or

delegates that tasks are being carried out properly. There is a risk to the fund

management company that a confirmation is incorrect i.e. that a designated

person has received a confirmation that a task is operating normally when that

is not the case. A designated person might receive an incorrect confirmation

because the employee or delegate has made a mistake or does not have the

expertise necessary to interpret information and provide an accurate

confirmation or is deliberately attempting to misinform the designated person.

44. Fund management companies should consider instances where this risk might

arise and how it could be mitigated. There may be someone better placed to

provide a confirmation or it may be possible to receive a secondary confirmation

from another independent source. For example, a fund management company

may seek confirmations from both its investment manager and its legal advisers

concerning the contents of a new prospectus or from the fund administrator and

external auditor concerning the contents of annual reports.

45. Designated Persons should record their engagement on reports received. Where

a Designated Person enquires further into information received from a delegate,

a record of this engagement should be retained. Evidence of constructive

challenge by Designated Persons and interrogation by Designated Persons of

the information received by them might point towards a fund management

company which is well managed and that takes compliance with its regulatory

obligations seriously.

Fund Management Companies - Guidance

ANNEX I – Obligations on AIFMs

This Annex lists obligations placed on AIFMs by Level 1 and Level 2 of the AIFMD.

Further obligations are placed on AIFMs by other legislation and rulebooks (e.g. the

AIF Rulebook). AIFMs should also consider which Designated Person should be

responsible for monitoring and overseeing compliance with those obligations.

Obligations highlighted in green apply to each AIF under management. Obligations

highlighted in blue will only apply if the AIFM or the AIFs under management engage

in certain activities (e.g. if they acquire control of non-listed companies).

Fund Management Companies - Guidance

Capital and Financial Management

Legislative Provision

Managerial obligation

AIF annual reports

Reg. 23(1) AIFM Regulations

The AIFM must make available an annual report for

each AIF it manages and each of the AIFs it markets in

the Union within 6 months of year end.

Article 106(2) Level 2

The AIFM must assess changes in the information

referred to in Reg. 24 of the AIFM Regulations during

the financial year in accordance with Art 106(1) of

Level 2.

Article 107(4) Level 2

The AIFM must provide general information in the

annual report relating to the financial and non-financial

criteria of the remuneration policies and practices for

relevant categories of staff to enable investors to assess

the incentives created. The AIFM must disclose at least

the information necessary to provide an understanding

of the risk profile of an AIF and the measures it adopts

to avoid or manage conflicts of interest.

Capital

Reg. 10(1)-(3) AIFM Regulations

An internally managed AIFM must have initial capital

of at least €300,000 and an external AIFM must have at

least €125,000. It must also have own funds where a

threshold of €250 million in assets under management

is exceeded.

Article 14(2) Level 2

The AIFM must recalculate additional own funds

requirement at end of each financial year. AIFM must

have procedures to monitor on an ongoing basis the

value of portfolios of AIFs managed and shall adjust

additional own funds where the value of AIF portfolios

managed increases significantly.

Reg. 10(7) AIFM Regulations

The AIFM must have professional indemnity insurance

or additional own funds to cover potential professional

liability risks.

Reg. 10(8) AIFM Regulations

The AIFM’s own funds including additional own funds

must be invested in liquid assets or assets readily

convertible to cash.

Fund Management Companies - Guidance

Article 15(5) Level 2

Where professional indemnity risk is covered through

professional indemnity insurance the AIFM must

review the professional indemnity insurance policy and

its compliance with Article 15 provisions at least once

a year.

Organisational requirements

Reg. 19(2) AIFM Regulations

The AIFM must have sound administrative and

accounting procedures.

Article 51(4) Level 2

The AIFM must have accounting policies and

procedures and valuation rules to enable them to deliver

in a timely manner financial reports and which comply

with Article 59 of Level 2.

Reg. 19(2) AIFM Regulations

The AIFM must have control and safeguard

arrangements for electronic data processing and

mechanism to ensure that each transaction involving an

AIF can be reconstructed.

Article 57(1)(e) Level 2

The AIFM must maintain adequate and orderly records

of their business and internal organisation.

Article 57(2) Level 2

The AIFM must have systems and procedures adequate

to safeguard the security, integrity and confidentiality

of information.

Article 58(1) Level 2

The AIFM must have appropriate and sufficient

arrangements for suitable electronic systems for the

timely and proper recording of each portfolio

transaction and subscriptions and redemptions.

Article 58(2) Level 2

The AIFM must ensure a high standard of security

during the electronic data processing and integrity and

confidentiality of recorded information.

Article 64(1) Level 2

The AIFM must make without delay a record of

information which is sufficient to reconstruct the details

of an order, executed transaction or agreement made in

relation to an AIF under management.

Article 65(1) Level 2

The AIFM must take all reasonable steps to ensure that

subscription and redemption orders are recorded

without delay.

Article 66(1) Level 2

The AIFM shall ensure that records of portfolio

transactions and subscription and redemption orders are

kept for a period of at least 5 years.

Fund Management Companies - Guidance

Reporting to competent authorities

Reg. 25 (1), (2) and (3) AIFM

Regulations

The AIFM must regularly report certain information to

the Central Bank and must comply with the Central

Bank’s requests for further information.

Valuation

Reg. 20(1) AIFM Regulations

The AIFM must ensure that appropriate and consistent

procedures are established for the proper and

independent valuation of AIF assets.

Article 67(1) Level 2

The AIFM shall establish, maintain, implement and

review written policies and procedures that ensure a

sound, transparent, comprehensive and appropriately

documented valuation process which must be in

accordance with Article 67(1) and (2) of Level 2.

Article 67(3) Level 2

The AIFM must conduct initial and periodic due

diligence on third parties appointed to perform

valuation services.

Article 68(1) Level 2

If a model is used to value the assets of an AIF, the

model and its main features shall be explained and

justified in the valuation policies and procedures. The

reason for the choice of the model, the underlying data,

the assumptions used in the model and the rationale for

using them, and the limitations of the model-based

valuation shall be appropriately documented.

Article 68(3) Level 2

The AIFM’s senior management must approve any

valuation model used.

Article 69(1) and (4) Level 2

The AIFM must ensure that valuation policies and

procedures and methodologies are applied consistently

including across all AIFs managed by the same AIFM.

Article 70(1) Level 2

The AIFM must conduct a periodic review of valuation

policies.

Article 71(1) Level 2

The AIFM must ensure that all assets are fairly and

appropriately valued and must be able to demonstrate

that the portfolios of AIFs it manages are properly

valued.

Fund Management Companies - Guidance

Reg. 20(3) AIFM Regulations

The AIFM must ensure that NAV is calculated and

disclosed to AIF investors. Valuation to be carried out

when NAV is calculated and at least once per year. If

the AIF is of the open-ended type, such valuations and

calculations shall also be carried out at a frequency

which is both appropriate to the assets held by the AIF

and its issuance and redemption frequency. If the AIF

is of the closed-ended type, such valuations and

calculations shall also be carried out in case of an

increase or decrease of the capital by the relevant AIF.

Article 72(1) Level 2

The AIFM must ensure that the NAV per unit is

calculated on the occasion of each dealing in units but

at least once a year.

Article 72(2) Level 2

The AIFM must ensure that the procedures and

methodology for calculating the NAV per unit is fully

documented and subject to regular verification.

Article 72(3) Level 2

The AIFM must ensure that remedial procedures are in

place in the event of an incorrect calculation of the

NAV.

Article 72(4) Level 2

The AIFM must ensure that the number of units in issue

is subject to regular verification, at least as often as the

unit price is calculated.

Reg. 20(8) AIFM Regulations

The AIFM shall ensure that valuation is performed by

external valuer or by AIFM itself.

Reg. 20(10) AIFM Regulations

Where an external valuer is used, the AIFM must

demonstrate that the external valuer satisfies certain

conditions.

Reg. 20(12) AIFM Regulations

The AIFM must notify the appointment of an external

valuer to the Central Bank. .

Reg. 20(15) AIFM Regulations

The AIFM is responsible for the proper valuation of AIF

assets and the publication of the NAV.

Fund Management Companies - Guidance

Fund Risk Management

Legislative Provision

Managerial obligation

Risk management

Reg. 16(4) AIFM Regulations

The AIFM shall implement adequate risk management

systems in order to identify, measure, manage and

monitor appropriately all risks relevant to each AIF

investment strategy and to which each AIF is or may be

exposed.

Article 40(1) Level 2

The AIFM must establish, implement and maintain an

adequate and documented risk management policy

which identifies all the relevant risks to which the AIFs

it manages are or may be exposed.

Article 45(1) Level 2

The AIFM must adopt adequate and effective

arrangements, processes and techniques in order to

identify, measure, manage and monitor at any time the

risk to which AIFs under management are exposed and

to ensure compliance with risk limits.

Article 45(3)(a) Level 2

The AIFM must put in place such risk measurement

arrangements as are necessary to ensure that risks of

portfolio positions are accurately measured.

Article 45(3)(b) Level 2

The AIFM must conduct periodic back-tests of risk

measurement arrangements.

Article 45(3)(c) Level 2

The AIFM must conduct periodic stress tests and

scenario analyses of risks arising from changes in

market conditions.

Article 45(3)(d) Level 2

The AIFM must ensure that current level of risk

complies with risk limits.

Article 45(3)(e) Level 2

The AIFM must establish, implement and maintain

adequate procedures that, in the event of actual or

anticipated breaches of the risk limits of the AIF, result

in timely remedial actions in the best interest of

investors.

Article 53(2) Level 2

The AIFM must establish formal monitoring procedures

in relation to the credit risk of a securitisation position

in order to monitor performance information on the

exposures underlying such securitisation positions.

Fund Management Companies - Guidance

Reg. 16(6) (b) AIFM Regulations

The AIFM must ensure that risks associated with each

investment position and overall effect on AIF’s

portfolio can be properly identified, measured, managed

and monitored including through stress testing

procedures.

Reg. 16(6)(c) AIFM Regulations

The AIFM must ensure that the risk profile of the AIF

corresponds to the size, portfolio structure and

investment strategies of the AIF.

Article 44(1) Level 2

The AIFM must establish and implement quantitative or

qualitative risk limits or both for each AIF it manages.

Exposure of AIFs

Article 6(2) Level 2

The AIFM must calculate exposure of AIFs in

accordance with gross method and commitment

method.

Article 6(5) Level 2

The AIFM must have appropriately documented

procedures to calculate the exposure of each AIF under

management.

Investment of AIF assets

Reg. 19(2) AIFM Regulations

The AIFM must have internal control mechanisms to

ensure that AIF assets are invested in accordance with

AIF rules/instruments of incorporation and the legal

provisions in force.

Fund Management Companies - Guidance

Operational Risk Management

Legislative Provision

Managerial obligation

Risk management function

Reg. 16(1) AIFM Regulations

The AIFM must functionally and hierarchically

separate the functions of risk management from the

operating units.

Article 39(1) Level 2

The AIFM must establish and maintain a permanent risk

management function.

Article 39(1)(a) Level 2

The AIFM’s permanent risk management function must

implement effective risk management policies and

procedures.

Article 39(1)(b) Level 2

The AIFM’s permanent risk management function must

ensure that the risk profile of the AIF disclosed to

investors in accordance with Regulation (4)(c) of the

AIFM Regulations is consistent with the risk limits set

in Article 44 of Level 2.

Article 39(1)(c) Level 2

The AIFM's permanent risk management function must

monitor compliance with the risk limits set in

accordance with Article 44 of Level 2 and notify the

AIFM’s governing body and, where it exists, the

AIFM’s supervisory function in a timely manner when

it considers the AIF’s risk profile inconsistent with

these limits or sees a material risk that the risk profile

will become inconsistent with these limits.

Article 39(1)(d) Level 2

The AIFM's permanent risk management function shall

provide the updates in (i) and (ii) to the governing body

of the AIFM and where it exists the AIFM’s supervisory

function at a frequency which is in accordance with the

nature, scale and complexity of the AIF or the AIFM’s

activities.

Article 39(1)(e) Level 2

The AIFM's permanent risk management function shall

provide regular updates to the senior management

outlining the current level of risk incurred by each

managed AIF and any actual or foreseeable breaches of

any risk limits set in accordance with Article 44 of

Level 2, so as to ensure that prompt and appropriate

action can be taken.

Fund Management Companies - Guidance

Article 42(2) Level 2

The functional and hierarchical separation of the risk

management function shall be reviewed by the

governing body and, where it exists, the supervisory

function of the AIFM.

Article 70(3) Level 2

The AIFM's risk management function shall review

and, if needed, provide appropriate support concerning

the policies and procedures adopted for the valuation of

assets.

Risk management policy

Article 41(1) Level 2

The AIFM must assess, monitor and periodically, at

least once a year, review (a) the adequacy and

effectiveness the risk management policy; (b) the

degree of compliance by the AIFM with the risk

management policy; (c) the adequacy and effectiveness

of measures taken to address any deficiencies in the

performance of the process; (d) the performance of the

risk management function; (e) the adequacy and

effectiveness of measures aiming to ensure the

functional and hierarchical separation of the risk

management function in accordance with Article 42 of

Level 2.

Article 41(3) Level 2

The AIFM shall update the risk management systems

on the basis of the outcome of the review per Article

41(1) and (2) of Level 2.

Article 41(4) Level 2

The AIFM shall notify the Central Bank of any material

changes to the risk management policy and of the

arrangements, processes and techniques referred to in

Article 45 of Level 2.

Operational risk management

Article 13(1) Level 2

The AIFM must implement effective internal

operational risk management policies and procedures in

order to identify, measure, manage and monitor

appropriately operational risks including professional

liability risks to which an AIFM is or could reasonably

be exposed.

Article 13(2) Level 2

The AIFM must set up a historical database in which

any operational failures, loss and damage experienced

shall be recorded.

Article 13(3) Level 2

The AIFM must use its internal historical loss data and

external data, scenario analysis and factors reflecting

Fund Management Companies - Guidance

business environment and internal control systems in

within its risk framework.

Article 13(4) Level 2

The AIFM must monitor operational risk exposures and

loss experience on an ongoing basis with regular

internal reporting.

Article 13(5) Level 2

The AIFM’s operational risk management policies and

procedures must be well documented.

Article 13(5) Level 2

The AIFM must have arrangements in place for

ensuring compliance and effective measures for

treatment of non-compliance.

Article 13(5) Level 2

The AIFM must have procedures in place for taking

appropriate corrective action.

Article 13(6) Level 2

The AIFM must review operational risk management

policies and procedures and measurement systems

regularly and at least annually.

Business continuity policy

Article 57(3) Level 2

The AIFM shall establish, implement and maintain an

adequate business continuity policy aimed at ensuring,

in the event of an interruption to their systems and

procedures, the preservation of essential data and

functions, and the maintenance of services and

activities, or, where that is not possible, the timely

recovery of such data and functions and the timely

resumption of their services and activities.

Appointment of prime broker

Reg. 15(5), (6)AIFM Regulations

The AIFM must conduct due diligence before

appointing prime brokers and must set the terms of the

appointment out in a written contract.

Article 20(1) Level 2

The AIFM must exercise due skill, care and diligence

before appointing a prime broker and on an ongoing

basis.

Article 20(2) Level 2

The AIFM must ensure that prime brokers fulfil certain

conditions.

Fund Management Companies - Guidance

Article 20(4) Level 2

The AIFM’s senior management must approve list of

selected prime brokers. Other prime brokers may be

selected but AIFM must be able to demonstrate reasons

for such a choice and the due diligence it exercised in

selecting and monitoring these.

Delegation

Reg. 21(1)(a) AIFM Regulations

The AIFM must notify the Central Bank before the

delegation arrangements become effective. AIFM must

be able to justify the entire delegation structure on

objective reasons.

Article 75(d) Level 2

The AIFM must ensure that delegation arrangements

take the form of a written agreement.

Article 75(e) Level 2

The AIFM must ensure that delegate carries out its

functions effectively and in compliance with applicable

law and regulatory requirements and must have

procedures for reviewing on an ongoing basis the

services provided by the delegate. An AIFM must take

appropriate action if delegate cannot carry out functions

effectively or in compliance with applicable laws.

Article 75(f) Level 2

The AIFM must supervise effectively the delegated

functions and manage the risks associated with the

delegation.

Article 75(g) Level 2

The AIFM must ensure that the continuity and quality

of the delegated functions is maintained in the event of

the termination of the delegation or the transfer of these

functions.

Article 75(h) Level 2

The AIFM shall contractually ensure its instruction and

termination rights, its rights of information, and its right

to inspections and access to books and premises. The

agreement shall make sure that sub-delegation can take

place only with the consent of the AIFM.

Article 75(i) Level 2

The AIFM must instruct the delegate how to implement

the investment policy and the AIFM must monitor this

on an ongoing basis.

Article 75(j) Level 2

The AIFM must ensure that the delegate discloses any

development that might have a material impact on the

delegate’s ability to carry out the delegated function

effectively and in compliance with applicable laws.

Article 75(k) Level 2

The AIFM must ensure that delegate protections

confidential information concerning the AIFM, the AIF

and its investors.

Fund Management Companies - Guidance

Article 75(l) Level 2

The AIFM must ensure that delegate has a contingency

plan for disaster recovery and periodic testing of backup

facilities.

Article 76(1) and (2) Level 2

The AIFM must provide the Central Bank with a

detailed description, explanation and evidence of the

objective reasons for delegation and shall provide

further information where requested by the Central

Bank.

Reg. 21(1)(e) AIFM Regulations

The delegation must not prevent the effectiveness of

supervision of the AIFM.

Reg. 21(1)(f) AIFM Regulations

The AIFM must be able to demonstrate that

- delegate is qualified and capable of undertaking the

functions in question;

- the delegate has been selected with all due care;

- the AIFM is in a position to monitor effectively at any

time delegated activity;

- the AIFM can give at any time further instructions; and

- the AIFM can withdraw delegation with immediate

effect.

Reg. 21(1) AIFM Regulations

The AIFM shall review the services provided by each

delegate on an ongoing basis.

Article 21(5) (b) AIFM

Regulations

The AIFM must notify the Central Bank before sub-

delegation arrangements become effective.

Fund Management Companies - Guidance

Investment Management

Legislative Provision

Managerial obligation

Due diligence in selection of investments

Reg. 16(6) (a) AIFM Regulations

The AIFM must implement an appropriate, documented

and regularly updated due diligence process when

investing on behalf of the AIF.

Article 18(1) Level 2

The AIFM must apply a high standard of due diligence

in selection and ongoing monitoring of investments.

Article 18(2) Level 2

The AIFM must have adequate knowledge and

understanding of the assets in which AIF is invested.

Article 18(3) Level 2

The AIFM must establish, implement and apply written

policies and procedures on due diligence and implement

effective arrangements for ensuring that investment

decisions are carried out in compliance with objectives,

strategy and risk limits of AIF.

Article 18(4) Level 2

The AIFM must regularly review and update due

diligence procedures.

Article 19(1) Level 2

The AIFM must comply with specific due diligence

requirements where investing in assets of limited

liquidity. This includes an obligation to set out and

regularly update a business plan consistent with the

duration of the AIF and market conditions.

Article 19(2) Level 2

The AIFM must retain records of the due diligence

activities carried out pursuant to Article 19(1) of Level

2 for at least 5 years.

Leverage

Reg. 17AIFM Regulations

The AIFM must set a maximum level of leverage and

must specify the extent of the right to reuse collateral or

grant a guarantee.

Reg. 26(3)(a) AIFM Regulations

The AIFM shall demonstrate that the leverage limits set

by it for each AIF it manages are reasonable.

The AIFM shall demonstrate that it complies with the

leverage limits set for each AIF at all times.

Fund Management Companies - Guidance

Liquidity management

Reg. 18(1) AIFM Regulations

For unleveraged closed ended-AIF, the AIFM must

employ an appropriate liquidity management system

adopt procedures to monitor liquidity risk and ensure

liquidity profile of underlying investments complies

with underlying obligations.

Article 45(3)(f) Level 2

The AIFM must ensure that there are appropriate

liquidity management systems and procedures for each

AIF in line with requirements per Article 46 of Level 2.

Article 46 Level 2

The AIFM must be able to demonstrate that an

appropriate liquidity management system and effective

procedures are in place.

Article 47(1)(a) Level 2

The AIFM must maintain a level of liquidity in the AIF

appropriate to its underlying obligations.

Article 47(1)(b) Level 2

The AIFM must monitor the liquidity profile of the

AIF’s portfolio of assets.

Article 47(1)(c) Level 2

The AIFM must, were AIF invests in other investment

funds, monitor the approach adopted by manager of

underlying investment fund to the management of

liquidity.

Article 47(1)(d) Level 2

The AIFM must implement and maintain appropriate

liquidity measurement arrangements and procedures to

assess quantitative and qualitative risk of positions and

intended positions.

Article 47(1)(e) Level 2

The AIFM must consider and put into effect the tools

and arrangements necessary to manage the liquidity risk

of each AIF under management.

Article 47(2) Level 2

The AIFM must document their liquidity management

policies and procedures and review them at least

annually.

Article 47(3) Level 2

The AIFM must include appropriate escalation

measures in their liquidity management system and

procedures to address anticipate or actual liquidity

shortages or other distressed situations.

Article 48(1) Level 2

The AIFM must implement and maintain adequate

limits for the liquidity or illiquidity of the AIF.

Fund Management Companies - Guidance

Article 48(1) Level 2

The AIFM must monitor compliance with liquidity

limits and determine the required course of action if

these are exceeded or likely to be exceeded.

Reg. 18(2) AIFM Regulations

The AIFM must regularly conduct liquidity stress tests.

Article 48(2) Level 2

The AIFM must conduct stress tests under normal and

exceptional liquidity conditions to assess the liquidity

risk of each AIF.

Reg. 18(3) AIFM Regulations

The AIFM must ensure that investment strategy,

liquidity profile and redemption policy are consistent

for each AIF.

Article 49(2) Level 2

The AIFM must have regard to the impact that

redemptions may have on the underlying prices or

spreads of individual assets of the AIF in assessing the

alignment of investment strategy, liquidity profile and

redemption policy.

Investment in securitisations

Article 51(1) Level 2

The AIFM shall assume exposure to the credit risk of a

securitisation on behalf of one or more AIFs it manages

only if the originator, sponsor or original lender has

explicitly disclosed to the AIFM that it retains, on an

ongoing basis, a material net economic interest, which

in any event shall not be less than 5 %.

Article 52 Level 2

Prior to the AIFM assuming exposure to the credit risk

of a securitisation on behalf of one or more AIFs, it shall

ensure that the sponsor and originator performs certain

actions.

Article 53(1) Level 2

The AIFM must be able to demonstrate that it has a

comprehensive and thorough understanding of a

proposed securitisation position and that it has

implemented formal policies and procedures prior to

investing in a securitisation.

Article 53(2) Level 2

Where the AIFM has assumed exposure to a material

value of the credit risk of a securitisation on behalf of

one or more AIFs, it shall regularly perform stress tests

appropriate to such securitisation positions in

accordance with point (b) of Regulation 16(6) of the

AIFM Regulations. The stress test shall be

commensurate with the nature, scale and complexity of

the risk inherent in the securitisation positions.

Fund Management Companies - Guidance

Article 53(3) Level 2

The AIFM must properly identify, measure, monitor,

manage, control and report the risks that arise because

of mismatches between the assets and liabilities of the

relevant AIF.

Article 53(3) Level 2

The AIFM shall ensure that the risk profile of such

securitisation positions corresponds to the size, overall

portfolio structure, investment strategies and objectives

of the relevant AIF as laid down in the AIF rules or

instruments of incorporation, prospectus and offering

documents.

Article 53(4) Level 2

The AIFM shall ensure an adequate degree of internal

reporting to the senior management so that senior

management is fully aware of any material assumption

of exposure to securitisations and that the risks arising

from those exposures are adequately managed.

Article 53(5) Level 2

The AIFM must include appropriate information on

their investments in securitisations in the annual report,

disclosures to investors and reporting to competent

authorities.

Article 54(1) Level 2

The AIFM must take corrective action where they

discover that the retained interest did not meet the

requirements laid down in Level 2.

Article 54(2) Level 2

The AIFM must take corrective action where they

discover that the retained interest has fallen below the

5% limit (where not due to the natural payment

mechanism of the transaction).

Exercising voting rights

Article 37(1) Level 2

The AIFM must develop adequate and effective

strategies for determining when and how voting rights

will be exercised.

Article 37(3) Level 2

A summary description of the voting right strategies and

details of the actions taken on the basis of those

strategies shall be made available to the investors on

their request.

Fund Management Companies - Guidance

Distribution

Legislative Provision

Managerial obligation

Reg. 32(2) AIFM Regulations

In relation to marketing of units or shares of EU AIFs

in the home Member State of the AIFM the AIFM shall

submit a notification to the competent authorities of its

home Member State in respect of each EU AIF that it

intends to market.

Reg.32(4) AIFM Regulations

The AIFM must advise the Central Bank in writing

when information previously provided under

Regulation 32(2) of the AIFM Regulations is materially

changed.

Reg. 33(4) AIFM Regulations

The Irish AIFM shall submit a notification to the

Central Bank in respect of each EU AIF that it intends

to market in another Member State. That notification

shall comprise the documentation and information set

out in Schedule 4 of the AIFM Regulations.

Reg. 33(7) AIFM Regulations

The AIFM must advise the Central Bank in writing, in

the timelines set out when any of the particulars

previously communicated under Regulation 33(4) of the

AIFM Regulations is materially changed.

Reg. 34(3) AIFM Regulations

The AIFM intending to manage EU AIF established in

another Member State for the first time shall provide

relevant information to the Central Bank.

Reg. 34(4) AIFM Regulations

Where the AIFM intends to establish a branch in must

provide additional information to the Central Bank.

Reg. 34(6) AIFM Regulations

The AIFM must advise the Central Bank in writing, in

the timelines set out, when any of the particulars

previously communicated under Regulation34(3) or

Regulation 34(4) are changed.

Reg. 36(3) AIFM Regulations

In relation to marketing non-EU AIF in the Union with

a passport AIFM must comply with all the requirements

of the AIFM Regulations with the exception of Chapter

Reg. 36(5) AIFM Regulations

If the AIFM intends to market units or shares of non-

EU AIFs in the State, the AIFM shall submit a

notification to the Central Bank in respect of each non-

EU AIF that it intends to market. That notification shall

comprise the documentation and information set out in

Schedule 3 of the AIFM Regulations.

Fund Management Companies - Guidance

Reg. 36(7) AIFM Regulations

If the Irish AIFM intends to market units or shares of

non-EU AIFs in another Member State, the AIFM shall

submit a notification to the Central Bank in respect of

each non-EU AIF that it intends to market. That

notification shall comprise the documentation and

information set out in Schedule 4 of the AIFM

Regulations

Reg.36(11) AIFM Regulations

The AIFM must advise the Central Bank in writing, in

the timelines set out, when information previously

provided under Regulation 36(5) or Regulation 36(7) is

materially changed.

Article 37(2)(a) AIFM Regulations

In relation to marketing in the State without a passport

of non-EU AIFs and of EU feeder AIF which do not

fulfil the requirements of Regulation 32(1)(b) the AIFM

must comply with all the requirements of the AIFM

Regulations with the exception of Regulation 22. That

AIFM shall ensure that one or more entities are

appointed to carry out the duties referred to in

Regulation 22(7), (8) and (9) of the AIFM Regulations.

The AIFM shall not perform those functions.

Reg. 37(2)(a) AIFM Regulations

The AIFM shall provide the Central Bank with

information about the identity of those entities

responsible for carrying out the duties referred to in

Regulation 21(7), (8) and (9) of the AIFM Regulations

Reg. 43 AIFM Regulations

The AIFM marketing AIF to retail investors must

comply with the requirements of the Central Bank in

relation to such marketing.

Fund Management Companies - Guidance

Regulatory Compliance

Legislative Provision

Managerial obligation

General

Reg. 6(3) AIFM Regulations

In cases where an external AIFM is unable to ensure

compliance with requirements of the AIFM Regulations

for which an AIF or another entity on its behalf is

responsible, it shall immediately inform the Central

Bank and, if applicable, the competent authorities of the

EU AIF concerned. The Central Bank shall require the

AIFM to take the necessary steps to remedy the

situation.

Reg. 7(1) AIFM Regulations

The AIFM authorised in accordance with the AIFM

Regulations shall meet the conditions for authorisation

established in the AIFM Regulations at all times.

Reg. 7(6) AIFM Regulations

Regulations 5(2), 32, 33 and 76 of European

Communities (Markets in Financial Instruments)

Regulations 2007 (S.I. No. 60 of 2007) shall apply to

the provision of services referred to in Regulation 7(4)

of the AIFM Regulations by AIFMs.

Reg. 7(7) AIFM Regulations

The AIFM shall provide the Central Bankwith the

information it requires to monitor compliance with the

conditions referred to in the AIFM Regulations at all

times.

Reg. 9(1)(a)(iii) AIFM

Regulations

The persons who effectively conduct the business of the

AIFM must be of sufficiently good repute and

sufficiently experienced in relation to the investment

strategies pursued by the AIFs managed by the AIFM,

the names of those persons and of every person

succeeding them in office must be communicated

forthwith to the Central Bank and the conduct of the

business of the AIFM must be decided by at least two

persons meeting such conditions.

Reg. 11(1) AIFM Regulations

The AIFM shall, before implementation, notify the

Central Bank of any material changes to the conditions

for initial authorisation, in particular material changes

to the information provided in accordance with

Regulation 8 of the AIFM Regulations.

Reg. 13(1)(a) AIFM Regulations

The AIFM shall at all times act honestly, with due skill,

care and diligence and fairly in conducting its activities.

Fund Management Companies - Guidance

Reg. 13(1)(b) AIFM Regulations

The AIFM shall at all times act in the best interests of

the AIFs or the investors of the AIFs they manage and

the integrity of the market.

Article 17(1) Level 2

The AIFM shall apply policies and procedures for

preventing malpractices, including those that might

reasonably be expected to affect adversely the stability

and integrity of the market.

Article 17(2) Level 2

The AIFM shall ensure that the AIFs they manage or

the investors in these AIFs are not charged undue costs.

Resources

Reg. 13(1)(c) AIFM Regulations

The AIFM must have and employ effectively the

resources and procedures that are necessary for the

proper performance of their business activities.

Article 22(1) Level 2

The AIFM shall employ sufficient personnel with the

skills, knowledge and expertise necessary for

discharging the responsibilities allocated to them.

Article 13(7) Level 2

The AIFM must maintain financial resources adequate

to its assessed risk profile.

Reg. 19(1) AIFM Regulations

The AIFM shall use, at all times, adequate and

appropriate human and technical resources that are

necessary for the proper management of each AIF.

Best execution

Article 25(1) Level 2

The AIFM shall establish, implement and apply

procedures and arrangements which provide for the

prompt, fair and expeditious execution of orders on

behalf of the AIF.

Article 25(4) Level 2

The AIFM shall not misuse information related to

pending AIF orders, and shall take all reasonable steps

to prevent the misuse of such information by any of

their relevant persons.

Article 26(1) Level 2

Where the AIFM has carried out a subscription or,

where relevant, a redemption order from an investor,

they shall promptly provide the investor, by means of a

durable medium, with the essential information

concerning the execution of that order or the acceptance

of the subscription offer, as the case may be.

Fund Management Companies - Guidance

Article 26(2) Level 2

Article 26(1) of Level 2 shall not apply where a third

person is required to provide the investor with a

confirmation concerning the execution of the order and

where the confirmation contains the essential

information.

The AIFM shall ensure that the third person complies

with its obligations.

Article 26(4) Level 2

The AIFM shall supply the investor, upon request, with

information about the status of the order or the

acceptance of the subscription offer, or both as the case

may be.

Article 27(1) Level 2

The AIFM shall act in the best interests of the AIFs or

the investors in the AIFs they manage when executing

decisions to deal on behalf of the managed AIF in the

context of the management of their portfolio.

Article 27(2) Level 2

Whenever the AIFM buy or sell financial instruments

or other assets for which best execution is relevant, and

for the purposes of Article 26(1) of Level 2, they shall

take all reasonable steps to obtain the best possible

result for the AIFs they manage or the investors in these

AIFs, taking into account price, costs, speed, likelihood

of execution and settlement, size, nature or any other

consideration relevant to the execution of the order. The

relative importance of such factors shall be determined

by reference to the specified criteria.

Article 27(3) Level 2

The AIFM shall establish and implement effective

arrangements for complying with the obligations

referred to in Article 26(1) and (2) of Level 2. In

particular, the AIFM shall establish in writing and

implement an execution policy to allow AIFs and their

investors to obtain, for AIF orders, the best possible

result in accordance with Article 26(2) of Level 2.

Article 27(4) Level 2

The AIFM shall monitor on a regular basis the

effectiveness of their arrangements and policy for the

execution of orders with a view to identifying and,

where appropriate, correcting any deficiencies.

Article 27(5) Level 2

The AIFM shall review its execution policy on an

annual basis. A review shall also be carried out

whenever a material change occurs that affects the

AIFM’s ability to continue to obtain the best possible

result for the managed AIFs.

Fund Management Companies - Guidance

Article 27(6) Level 2

The AIFM shall be able to demonstrate that it has

executed orders on behalf of the AIF in accordance with

their execution policy.

Article 28(1) Level 2

Whenever the AIFM buys or sells financial instruments

or other assets for which best execution is relevant, it

shall act in the best interest of the AIFs it manages or

the investors in the AIFs when placing orders to deal on

behalf of the managed AIFs with other entities for

execution, in the context of the management of their

portfolio.

Article 28(2) Level 2

The AIFM shall take all reasonable steps to obtain the

best possible result for the AIF or the investors in the

AIF taking into account price, costs, speed, likelihood

of execution and settlement, size, nature or any other

consideration relevant to the execution of the order. The

relative importance of such factors shall be determined

by reference to the criteria laid down in Article 27(2) of

Level 2.

The AIFM shall establish, implement and apply a policy

to enable them to comply with the obligation referred to

in the first subparagraph. The policy shall identify, in

respect of each class of instruments, the entities with

which the orders may be placed. The AIFM shall only

enter into arrangements for execution where such

arrangements are consistent with the obligations laid

down in this Article. The AIFM shall make available to

investors in the AIFs it manages appropriate

information on the policy established in accordance

with this paragraph and on any material changes to that

policy.

Article 28(3) Level 2

The AIFM shall monitor on a regular basis the

effectiveness of the policy established in accordance

with Article 28(2) of Level 2 and, in particular, the

quality of the execution by the entities identified in that

policy and, where appropriate, correct any deficiencies.

In addition, the AIFM shall review the policy on an

annual basis. Such a review shall also be carried out

whenever a material change occurs that affects the

AIFM’s ability to continue to obtain the best possible

result for the managed AIFs.

Article 28(4) Level 2

AIFMs shall be able to demonstrate that they have

placed orders on behalf of the AIF in accordance with

the policy established pursuant to Article 28(2) of Level

Fund Management Companies - Guidance

Article 28(5) Level 2

Whenever there is no choice of different execution

venues Article 28(2) to (5) Level 2 shall not apply.

However, the AIFM shall be able to demonstrate that

there is no choice of different execution venues.

Article 29(1) Level 2

The AIFM can only carry out an AIF order in aggregate

with an order of another AIF, a UCITS or a client or

with an order made when investing their own funds

where:

(a) it can be reasonably expected that the aggregation of

orders will not work overall to the disadvantage of any

AIF, UCITS or clients whose order is to be aggregated;

(b) an order allocation policy is established and

implemented, providing in sufficiently precise terms for

the fair allocation of aggregated orders, including how

the volume and price of orders determines allocations

and the treatment of partial executions.

Conduct of business

Reg. 13(1)(e) AIFM Regulations

The AIFM shall comply with all regulatory

requirements applicable to the conduct of their business

activities so as to promote the best interests of the AIFs

or the investors of the AIFs they manage and the

integrity of the market.

Reg. 13(1)(f) AIFM Regulations

The AIFM shall treat all AIF investors fairly. No

investor in an AIF shall obtain preferential treatment,

unless such preferential treatment is disclosed in the

relevant AIF’s rules or instruments of incorporation.

Depositary

Reg. 22 AIFM Regulations

The AIFM must ensure that a single depositary is

appointed in accordance with this Regulation 22

Obligations for AIFMs managing AIFs which acquire control of non-listed companies and

issuers

Reg. 28(1) AIFM Regulations

The AIFM must provide notification (proportion of

voting rights) to the Central Bank in relation to

acquisition/disposal/holding by an AIF of shares of a

non-listed company when the proportion of voting

rights reaches, exceeds or falls below certain thresholds.

This also applies to AIFMs managing AIFs that acquire

a non-controlling participation in a non-listed company.

Reg. 28(2) AIFM Regulations

The AIFM must notify the Central Bank, the non-listed

company and its shareholders (where details are

available) where an AIF it manages acquires

(individually or jointly) control over a non-listed

Fund Management Companies - Guidance

company.

Reg. 29(1) AIFM Regulations

Where an AIF acquires, individually or jointly, control

of an non-listed company or an issuer pursuant to

Regulation 27(1), the AIFM must make relevant

information (Regulation 29(2)) available to the non-

listed company, its shareholders (where details

available) and the Central Bank.

Reg. 29(3) AIFM Regulations

The AIFM shall use its best efforts to ensure that the

employees’ representatives of the non-listed company

or, where there are none, the employees themselves, are

duly informed by the board of directors in accordance

with Regulation 29.

Reg. 29(4) AIFM Regulations

Where an AIF acquires, individually or jointly, control

of an non-listed company pursuant to Regulation 27(1),

the AIFM shall ensure that the AIF, or the AIFM acting

on behalf of the AIF, disclose its intentions with regard

to the future business of the non-listed company and the

likely repercussions on employment, including any

material change in the conditions of employment, to: the

non-listed company and its shareholders. In addition it

shall use its best efforts to ensure the board of the non-

listed company makes available the information to the

employee representative or where there are none, the

employees.

Reg. 29(6) AIFM Regulations

Where an AIF acquires, individually or jointly, control

of an non-listed company or an issuer pursuant to

Regulation 27(1), the AIFM shall provide the Central

Bank with information on the financing of the

acquisition.

Reg. 30(1) AIFM Regulations

The AIFM shall either (a) request and use best efforts to

ensure that the annual report of the non-listed company

(including the information per Regulation 30(2)) is

made available by the board of the company to the

employee representatives/employees; or (b) include

relevant information in the AIF annual report.

Reg. 30(3) AIFM Regulations

The AIFM shall (within specific timeframes) either (a)

request and use its best efforts to ensure the board of the

non-listed company makes available to its employee

reps/employees the annual report of the AIF (in

accordance with Regulation 30(1)(b)); or (b) make

available to the investors of the AIF the annual of the

non-listed company(in accordance with Regulation

30(1)(a)).

Fund Management Companies - Guidance

Reg. 31(1)(a) AIFM Regulations

Following acquisition of control by an AIF, the AIFM

(for a period of 24 months) shall not facilitate, support

or instruct any distribution, capital reduction, share

redemption and/or acquisition of own shares by the

company.

Reg. 31(1)(b) AIFM Regulations

In so far as the AIFM is authorised to vote on behalf of

the AIF at the meetings of the governing bodies of the

company, it shall not vote in favour of a distribution,

capital reduction, share redemption and/or acquisition

of own shares by the company (for a period of 24

months).

Reg. 31(1)(c) AIFM Regulations

The AIFM shall use its best efforts to prevent

distributions, capital reductions, share redemptions

and/or the acquisition of own shares by the company

(for a period of 24 months).

Decision making

Article 23(1) Level 2

The AIFM shall ensure that its decision-making

procedures and its organisational structure, referred to

in Article 57 Level 2, ensure fair treatment of investors.

Article 57(1)(a) Level 2

The AIFM shall establish, implement and maintain

decision-making procedures and an organisational

structure which specifies reporting lines and allocates

functions and responsibilities clearly and in a

documented manner.

Article 57(1)(b) Level 2

The AIFMs shall ensure that their relevant persons are

aware of the procedures to be followed for the proper

discharge of their responsibilities.

Article 57(1)(c) Level 2

The AIFM shall establish, implement and maintain

adequate internal control mechanisms designed to

secure compliance with decisions and procedures at all

levels of the AIFM.

Article 57(1)(d) Level 2

The AIFM shall establish, implement and maintain

effective internal reporting and communication of

information at all relevant levels of the AIFM and

effective information flows with any third party

involved.

Fund Management Companies - Guidance

Article 57(6) Level 2

The AIFM must monitor and, on a regular basis,

evaluate the effectiveness of the systems etc.

established in accordance with Article 57(1) to (5) of

Level 2 and take appropriate measures to address any

deficiencies.

Permanent compliance function

Article 61(1) Level 2

The AIFM shall establish, implement and maintain

adequate policies and procedures designed to detect any

risk of failure by the AIFM to comply with its

obligations under Directive 2011/61/EU, and the

associated risks, and put in place adequate measures and

procedures designed to minimise such risk.

The AIFM shall take into account the nature, scale and

complexity of its business, and the nature and range of

services and activities undertaken in the course of that

business.

Article 61(2) Level 2

The AIFM shall establish and maintain a permanent and

effective compliance function which operates

independently and has the responsibilities listed in

Article 61(2) Level 2 and complies with the conditions

listed in Article 61(3) Level 2.

Remuneration

Article 13 AIFMD

The AIFM must have remuneration practices and

policies in accordance with AIFMD and ESMA

guidelines.

Disclosure to investors

Reg. 24(1) AIFM Regulations

The AIFM must disclose certain information to

investors before they invest.

Reg. 24(1) AIFM Regulations

The AIFM must disclose material changes to

information provided to investors.

Reg. 24(2) AIFM Regulations

The AIFM must inform investors before they invest of

any arrangements made by the depositary to

contractually discharge its liability in accordance with

Regulation 22(13)

Reg. 24(2) AIFM Regulations

The AIFM must inform investors without delay of any

changes regarding depositary liability.

Article 57(5) Level 2

The AIFM must have policies and procedures to ensure

redemption policies of the AIF are disclosed to

Fund Management Companies - Guidance

investors before they invest in the AIF and in the event

of material changes.

Reg. 24(4) AIFM Regulations

The AIFM must (for each EU AIF managed and each

AIF it markets in the EU) periodically disclose to

investors:

- the percentage of assets which are subject to special

arrangements;

- any new arrangements for managing the liquidity of

the AIF;

- the current risk profile and risk management systems

employed.

Article 108(2) Level 2

The AIFM must, when disclosing the percentage of

assets subject to special arrangements (as part of

periodic reporting to investors), provide an overview of

any special arrangements in place, the valuation

methodology in place and how management and

performance fees apply to these assets.

Article 108(3) Level 2

The AIFM must, for any new arrangement for managing

the liquidity of the AIF, notify investors whenever they

make material changes to liquidity management

systems, immediately notify investors when they

activate liquidity management tools and provide an

overview of the changes to liquidity arrangements.

Reg. 24(5) AIFM Regulations

The AIFM (for AIFs employing leverage) must disclose

on a regular basis:

- any changes to maximum level of leverage or to any

right to reuse collateral or to grant a guarantee

- the total amount of leverage employed by the AIF.

Senior management

Article 60(1) Level 2

When allocating functions internally, the AIFM shall

ensure that the governing body, the senior management

and, where it exists, the supervisory function are

responsible for the AIFM’s compliance with its

obligations under Directive 2011/61/EU.

Article 60(2)(a) Level 2

The AIFM shall ensure its senior management is

responsible for the implementation of the general

investment policy for each managed AIF, as defined,

where relevant, in the fund rules, the instruments of

incorporation, the prospectus or the offering

documents;

Fund Management Companies - Guidance

Article 60(2)(b) Level 2

The AIFM shall ensure its senior management oversees

the approval of the investment strategies for each

managed AIF.

Article 60(2)(c) Level 2

The AIFM shall ensure its senior management is

responsible for ensuring that valuation policies and

procedures in accordance with Regulation 20 of the

AIFM Regulations are established and implemented.

Article 60(2)(d) Level 2

The AIFM shall ensure its senior management is

responsible for ensuring that the AIFM has a permanent

and effective compliance function, even if this function

is performed by a third party.

Article 60(2)(e) Level 2

The AIFM shall ensure its senior management ensures

and verifies on a periodic basis that the general

investment policy, the investment strategies and the risk

limits of each managed AIF are properly and effectively

implemented and complied with, even if the risk

management function is performed by third parties.

Article 60(2)(f) Level 2

The AIFM shall ensure its senior management approves

and reviews on a periodic basis the adequacy of the

internal procedures for undertaking investment

decisions for each managed AIF, so as to ensure that

such decisions are consistent with the approved

investment strategies.

Article 60(2)(g) Level 2

The AIFM shall ensure its senior management approves

and reviews on a periodic basis the risk management

policy and the arrangements, processes and techniques

for implementing that policy, including the risk limit

system for each AIF it manages.

Article 60(2)(h) Level 2

The AIFM shall ensure its senior management is

responsible for establishing and applying a

remuneration policy in line with Schedule 2 of the

AIFM Regulations.

Article 60(3)Level 2

The AIFM shall also ensure that its senior management

and, where appropriate, its governing body or

supervisory function assess and periodically review the

effectiveness of the policies, arrangements and

procedures put in place to comply with the obligations

laid down in the AIFM Regulations and take

appropriate measures to address any deficiencies.

Fund Management Companies - Guidance

Article 60(4) Level 2

The AIFM shall ensure that its senior management

receives on a frequent basis, and at least annually,

written reports on matters of compliance, internal audit

and risk management indicating in particular whether

appropriate remedial measures have been taken in the

event of any deficiencies.

Article 60(5) Level 2

The AIFM shall ensure that its senior management

receives on a regular basis reports on the

implementation of investment strategies and of the

internal procedures for taking investment decisions

referred to in points (b) to (e) of Article 60(2) of Level

Fund Management Companies - Guidance

Organisational Effectiveness

Legislative Provision

Obligation

Conflicts of interest

Reg. 13(1)(d) AIFM Regulations

The AIFM shall take all reasonable steps to avoid

conflicts of interest and, when they cannot be avoided,

to identify, manage and monitor and, where applicable,

disclose, those conflicts of interest in order to prevent

them from adversely affecting the interests of the AIFs

and their investors and to ensure that the AIFs they

manage are fairly treated.

Reg. 15(1) –(3) AIFM Regulations

The AIFM must take all reasonable steps to identify

conflicts of interest. AIFM must maintain and operate

effective organisational and administrative

arrangements to identify, prevent, manage and monitor

conflicts. Segregate tasks and responsibilities which

may be regarded as incompatible with each other and

potentially generate systemic conflicts of interest.

Article 31(1) Level 2

The AIFM must establish, implement and apply an

effective conflicts of interest policy.

Article 32 Level 2

The AIFM for open-ended AIF must identify, manage

and monitor conflicts between redeeming investors and

remaining investors and anyconflicts between the

AIFM’s incentive to invest in illiquid assets and the

AIF’s redemption policy in accordance with its

obligations under Regulation 15(1) of the AIFM

Regulations.

Article 34 Level 2

Where organisational or administrative arrangements

are not sufficient to prevent conflicts, senior

management of AIFM must be promptly informed in

order to take any necessary decision or action to ensure

that AIFM acts in best interests of AIFs or the investors

in that AIF..

Article 35(1) Level 2

The AIFM must keep and regularly update a record of

the types of activities undertaken by or on behalf of the

AIFM in which a conflict of interest entailing a material

risk of damage to the interests of one or more AIFs or

its investors has arisen or, in the case of an ongoing

activity, may arise.

Article 35(2) Level 2

Senior management must receive frequent reports, at

least annually, written report on conflicts of interest

record.

Fund Management Companies - Guidance

Reg. 15(4) AIFM Regulations

Where organisational arrangements are not sufficient to

prevent conflicts, the AIFM must disclose conflicts to

investors before undertaking business on their behalf

and develop appropriate policies and procedures.

Article 36(2) Level 2

Where disclosure regarding conflicts of interest is made

via a website, certain obligations apply.

Dealings by employees and on own account

Reg. 19(2) AIFM Regulations

The AIFM must have internal control mechanisms

including for:

- personal transactions by employees; or

- holding or management of investments for investing

on own account.

Article 63(1) Level 2

The AIFM must have adequate arrangements aimed at

preventing insider dealing, misuse or improper use of

confidential information; advising or inducing other

than in the proper course of employment; disclosing

information in particular circumstances.

Article 63(2) last para Level 2

For the purposes of Article 63(2)(b) Level 2 where

certain activities of the AIFM are performed by third

parties, the AIFM shall ensure that the entity performing

the activity maintains a record of personal transactions

entered into by any relevant person covered by

paragraph Article 63(1) Level 2 and provides that

information to the AIFM promptly on request.

Internal audit function

Article 62(1) Level 2

The AIFM shall, where appropriate taking into account

is nature, scale and complexity, have an internal audit

function which is separate and independent from its

other functions and complies with the provisions in

Article 62(2) of AIFMD Level 2.

Fund Management Companies - Guidance

ANNEX II – Obligations on UCITS management companies

This Annex lists obligations placed on UCITS management companies by the EC

(UCITS) Regulations 2011. Further obligations are placed on UCITS management

companies by other legislation (e.g. the Central Bank UCITS Regulations 2019).

UCITS management companies should also consider which Designated Person should

be responsible for monitoring and overseeing compliance with those obligations.

Obligations highlighted in green apply to each UCITS under management. Obligations

highlighted in blue will only apply if the UCITS management company or the UCITS

under management engage in certain activities (e.g. if they are undertaking a merger

with another UCITS).

Fund Management Companies - Guidance

Capital and Financial Management

Legislative Provision

Managerial obligation

Regulation 17(1), (4), (5)

A UCITS management company must have initial

capital of at least €125,000. It must also have own funds

where a threshold of €250 million in assets under

management is exceeded.

Schedule 5, paragraph 3

A UCITS management company shall ensure that fair,

correct and transparent pricing models and valuation

systems are used for UCITS under management. It must

be able to demonstrate that the UCITS portfolios have

been accurately valued.

Schedule 5, paragraph 34

A UCITS management company shall make appropriate

arrangements for suitable electronic systems for the

timely and proper recording of each portfolio

transaction and subscriptions and redemptions.

Schedule 5, paragraph 35

A UCITS management company shall ensure a high

standard of security during the electronic data

processing and integrity and confidentiality of recorded

information.

Schedule 5, paragraph 36(1)

A UCITS management company shall ensure the

employment of accounting policies and procedures as

referred to in Regulation 22 so as to ensure the

protection of unit-holders.

Schedule 5, paragraph 36(2)

UCITS accounting shall be maintained in such a way

that all assets and liabilities of the UCITS can be

directly identified at all times.

Schedule 5, paragraph 36(3)

Where a UCITS has different sub-funds, separate

accounts shall be maintained for each sub-fund.

Schedule 5, paragraph 37

A UCITS management company shall have accounting

policies and procedures which ensure that the accurate

calculation of the net asset value of each UCITS to

facilitate subscription and redemption orders being

properly executed at net asset value.

Schedule 5, paragraph 38

A UCITS management company shall establish

appropriate procedures to ensure the proper and

accurate valuation of the assets and liabilities of the

UCITS.

Fund Management Companies - Guidance

Schedule 5, paragraph 58

A UCITS management company shall ensure that a

record of information which is sufficient to reconstruct

the details of an order and executed transaction is made

without delay.

Schedule 5, paragraph 60

A UCITS management company shall take all

reasonable steps to ensure that the received UCITS

subscription and redemption orders are centralised and

recorded immediately after receipt.

Schedule 5, paragraph 62(1), (2)

Subject to the Central Bank’s requirements for longer

periods of retention, a UCITS management company

shall retain records referred to in paragraphs 58 to 61 of

Schedule 5 for a period of at least 5 years.

Schedule 5, paragraph 63(1)

Following termination of a UCITS management

company’s authorisation the management company

shall retain relevant records for the outstanding term of

the 5-year period.

Schedule 5, paragraph 63(2)

Where a UCITS management company transfers its

responsibilities to a UCITS to another management

company, it shall ensure records for the previous 5 years

are accessible to that successor management company.

Regulation 88(1)

A UCITS management company shall publish an

annual report for each financial year and a half-yearly

report covering the first six months of the financial year

for each common contractual funds and unit trust it

manages. A UCITS investment company shall publish

an annual report for each financial year and a half-

yearly report covering the first six months of the

financial year. ,

Regulation 89(3)

The annual report shall include information specified by

this Regulation, additional information set out in

Schedule 12 together with any significant information

as would enable investor to make an informed

judgement on the development of the activities of the

UCITS and its results.

Regulation 89(5)

The half-yearly report shall include at least the

information provided for in paragraphs 1 to 4 of

Schedule 12. After tax figures shall also be included

where a UCITS has paid or proposes to pay an interim

dividend.

Fund Management Companies - Guidance

Regulation 93

he accounting information given in the annual report is

audited by one or more persons empowered by law to

audit accounts in accordance with the Companies Act.

The annual report shall include the auditor’s report (and

any qualification thereto).

Regulation 95(1)

The latest published annual and half-yearly reports shall

be provided to investors on request and free of charge.

Regulation 95(3)

The annual and half-yearly reports shall be available to

investors in the manner specified in the prospectus and

in the key investor information. A paper copy of the

annual and half-yearly reports shall be delivered to

investors on request and free of charge.

Regulation 96(1)

Unless otherwise agreed with the Central Bank, a

UCITS shall publish in an appropriate manner (and at

least twice a month) the issue, sale, repurchase or

redemption price of its units each time it issues, sells,

repurchases or redeems them.

Regulation 108(1)

Unless otherwise provided for in the UCITS

constitutive documents, the value of a UCITS’ listed or

traded assets shall typically be the last known stock

exchange or market quotation. . Unlisted assets and

assets for which the latest exchange or market quotation

is not representative shall be valued on the probable

realisation value estimated with care and in good faith.

Regulation 108(3)

The UCITS constitutive documents shall determine the

frequency of the calculation of the issue and repurchase

price of units.

Regulation 109

The UCITS constitutive documents shall lay down the

conditions and manner of application of a UCITS’

income.

Regulation 110(1)

A UCITS’ units shall be issued or sold at a price (which

may be increased by duties and charges) which is

arrived at by dividing the net asset value of the UCITS

by the number of units outstanding.

Regulation 110(2)

A UCITS’ units shall not be issued unless the equivalent

of the net issue price is paid to the UCITS within usual

time limits.

Regulation 110(3)

A UCITS’ units shall be redeemed or repurchased at a

price (which may be decreased by duties and charges)

Fund Management Companies - Guidance

which is arrived at by dividing the net asset value of the

UCITS by the number of units outstanding.

Fund Management Companies - Guidance

Fund Risk Management

Legislative Provision

Managerial obligation

Regulation 69 (1)(a),

Schedule 9, paragraph 1(a)

A UCITS management company shall have a risk

management policy (“RMP”) which identifies risks to

which a UCITS may be exposed and which those risks

to be monitored and measured vis-à-vis the UCITS

positions and their contribution to the overall risk

profile of the UCITS.

Schedule 9, paragraph 1(c)(i)

A UCITS management company shall, in its RMP,

address the techniques, tools and arrangements that

enables them to comply with the obligations of

Schedule 9, Parts 7 to 10

Schedule 9, paragraph 1(c)(ii)

A UCITS management company shall, in its RMP,

address the allocation of responsibilities within the

management company relating to risk management

Schedule 9, paragraph 2

A UCITS management company shall, in its RMP, state

the terms, contents and frequency of reporting to the

board of directors, senior management and, where

appropriate, to the supervisory function.

Schedule 9, paragraph 3

A UCITS management company shall, in its RMP, take

into account the nature, scale and complexity of its

business and of the UCITS under management.

Schedule 9, paragraph 4(a)

A UCITS management company shall, assess, monitor

and periodically review the adequacy and effectiveness

of the RMP and of the arrangements, processes and

techniques referred to in paragraphs 7 to 14 of Schedule

Schedule 9, paragraph 4(b)

A UCITS management company shall assess, monitor

and periodically review the level of compliance with the

RMP and with the arrangements, processes and

techniques put in place pursuant thereto.

Schedule 9, paragraph 4 c)

A UCITS management company shall assess, monitor

and periodically review the adequacy and effectiveness

of measures taken to address deficiencies in the

performance of the RMP.

Fund Management Companies - Guidance

Schedule 9, paragraph 7(1)(a)

A UCITS management company shall have adequate

and effective arrangements, processes and techniques to

measure and manage at any time the risks which the

UCITS under management are or might be exposed to.

Schedule 9, paragraph 7(1)(b)

A UCITS management company shall have adequate

and effective arrangements, processes and techniques to

comply with global exposure limits and counterparty

risk in accordance with paragraphs 11 to 14 and 20 to

25 of Schedule 9.

Schedule 9, paragraph 8(a)

A UCITS management company shall have necessary

risk measurement arrangements in place to ensure that

the risks of positions taken are accurately measured.

Schedule 9, paragraph 8(b)

A UCITS management company shall conduct periodic

back tests.

Schedule 9, paragraph 8(c)

A UCITS management company shall conduct periodic

stress tests.

Schedule 9, paragraph 8(d)

A UCITS management company shall have a system of

internal limits concerning the measures used to manage

and control each UCITS’ risks.

Schedule 9, paragraph 8(e)

A UCITS management company shall ensure that

UCITS’ risk and the risk limit system in place are

consistent.

Schedule 9, paragraph 8(f)

A UCITS management company shall have procedures

for the timely remediation of actual or anticipated

breaches to the risk limit system occur.

Schedule 9, paragraph 9 (1)

A UCITS management company shall have an

appropriate liquidity RMP in place.

Schedule 9, paragraph 9(2)

A UCITS management company shall conduct stress

tests to enable assessment of the liquidity risk .

Schedule 9, paragraph 10

A UCITS management company shall ensure that the

liquidity profile of each UCITS investments is

appropriate for the UCITS redemption policy.

Schedule 9, paragraph 11

A UCITS management company shall calculate global

exposure of UCITS under management on a daily basis.

Schedule 9, paragraph 12(2)

A UCITS management company shall that the risk

measurement methodology used for a UCITS is

appropriate.

Fund Management Companies - Guidance

Schedule 9, paragraph 19

A UCITS management company shall ensure that

counterparty risk arising from OTC FDIs does not

exceed Regulation 70 limits

Schedule 9, paragraph 26

A UCITS management company shall have accurate

and independent procedures for valuing OTC

derivatives. This shall ensure that the fair value of OTC

FDIs is subject to adequate, accurate and independent

assessment.

Schedule 9, paragraph 28

The valuation arrangements and procedures shall be

adequately documented.

Regulation 69(1)(a)

A UCITS management company shall employ an RMP

which enables it to monitor and measure at any time the

risk of the UCITS positions and their contribution to the

overall risk profile of the portfolio of assets of the

UCITS.

Regulation 69 (1)(b)

A UCITS management company shall employ a process

for accurate and independent assessment of the value of

OTC Derivatives.

Regulation 69(1)(c)

A UCITS management company shall, in accordance

with the requirements of the Central Bank,

communicate to the Central Bank the types of FDIs,

underlying risks, quantitative limits and the methods

which are chosen in order to manage FDI-related risk

Schedule 5, paragraph 8(1)

A UCITS management company shall, in advance of

making an investment, analyse the investment’s

contribution to the UCITS portfolio composition,

liquidity and risk and reward profile.

Schedule 5, paragraph 9(1)

A UCITS management company shall notify a unit-

holder (in a durable medium) details of the subscription

or redemption order in specified timeframes.

Schedule 5, paragraph 11

A UCITS management company shall comply with the

requirements of paragraphs 9 and 10 of Schedule 5 in

relation to relevant transactions at least once every 6

months.

Schedule 5, paragraph 12

A UCITS management company shall supply the unit-

holder, upon request, with information about the status

of an order.

Fund Management Companies - Guidance

Schedule 5, paragraph 40(d)

A UCITS management company shall ensure that its

senior management ensures and verifies that the

investment policy, investment strategies and risk limits

of each UCITS under management are implemented

and complied with.

Schedule 5, paragraph 40(f)

A UCITS management company shall ensure that its

senior management approves and reviews the RMP and

arrangements referred to in the RMP.

Regulation 90(4)

A UCITS management company shall supply

supplementary information in relation to quantitative

risk management limits, risk management methods

used , and

the evolution of risks and yields for the main instrument

categories with which the UCITS is involved to a

unitholder, on request

Fund Management Companies - Guidance

Operational Risk Management

Legislative Provision

Managerial obligation

Schedule 9, paragraph 27

The risk management function shall have specific duties

and responsibilities in the context of functions relating

to global exposure calculations (by reference to

Schedule 9, paragraphs 16 and 17).

Schedule 5, paragraph 50

A UCITS management company shall establish and

maintain a permanent risk management function.

Schedule 5, paragraph 53

The permanent risk management function shall have

necessary authority and access to information.

Schedule 9, paragraph 52(a)

The permanent risk management function shall

implement the risk management policy and procedures.

Schedule 9, paragraph 52(b)

The permanent risk management function shall ensure

compliance with the UCITS risk limit system, global

exposure and counterparty risk limits.

Schedule 9, paragraph 52(c)

The permanent risk management function shall provide

advice to the board of directors as regards the

identification of the risk profile of each managed

UCITS.

Schedule 9, paragraph 52(d)

The permanent risk management function shall provide

regular reports to the board of directors and, where it

exists, the supervisory function, on the consistency

between and compliance with risk levels and risk profile

and the adequacy and effectiveness of the RMP.

Schedule 9, paragraph 52(e)

The permanent risk management function shall provide

regular reports to the senior management outlining risk

levels and any actual or foreseeable breaches to their

limits.

Schedule 9, paragraph 52(f)

The permanent risk management function shall review

and support procedures for valuation of OTC

derivatives.

Schedule 4, paragraph1(e)

A UCITS management company shall maintain

adequate and orderly records of its business and internal

organisation.

Fund Management Companies - Guidance

Schedule 4, paragraph 3

A UCITS management company shall have procedures

adequate to safeguard the security, integrity, and

confidentiality of information, taking into account the

nature of the information concerned.

Schedule 4, paragraph 4

A UCITS management company shall have a Business

Continuity Policy in case of an interruption to their

systems and procedures.

Schedule 5, paragraph 2

A UCITS management company shall have policies and

procedures for preventing malpractices which might

affect the stability and integrity of the market.

Schedule 5, paragraph 8(2)

A UCITS management company shall exercise due

skill, care and diligence when entering into, managing

or terminating any arrangements with third parties in

relation to the performance of risk management

activities.

Schedule 5, paragraph 31

A UCITS management company shall have necessary

resources and expertise to effectively monitor the

activities of third parties especially with regard to the

management of the risk associated with those

arrangements.

Fund Management Companies - Guidance

Investment Management

Legislative Provision

Managerial obligation

Schedule 5, paragraph 4

A UCITS management company shall prevent undue

costs being charged to the UCITS and its unit-holders.

Schedule 5, paragraph 5

A UCITS management company shall ensure a high

level of diligence in the selection and ongoing

monitoring of investments, in the best interests of

UCITS and the integrity of the market.

Schedule 5, paragraph 6

A UCITS management company shall ensure it has

adequate knowledge and understanding of the assets in

which the UCITS are invested.

Schedule 5, paragraph 7

A UCITS management company shall establish policies

and procedures for ensuring that investment decisions

are carried out in compliance with the objectives,

investment strategy and risk limits of the UCITS.

Schedule 5, paragraph 13

A UCITS management company shall act in the best

interests of the UCITS (in the context of the

management of the UCITS’ portfolios) when executing

decisions to deal.

Schedule 5, paragraph 14

A UCITS management company shall take all

reasonable steps to obtain best execution for the

UCITS.

Schedule 5, paragraph 18

A UCITS management company shall act in the best

interests of UCITS under management when placing

orders to deal with other entities for execution.

Schedule 5, paragraph 19(1)

A UCITS management company shall take all

reasonable steps to obtain best execution.

Schedule 5, paragraph 19(2)

A UCITS management company shall establish and

implement a policy to enable compliance with best

execution principles. This information (and any change

to it) shall be available to unit-holders on request.

Schedule 5, paragraph 22(1)

A UCITS management company shall have procedures

for the execution of portfolio transactions on behalf of

the UCITS.

Fund Management Companies - Guidance

Schedule 5, paragraph 22(3)

Financial instruments or sums of money shall be

promptly delivered to the UCITS.

Schedule 5, paragraph 23

A UCITS management company shall not misuse and

shall take steps to prevent misuse of information by any

of its relevant persons.

Schedule 5, paragraph 24

A UCITS management company may only aggregate

orders of different UCITS under management or with

orders of other clients under certain conditions.

Schedule 5, paragraph 25

A UCITS management company which aggregates

orders shall allocate the related trades in accordance

with its order allocation policy.

Schedule 5, paragraph 26

A UCITS management company which has aggregated

transactions for own account with one or more UCITS

or other clients’ orders shall not allocate the related

trades in a way that is detrimental to the UCITS or

another client.

Schedule 5, paragraph 27 (1)

A UCITS management company which aggregates

orders of a UCITS or another client with a transaction

for own account and the aggregated order is partially

executed, shall allocate the related trades to the UCITS

or other client in priority over those for own account.

Schedule 5, paragraph 40(b)

A UCITS management company shall ensure its senior

management oversees the approval of investment

strategies for each UCITS

Schedule 5, paragraph 40(e )

A UCITS management company shall ensure its senior

management approves and reviews internal procedures

for decisions to invest a UCITS assets to ensure the

decisions consistent with approved investment

strategies.

Schedule 5, paragraph 43

A UCITS management company shall ensure that its

senior management receives reports on the

implementation of investment strategies and on the

internal procedures for taking investment decisions.

Schedule 5, paragraph 74,

paragraph 75

A UCITS management company shall have strategies in

relation to the exercise of voting rights. The strategies

shall meet the criteria of Schedule 5, paragraph 75.

Fund Management Companies - Guidance

Distribution

Legislative Provision

Managerial obligation

Regulation 25(1)(a), (3)

A UCITS management company shall have

transparent procedures to ensure investor complaints

are properly and promptly dealt with. These

procedures shall be available free of charge.

Regulation 25(1)(a)

A UCITS management company shall to make

information available to the public or the Central

Bank.

Regulation 25(2)

A UCITS management company shall ensure that each

complaint and the measures taken for its resolution are

recorded.

Regulation 25(3)

A UCITS management company shall ensure that

investors shall be able to file complaints free of

charge.

Regulation 116

A UCITS which markets its units in Ireland shall

satisfy the Central Bank that there are facilities in

Ireland for redeeming unitholders and for the making

available of required information.

Regulation 117(1)

A UCITS authorised by the Central Bank which

proposes to market its units in a Member State shall

submit a notification letter to the Central Bank

containing specific information.

Regulation 117(2)

A UCITS shall enclose certain specified

documentation with the relevant notification.

Regulation 117(7)

The UCITS shall notify any amendments to relevant

documents to the competent authority of the UCITS

host Member State and shall indicate where those

documents can be obtained electronically.

Regulation 117(8)

The UCITS shall notify the UCITS host Member State

of any change in marketing or share classes as outlined

in the notification letter.

Regulation 118(1)(a),(b)

A UCITS which is authorised by the Central Bank and

which markets its units in a host Member State shall

provide certain specified information to investors

within the territory of such Member State. This

information shall comply with host Member State

requirements. Any documents produced in different

languages shall be translated in accordance with

Regulation 118(1)(b).

Fund Management Companies - Guidance

Regulation 27(1)

A UCITS management company which wishes to

establish a branch in another Member State shall be

required to provide certain specified information to the

Central Bank.

Regulation 27(4)

A UCITS management company, authorised by the

Central Bank and which has a branch in a host

Member State shall comply with relevant rules of the

host Member State.

Regulation 27(8)

A UCITS management company shall advise the

Central Bank and the competent authority of the host

Member State in the event of a change in specified

information previously provided to the Central Bank

and to the competent authority of the host Member

State.

Regulation 28(1)

A UCITS management company authorised by the

Central Bank which wishes to passport its activities

into the territory of another Member State for the first

time shall notify the Central Bank and provide it with

specified information.

Regulation 28(3)

A UCITS management company authorised by the

Central Bank which wishes to passport its activities

into the territory of another Member State shall

comply with the requirements of the Central Bank.

Regulation 28(4)

Where information communicated in accordance with

Regulation 28(1) is amended, the management

company shall give notice in writing to the Central

Bank and to host Member State before implementing

the change.

Regulation 30(1)(a)

A UCITS management company which applies to

manage a UCITS established in another Member State

shall provide certain specified documentation to the

competent authority of the UCITS home Member

State.

Regulation 30(3)

A UCITS management company shall advise the

competent authority of the host Member State in the

event of any material change in specified information

previously provided to the competent authority of the

host Member State.

Schedule 14, paragraph 1

Documentation referred to in Regulation 117(2) shall

be made available on the website designated by the

UCITS in the notification letter submitted in

accordance with Regulation 117(1).

Fund Management Companies - Guidance

Schedule 14, paragraph 2

UCITS shall ensure that the UCITS host Member

State has access to the website referred to in Schedule

14, paragraph (1).

Fund Management Companies - Guidance

Regulatory Compliance

Legislative Provision

Managerial obligation

Regulation 16(4)

A UCITS management company which provides

individual portfolio management services shall comply

with the client asset requirements issued by the Central

Bank under the MiFID Regulations.

Regulation4 16(5)

A UCITS management company which maintains client

asset accounts for processing subscription and

salespersons moneys shall comply with the

requirements of the Central Bank under Regulation 123

as well as with client asset requirements issued by the

Central Bank under the MIFID Regulations.

Regulation 17(3)(9)

The conduct of a UCITS management company’s

business shall be decided by at least 2 persons who are

of sufficiently good repute and are sufficiently

experienced in relation to the type of UCITS to be

managed by the management company. The UCITS

management company shall communicate the names of

these persons (and the names of any persons succeeding

them in office) to the Central Bank.

Regulation 17(6)

The own funds of a UCITS management company shall

never be less than the amount prescribed by the Central

Bank in accordance with the terms of Directive

2006/49/EC.

Regulation 22(3)(a)

A UCITS management company which is authorised to

engage in discretionary portfolio management services

shall not make investments in collective investment

schemes managed by it unless the client’s prior

approval has been received for such investment.

Regulation 22(3)(b)

A UCITS management company which is authorised to

engage in discretionary portfolio management services

shall comply with the Investor Compensation Act 1998.

Schedule 4, paragraph 5

A UCITS management company shall have accounting

policies and procedures that enables them to submit

financial reports, where required, to the Central Bank.

Schedule 4, paragraph 1(a)

A UCITS management company shall have decision-

making procedures and an organisational structure

which specifies reporting lines and allocates functions

and responsibilities.

Schedule 4, paragraph 1(b)

A UCITS management company shall ensure relevant

persons are aware of the procedures which must be

followed for the proper discharge of their

responsibilities/

Fund Management Companies - Guidance

Schedule 4, paragraph 1(c)

A UCITS management company shall have internal

control mechanisms to secure compliance with

decisions and procedures at all levels of the

management company.

Schedule 4, paragraph 1(d)

A UCITS management company shall have effective

internal reporting and communication of information at

all levels of the company as well as with relevant third

parties.

Schedule 4, paragraph 6

A UCITS management company shall monitor and

evaluate, on a regular basis their internal control

mechanisms and take appropriate measures to address

any deficiencies.

Schedule 5, paragraph 39

A UCITS management company shall ensure that

senior management and, where appropriate, the

supervisory function, are responsible for the

management company’s compliance with its

obligations under these Regulations.

Schedule 5, paragraph 46

A UCITS management company shall establish and

maintain a permanent and effective compliance

function.

Schedule 5, paragraph 47(1)(a)

A UCITS management company shall ensure that(a) the

compliance function must have the necessary authority,

resources, expertise and access to all relevant

information.

Schedule 5, paragraph 47(1)(b)

A UCITS management company shall ensure that a

compliance officer who is responsible for the

compliance function and for any reporting on a frequent

basis, and who must, at least annually report to the

senior management on matters of compliance is

appointed.

Schedule 5, paragraph 47(1)(c)

A UCITS management company shall ensure that

persons involved in the compliance function must not

be involved in the performance of services or activities

they monitor.

Schedule 5, paragraph 47(1)(d)

A UCITS management company shall ensure that the

method of determining the remuneration of the relevant

persons involved in the compliance function must not

compromise their objectivity and must not be likely to

do so.

Regulation 40(a)

A UCITS management company shall ensure that its

senior management is responsible for the

implementation of the general investment policy for

each managed UCITS, as set out in the prospectus or

constitutive documentation.

Schedule 5, paragraph 40(c)

A UCITS management company shall ensure that its

senior management is responsible for ensuring that the

management company has a permanent

Fund Management Companies - Guidance

and effective compliance function.

Schedule 5, paragraph 42

A UCITS management company shall ensure that its

senior management receives frequent written reports on

matters of compliance, internal audit and risk

management.

Schedule 5, paragraph 44

A UCITS management company shall ensure that the

supervisory function, if any, receives regular written

reports on the matters referred to in paragraph 43 of

Schedule 5.

Schedule 5, paragraph 46(a)

A UCITS management company shall have an

independent, permanent and effective compliance

which is responsible for monitoring and assessing the

adequacy and effectiveness of risk-related measures,

policies and procedures put in place.

Schedule 5, paragraph 46(b)

A UCITS management company shall have an

independent, permanent and effective compliance

which advises and assists persons responsible for

carrying out services and activities to achieve

compliance with relevant obligations.

Schedule 5, paragraph 47(1)(a)

A UCITS management company shall ensure that the

compliance function has the necessary authority,

resources and expertise.

Regulation 66(4)(a)

A UCITS management company of a receiving UCITS

shall confirm to the trustee of the receiving UCITS that

transfer of assets and where applicable, liabilities, is

complete.

Schedule 9, paragraph 5

A UCITS management company shall notify the

Central Bank of any material changes to the RMP.

Schedule 9, paragraph 26

A UCITS management company shall have accurate

and independent procedures for valuing OTC

derivatives. This shall ensure that the fair value of OTC

FDIs is subject to adequate, accurate and independent

assessment.

Schedule 9, paragraph 29

A UCITS management company shall, on an annual

basis, deliver a report the Central Bank containing

information on the types of FDIs used for each UCITS,

along with the underlying risks, quantitative limits and

methods chosen to estimate risk to the Central Bank.

Fund Management Companies - Guidance

Regulation 57(1)

The information provided to the Central Bank by a

merging UCITS authorised by the Central Bank shall

include certain specified information.

Regulation 61(1)(a)

A merging UCITS and a receiving UCITS shall provide

appropriate and accurate information on the proposed

merger to their respective unit-holders to enable them to

make an informed judgement of the impact of the

proposal.

Regulation 61(4)

Where the merging UCITS or the receiving UCITS has

been the subject of a Regulation 117 notification, the

relevant information shall be provided to unit holders in

one of the State’s languages. Where the subject of a

Regulation 115 notification, relevant information shall

be provided in the official language of the host Member

State or in one of the official languages of the host

Member State.

Regulation 65(2)

The entry into effect of the merger shall be made public

as prescribed by the laws of the receiving UCITS home

Member State, and shall be notified to the competent

authorities of the home Member States of the merging

UCITS and the receiving UCITS.

Regulation 74(1)

A UCITS management company may not, on behalf of

collective investment schemes managed by it, acquire

any shares carrying voting rights which would enable it

to exercise significant influence over the management

of an issuing body.

Regulation 77

Where investment restrictions are exceeded for reasons

beyond the control of a UCITS or as a result of the

exercise of subscription rights, the UCITS shall adopt

as a priority objective for its sales transactions the

remedying of that situation, taking due account of the

interests of its unit-holders.

Regulation 80(1)

A master UCITS authorised by the Central Bank shall

enter into an agreement with a feeder UCITS in order

that the feeder UCITS is provided with all the

documents and information necessary for the feeder

UCITS to meet relevant UCITS requirements.

the Central Bank. Where the master UCITS and feeder

UCITS are managed by the same UCITS management

company the agreement may be replaced by internal

conduct of business rules.

Fund Management Companies - Guidance

Regulation 81(1)(d)

A feeder UCITS authorised by the Central Bank shall

communicate to its trustee any information about the

master UCITS which is required for the completion of

the duties of the trustee.

Regulation 83(3)

A feeder UCITS shall send the prospectus, the key

investor information and as the annual and half yearly

reports of the master UCITS, to the Central Bank.

Regulation 84(1)(a)

(A feeder UCITS authorised by the Central Bank which

already pursues activities as a UCITS, including those

of a feeder UCITS of a different master UCITS, shall

provide certain specified information to its unitholders.

Regulation 84(2)

A feeder UCITS authorised by the Central Bank which

has notified the Central Bank of its intention to market

its units in a host Member State shall provide relevant,

faithfully translated information in an a relevant

language.

Regulation 85(1)

A feeder UCITS authorised by the Central Bank shall

effectively monitor the activity of its master UCITS.

Regulation 85(2)

Where a fee or other monetary benefit is received by a

feeder UCITS, its management company (or any other

person acting on behalf of them) in connection with an

investment in the units of the master UCITS, the fee or

other monetary benefit shall be paid into the assets of

the feeder UCITS.

Regulation 86(1)

A master UCITS authorised by the Central Bank shall

immediately inform the Central Bank of the identity of

each feeder UCITS which invests in its units.

Regulation 86(2)

The master UCITS shall not charge subscription or

redemption fees for the investment of the feeder UCITS

into its units or the divestment thereof.

Regulation 86(3)

The master UCITS shall ensure the timely availability

of all information that is required in accordance with

relevant law to the competent authority, the trustee and

the auditor of the feeder UCITS.

Regulation 88(1)

A UCITS management company (in respect of UCITS

under management) and an investment company shall

publish a prospectus.

Fund Management Companies - Guidance

Regulation 89(1)(a)

A prospectus shall include information necessary for

investors to be able to make an informed judgement of

the investment proposed and of the risks attached

thereto.

Regulation 89(1)(b)

The prospectus shall include, , a clear and easily

understandable explanation of the fund’s risk profile.

Regulation 89(2)

The prospectus shall contain the information provided

for in Schedule 11 (except to the extent that it is not

already in the constitutive documentation).

Regulation 90(1)

The prospectus shall disclose the categories of assets in

which the UCITS is authorised to invest. Where a

UCITS is authorised to use financial derivative

instruments it shall include a prominent statement

which indicates the purpose for their use and the effect

of their use.

Regulation 90(2)

The prospectus shall include a prominent statement

drawing attention to its investment policy in its

prospectus and, where necessary, any other marketing

communications where it invests principally in

deposits, UCITS or other collective investment

undertakings or both, or financial derivative

instruments, or if it aims to replicate a stock or debt

securities index. .

Regulation 90(3)

The prospectus (and where necessary other marketing

communications) shall include a prominent statement

highlighting the fact that a UCITS is likely to have a

high volatility due to its portfolio composition or the

portfolio management techniques where this is the case.

Regulation 91(3)(a)

A preliminary prospectus or similar documentation

published by an investment company shall contain

appropriate and relevant disclaimers.

Regulation 91(3)(b)

The prospectus of an umbrella fund shall clearly state

the charges applicable to switching between sub-funds.

Regulation 92

The essential elements of the prospectus shall be kept

up to date.

Regulation 95(1)

The prospectus shall be provided to investors on request

and free of charge.

Fund Management Companies - Guidance

Regulation 97

All marketing communications to investors shall be

clearly identifiable as such. They shall be fair, clear and

not misleading and should not contradict or diminish the

information in a prospectus or key investor information.

Communications must contain specified information.

Regulation 98(1)

A UCITS management company (in respect of UCITS

under management) and an investment company shall

draw up a key investor information document.

Regulation 98(2)

Key investor information shall include appropriate

information to enable investors understand the nature

and the risks of the investment product.

Regulation 98(3)(a)

Key investor information shall provide specified

information.

Regulation 98(3)(b)

Those essential elements shall be comprehensible to the

investor without any reference to other documents.

Regulation 98(4)

Key investor information shall clearly specify where,

how and in what language additional information and

documentation relating to the proposed investment can

be obtained.

Regulation 98(5)

Key investor information shall concise and in

nontechnical language. It shall be in a specified format.

Regulation 99(1)

Key investor information shall constitute pre-

contractual information.

Regulation 99(2)

Key investor information shall contain a clear liability

statement.

Regulation 100(1)

A UCITS management company (in respect of UCITS

under management) and an investment company shall

provide investors with key investor information in good

time before their proposed subscription in such UCITS.

Regulation 100(2)

A UCITS management company (in respect of UCITS

under management) and an investment company shall

provide key investor information to product

manufacturers and intermediaries selling or advising

investors on potential investments in such UCITS or in

products offering exposure to such UCITS upon their

request.

Fund Management Companies - Guidance

Regulation 101(1)

A UCITS management company (in respect of UCITS

under management) and an investment company shall

provide key investor information in paper copy request

and free of charge.

Regulation 101(2)

An up-to-date version of the key investor information

shall be made available on the website of the investment

company or UCITS management company.

Regulation 102(2)

The essential elements of key investor information shall

be kept up to date.

Regulation 114(1)

The constitutive documentation of a unit trust and

common contractual fund shall prescribe the

remuneration (including its method of calculation) and

the expenditure which the management company is

empowered to charge.

Regulation 114(2)

The constitutive documentation of an investment

company shall prescribe the nature of the costs to be

borne by the investment company.

Regulation 94

A UCITS authorised by the Central Bank shall send its

prospectus or any amendments thereto, as well as its

annual and half-yearly reports, to the Central Bank. A

UCITS shall provide that documentation to the

competent authority of its management company’s

home Member State on request.

Regulation 102(1)

A UCITS shall send its key investor information and

any amendments thereto to the Central Bank.

Regulation 104(2)(c)

A UCITS which temporarily suspends the repurchase or

redemption of units shall communicate its decision to

the Central Bank and to the competent authorities of the

Member States in which it markets its units without

delay.

Regulation 113

Where a UCITS is constituted as an umbrella fund, each

sub-fund of the UCITS shall comply with the

regulations and conditions governing UCITS.

Regulation 116

A UCITS which markets its units in Ireland shall satisfy

the Central Bank that there are facilities in Ireland for

redeeming unitholders and for the making available of

required information.

Fund Management Companies - Guidance

Regulation 117(1)(a)(b)

A UCITS authorised by the Central Bank which

proposes to market its units in a Member State shall

submit a notification letter to the Central Bank

containing specific information.

Regulation 117(2)(a)

A UCITS shall enclose certain specified documentation

with the relevant notification.

Regulation 117(8)

The UCITS shall notify the UCITS host Member State

of any change in marketing or share classes as outlined

in the notification letter.

Regulation 118(1)(a),(b)

Regulation 118(2)

A UCITS which is authorised by the Central Bank and

which markets its units in a host Member State shall

provide certain specified information to investors

within the territory of such Member State. This

information shall comply with host Member State

requirements. Any documents produced in different

languages shall be translated in accordance with

Regulation 118(1)(b). This also applies to any changes

to such information.

Regulation 118(3)

The frequency of the publication of the issue, sale,

repurchase or redemption price of units of UCITS

authorised by the Central Bank according to Regulation

96 shall be subject to Irish laws, regulations and

administrative provisions.

Regulation 123(6)

A UCITS shall comply with any requirements or

conditions relating to its authorisation or business

imposed by the Central Bank.

Regulation 125(1)

A UCITS management company, investment company

or trustee of a UCITS shall keep at an office or offices

within the State books and records as may be specified

from time to time and shall notify the Central Bank of

the relevant addresses.

Regulation 126(1)(a)

A UCITS management company, investment company

trustee shall each furnish the Central Bank such

information as required by the Central Bank from time

to time.

Regulation 128(2)

Where the Central Bank replaces a UCITS management

company or trustee, the previous management

company or trustee shall cease to act for the UCITS, and

relevant powers and duties shall vest in the new UCITS

management company or trustee (as relevant).

Fund Management Companies - Guidance

Regulation 131(2)

Where the Central Bank issues a direction to a UCITS

management company, investment company or trustee

under Regulation 131(1) the UCITS shall immediately

notify its unit-holders.

Regulation 138(2)

A UCITS shall comply with all obligations in relation

to key investor information.

Fund Management Companies - Guidance

100

Organisational Effectiveness

Schedule 5, paragraph 30

A UCITS management company shall employ

personnel appropriate skills, knowledge and expertise.

Schedule 5, paragraph 32

A UCITS management company shall ensure that the

performance of multiple functions by relevant persons

will not prevent relevant persons from appropriately

discharging any particular function.

Schedule 5, paragraph 48

A UCITS management company where appropriate and

proportionate, shall establish and maintain an

independent, separate, internal audit function.

Schedule 5, paragraph 51(3)

A UCITS management company shall be able to

demonstrate that appropriate safeguards against

conflicts of interest are in place and that its risk

management process satisfies relevant requirements.

Schedule 5, paragraph 54

A UCITS management company shall establish,

implement and maintain arrangements aimed at

preventing behaviour which relates to market abuse,

market manipulation, insider dealing etc.

Schedule 5, paragraph 55

A UCITS management company shall ensure that

arrangements put in place under paragraph 54 shall

ensure that relevant persons are aware of their

obligations, that management is promptly informed of

relevant transactions and that appropriate records are

kept.

Schedule 5, paragraph 65

A UCITS management company shall, for the purposes

of identifying relevant types of conflict of interest shall

take certain minimum criteria into consideration.

Schedule 5, paragraph 66

A UCITS management company shall, take specified

interests into account when identifying the types of

conflict of interests that may arise.

Schedule 5, paragraph 67

A UCITS management company shall have an effective

conflicts of interest policy.

Schedule 5, paragraph 70

A UCITS management company shall adopt alternative

measures and procedures which are considered

necessary and appropriate by the Central Bank when

adopting alternative or additional measures designed to

manage conflicts of interest.

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Schedule 5, paragraph 71

A UCITS management company shall have records of

the types of collective portfolio management activities

undertaken by or on behalf of the management company

in which a conflict of interest has arisen or, where it may

arise.

Schedule 5, paragraph 72

A UCITS management company’s senior management

shall be promptly informed in order for necessary action

to be taken where conflicts of interest are not sufficient

to ensure, with reasonable confidence, that risks of

damage to the interests of UCITS or of its unit-holders

will be prevented.

Schedule 5, paragraph 73

A UCITS management company shall report situations

referred to in paragraph 72 to investors.

Schedule 5, paragraph 76

A summary description of the strategies referred to in

paragraph 74 shall be made available to investors.

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PART V

Operational Issues

Record retention, archiving and retrievability

Introduction

1. Regulation 123 of the UCITS Regulations 2011 provides the Central Bank with

broad powers to request information from inter alia fund management

companies. The Central Bank UCITS Regulations 2019 will provide that fund

management companies are required to keep all of their records in a way that

makes them immediately retrievable in or from Ireland. Similar rules will apply

to AIFMs. In the context of these rules, the Central Bank is of the view that

‘immediately’ means documentation requested before 1pm (Irish time) should

be provided to the Central Bank on the same day and documentation requested

after 1pm (Irish time) should be provided to the Central Bank before 12 noon

on the following day on which the Central Bank is open for business.

2. The purpose of the record retention, archiving and retrievabilty guidance is to

provide fund management companies with the Central Bank of Ireland’s (the

“Central Bank”) minimum expectations with respect to the retention,

maintenance, security, privacy, preservation and accessibility (collectively,

“Document Management”) of all relevant documentation and records.

3. Document management is particularly important for fund management

companies because engagement with the Central Bank is substantially based on

such documentation and records. For example, when the Central Bank meets

representatives of a fund management company in Ireland and asks them to

produce a record of the fund management company (such as board minutes,

policies and procedures, letters of engagement, contracts with delegates, reports

to Designated Persons), they should be able to produce this record immediately.

Furthermore, document management, and the content of documentation and

records will be a principal means by which the Central Bank can assess,

evidence and establish:

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(i) the control and resources of a fund management company;

(ii) compliance with relevant laws, regulations, conditions and rules;

(iii) the quality of oversight, governance and control provided by the

directors and Designated Persons; and

(iv) the fitness and probity of directors and Designated Persons.

Relevant Documents

4. By documentation and records, the Central Bank is referring to both:

(i) documentation and records pertaining to the fund management company

including those demonstrating the governance of the fund management

company; and

(ii) documentation and records pertaining to all investment funds under the

management

(collectively, “Relevant Documents”).

5. While not a definitive or exhaustive list, and solely for illustrative purposes,

Relevant Documents may include many of the documents listed below :

Relevant Documents

fund management company

Relevant Documents

investment fund

Constitution

Constitutional Document

Business Plan / Programme of Activity

Prospectus / Supplement(s)

Annual / Interim Audited Financial Statements

Key Investor Information Document

Minimum Capital Requirements Data

Risk Management Process / Risk Mitigation

Plans

Internal Audit Reports / Auditors Findings

Annual / Interim Audited Financial Statements

Director – Letter of Appointment

Administration Agreement

Designated Person – Letter of Appointment

Investment Manager Agreement

Relevant Contracts – Legal Agreements

Depositary Agreement

Business Continuity Plan

Management Agreement

Board Pack / Board Reports / Board Minutes

Prime Broker Agreements

Management Accounts

Statutory Filings

Investment Performance / Risk Management

Reporting

Anti-Money Laundering Reporting

Board Pack / Board Reports / Board Minutes

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Records / Engagements around Breaches / Errors

Auditor’s Report

Detailed Firm Procedures and Processes

Statutory Filings

Reports to Designated Persons

Administrator / Depositary (Custody) Reports

Documentation Evidencing Designated Persons

Performing their Designated Roles

Central Bank Regulatory Correspondence

Reports to Directors

Central Bank Regulatory Correspondence

Responsibility for record management policies and procedures

6. It is the individual responsibility of each fund management company to

independently determine its own record management policy and procedures,

including what documents are relevant to its particular circumstances and

operation. The record retention policy should:

(i) be approved by the directors of the fund management company and

reviewed on an annual basis;

(ii) be actively enforced and audited (internally or externally);

(iii) be appropriate for the fund management company’s nature, scale and

complexity; and

(iv) take into consideration not only business and operation requirements,

but also the requirements of all applicable laws, regulations, conditions

and rules respecting the fund management company and its investment

funds under management.

Minimum Requirements

7. Decisions on whether Relevant Documents should be retained in hard or

electronic format, as original or copy documentation, the location(s) where

Relevant Documentation are stored, the period of retention, the method for

retrieving Relevant Documents, ensuring immediate and unfettered access to

Relevant Documents, security, privacy, and the document destruction policy is

strictly a matter for the fund management company’s directors to determine,

subject to relevant laws, regulations, conditions and rules.

8. When engaging with a fund management company, the Central Bank will

expect, at a minimum:

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• a clearly defined and understandable records retention schedule

outlining where documents are stored, e.g. 3rd party, within the

organisation, the location of the record, the format of storage, the

classification of the document being stored, the date stored, the

minimum retention period, the date of destruction, the method of

destruction, the document owner, the records manager and any other

information deemed relevant by the organisation;

• Relevant Documents should be easily identifiable as pertaining to the

fund management company and the investment funds under its

management and the governance of both;

• A full audit trail of Relevant Documents should be available. In

particular, the Central Bank will require reasonable assurances and proof

that there are sufficient procedures and processes in place which will

robustly protect against and seek to avoid any manipulation of hard copy

or electronic (soft-copy) documents and record any manipulations

should they occur;

• Relevant Documents should be sufficient to demonstrate both control

and compliance with the provisions of relevant laws, regulations,

conditions and rules;

• the fund management company should have immediate and unfettered

access, from the State, to Relevant Documents;

• immediate and unfettered access to Relevant Documents means equally

access to documents held locally (in Ireland) and remotely (in other

jurisdictions), including those held within group companies and third

party service supplier network;

• immediate and unfettered access to Relevant Documents means that

documents are readily accessible, easily retrievable and available on

request by the Central Bank within the time periods set out in paragraph

• For meetings with the Central Bank at the registered offices of the fund

management company, the attending directors and Designated Persons

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should be in a position to produce all Relevant Documents upon request

by the Central Bank; and

• the fund management company’s directors should ensure, through

contractual arrangements or by other means, that they and the

Designated Persons have and will retain at all times immediate and

unfettered access to all Relevant Documents.

9. A fund management company that fails to provide any Relevant Documents in

the timeline and form reasonably required by the Central Bank may be viewed

by the Central Bank as not having provided the Relevant Documents in

compliance with the regulatory requirements described in paragraph 1.

Maintenance of designated and monitored email addresses

10. Section 22 of the Central Bank (Supervision and Enforcement) Act 2013,

Regulation 123 of the UCITS Regulations 2011 and Regulation 48 of the AIFM

Regulations 2013 each provide the Central Bank with broad powers to require

inter alia fund management companies to provide the Central Bank with

information within such time as it may specify. To ensure that fund

management companies are in a position to comply with those requirements and

to facilitate effective and efficient communication between the Central Bank

and fund management companies, each fund management company should

maintain a designated email address. The purpose of the designated email

address is to allow the Central Bank to, among other purposes:

(i) send letters, including formal letters, to the fund management company

or investment fund;

(ii) request meetings;

(iii) issue surveys or requests for information;

(iv) disseminate industry letters and notes; and

(v) more generally act as a portal for other fund management

company/supervisory related communication activities, (collectively

“Central Bank Communications”).

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11. The designated email address should:

(i) be approved by the directors of the fund management company as the

designated email address;

(ii) be continuously monitored. By continuously monitored, the Central

Bank means that on at least a daily basis the designated email address

should be checked for any communication(s) from the Central Bank. It

is a matter for the fund management company to determine the processes

and procedures by which the designed email address is monitored;

(iii) have appropriate security, data protection and privacy processes and

procedures implemented around the designated email address to ensure

compliance with all applicable laws, regulations, conditions and rules;

and

(iv) have sufficient capacity to accommodate a regular level of

communication from the Central Bank.

12. A Fund Management Company may choose to maintain a single email address

for the fund management company and all investment funds under management

or as separate dedicated email addresses for the fund management company and

for each investment fund under management.

13. The person monitoring the designated email address should have the relevant

expertise to ensure that Central Bank Communications are correctly considered

and, where required, forwarded to the relevant party to address the content of

the communication.

14. Central Bank Communications should be addressed within the time frame

provided in the communication. Procedures and processes around the ongoing

monitoring and onward transmission of Central Bank Communications should

factor in such time frames. Adherence to such time frames and the quality of

information received will be a principal means by which the Central Bank can

assess, evidence and establish:

(i) the control and resources of a fund management company;

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(ii) the quality of oversight and governance provided by the directors and

Designated Persons; and

(iii) the fitness and probity of directors and Designated Persons.

15. Changes to a designated email address must be communicated to the Central

Bank via the Online Reporting System as a “Regulatory Report”. Changes to a

fund designated email address should be communicated within five business

days to the Central Bank.

16. Communication to the Central Bank will continue by means of normally

established channels or as outlined in the Central Bank Communications. The

Central Bank may periodically test the effectiveness and efficiency of the

designated email address.

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PART VI

Procedural matters

Applications for authorisation

Introduction

1. An application for authorisation as a fund management company

should be

made by submitting:

(a) a completed application form signed by two directors of the applicant

fund management company;

(b) completed individual questionnaires (IQs) in respect of:

• each director and senior manager; and

• any natural person with a qualifying holding in the fund

management company as defined by the respective regulations.

that takes account of the

requirements of Regulation 18 of the UCITS Regulations

and/or

Regulation 8 of the AIFM Regulations

. The business plan should

accurately reflect current activities and procedures. Generic wording

should be avoided.

(d) all ancillary documentation requested in the application form, i.e.

financial projections, statement of responsibility, etc.

2. Application forms and IQs are available from the Central Bank’s website

www.centralbank.ie under the fund service provider heading. In completing an

Fund management company means a UCITS fund management company, an authorised AIFM, a

UCITS self-managed investment company or an internally managed alternative investment fund.

In this guidance, “business plan” refers to a business plan for a UCITS management company or

programme of activity for an AIFM.

European Communities (Undertakings for Collective Investment in Transferable Securities)

Regulations 2011

European Union (Alternative Investment Fund Managers) Regulations 2013

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IQ, applicants are directed to the Fit and Proper Requirements which are also

available on the website.

3. This note provides guidance on the type of information which should be

included in the detailed business plan in support of the application. This

guidance is not intended to be exhaustive. Each applicant should bear in mind

the nature, size and structure of its proposed business. The Central Bank will

advise the applicant of any additional information or clarification required

having reviewed the documentation submitted.

4. Regulation 17(11) of the UCITS Regulations and Regulation 9(5) of the AIFM

Regulations provide that a proposed fund management company shall be

informed whether or not authorisation has been granted within six months or

three months respectively of the date of receipt of a complete application. An

application is only considered complete when it includes completed application

form, all relevant individual questionnaires/declarations and a comprehensive

business plan. In the case of applicant fund management companies, full details

on qualifying shareholders should be provided in the initial submission. The

time scale for considering applications depends greatly upon the quality of the

information provided and the fund management company’s ability to address

the information requested or required under the application form.

5. Regulation 17(14) of the UCITS Regulations and Regulation 12(a) of the AIFM

Regulations, which provide that the Central Bank may revoke an authorisation

where a fund management company does not make use of its authorisation

within 12 months, should be borne in mind when considering whether or not to

submit an application for authorisation.

6. An applicant fund management company may only receive an authorisation

under the UCITS Regulations or AIFM Regulations where it has revoked all

other authorisations except in instances where the entity is seeking dual

authorisation as a UCITS management company and AIFM.

Information to be incorporated in a detailed business plan - Incorporation

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7. An original or certified copy of the certificate of incorporation or declaration of

intention to provide a certificate of incorporation should be submitted. A

certified document is one that is stamped, signed and dated as being a true copy

of the original at a particular date in time by a party independent of the firm.

The certification stamp should be present on the relevant document.

Information to be incorporated in a detailed business plan - Constitution

8. An original or certified copy of the constitution is required. It is the applicant

fund management company's responsibility to ensure that the scope of the

constitution is sufficiently wide to enable it to operate in accordance with the

UCITS Regulations and the Central Bank UCITS Regulations and/or in

accordance with the AIFM Regulations and AIF Rulebook, as appropriate.

Information to be incorporated in a detailed business plan – Capital

9. Detailed financial projections covering a period of three years are required.

These should include:

(a) projected profit and loss accounts;

(b) projected balance sheets.

10. The projections should be sufficiently detailed to demonstrate:

(a) compliance with initial capital requirements and ability to meet capital

requirements on an on-going basis; and

(b) that the applicant fund management company has projected adequate

resources to cater for projected/pipeline business.

11. Projections should be accompanied by relevant assumptions upon which the

data should be based. Applicant fund management companies should

endeavour to provide projections, which present the applicant’s realistic

analysis of their business over the reference period. Applicant fund

In this guidance, “constitution” refers to the constitution of an investment company under Part 24 of

the Companies Act 2014 and the instrument of incorporation of an ICAV under the Irish Collective

Asset-management Vehicles Act 2015.

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management companies should refer to the specific provisions of the UCITS

Regulations and the Central Bank UCITS Regulations and/or AIFM

Regulations and the AIF Rulebook in relation to capital. In particular, AIFMs

should refer to Articles 14 and 15 of Commission Delegated Regulation (EU)

No 231/2013 in relation to professional liability risk and the capital required to

cover such risks.

12. In the case of newly established fund management companies, a certified

confirmation of capital by the board of directors is required in advance of

authorisation. In providing the required confirmation to the Central Bank, the

board should stipulate the form and amount of capital and the name of the

subscribers. Confirmation should be accompanied by an original bank

statement evidencing compliance. This is required in draft form until such time

as the Central Bank confirms the fund management company application is clear

of comment.

13. In the case of existing companies who are already subject to our supervision,

the Central Bank will rely on financial information presented in the latest

audited financial statements as a basis for establishing the financial status of the

application. Depending on the time frame since the last audited accounts the

Central Bank reserves the right to seek more up to date information including

latest management accounts.

14. In the case of existing companies not currently supervised by the Central Bank

a copy of the audited accounts covering the previous three years are required.

Information to be incorporated in a detailed business plan - Probity and competence of

directors and managers

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15. A completed IQ for each proposed appointee should be submitted. In relation

to completion of the IQ, it should be noted that:

(a) all questions should be answered fully and submitted with all the

appropriate attachments; and

(b) if a question does not apply, it should be marked as "not applicable";

Information to be incorporated in a detailed business plan - Suitability of qualifying

shareholders

16. The Central Bank will look through the proposed direct qualifying shareholder

in the applicant, and each indirect qualifying shareholder to identify both the

intermediate and ultimate registered and beneficial shareholders including those

who are in a position to control or influence the applicant firm.

17. Proposed complex structures will only be approved where the Central Bank is

satisfied that the ultimate beneficial shareholders have been identified and that

the structure does not prevent the effective supervision of the firm.

18. To assist in this review, the application should include an ownership chart

indicating all direct and indirect shareholdings. The following should be

provided for each qualifying shareholder:

(a) Where the proposed qualifying shareholder is an individual:

i. an IQ in accordance with the guidelines set out at paragraph 15

above;

ii. regulatory status, if any;

iii. documentation evidencing the fact that the individual is the

registered holder of the shares (for example, a certified copy of

the share register);

iv. confirmation in writing that the individual is the beneficial

owner of the shares.

(b) Where the proposed qualifying shareholder is a company:

i. description of its activities;

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ii. regulatory status, if any;

iii. most recent audited accounts;

iv. details of the proposed interaction with the applicant fund

management company;

v. documentation evidencing the fact that the company is the

registered holder of the shares;

vi. confirmation in writing that the company is the beneficial owner

of the shares.

i. documentation evidencing the fact that the nominee is the

registered holder of the shares;

ii. ownership of the nominee company;

iii. most recent audited accounts;

iv. details of the beneficial owners of the shares;

v. purpose behind the use of a nominee holding;

vi. appropriate declarations in respect of the nominee holding of the

shares in trust for the beneficial owners, including formal

confirmation from the nominee itself that the relevant

declarations of trust remain valid and in force.

19. The Central Bank may require that all nominee holders (including those which

do not have a qualifying holding) be identified to ascertain that those individual

holdings when added to other direct or indirect holdings do not amount to a

qualifying holding.

(d) Where the proposed qualifying shareholder is a trust:

i. documentation evidencing the fact that the trust is the registered

holder of the shares;

ii. copies of all trust deeds and any other documentation

constituting the trust or relating to the trust in some other way

including any supplemental or ancillary deeds, agreements or

side letters;

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iii. names and addresses of the settlers of the trust;

iv. names and addresses of the beneficiaries of the trust (including

details of age for minors) and those of all persons who are within

the class of prospective beneficiaries;

v. financial information in relation to the trust;

vi. details relating to the trustees;

vii. purpose behind the use of a trust structure.

20. It is the policy of the Central Bank to require legal undertakings from various

parties related to the trust with a view to ensuring that the requirements of the

UCITS Regulations and/or AIFM Regulations in relation to qualifying

shareholders are met on a continuous basis. A legal opinion regarding the

validity and efficacy of the undertakings will also be required.

(e) Where the proposed qualifying shareholder is a partnership:

i. description of the LLP, including the names of the general and

limited partners and details of their respective roles;

ii. description of its activities;

iii. regulatory status, if any;

iv. most recent audited accounts;

v. details of the proposed interaction with the applicant fund

management company;

vi. documentation evidencing the fact that the LLP is the registered

holder of the shares;

vii. written confirmation that the LLP is the beneficial owner of the

shares.

The Central Bank may request a copy of the partnership deed and any relevant

agreement between the general and limited partners.

Information to be incorporated in a detailed business plan – Permitted activities

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21. A fund management company can provide investment management, fund

administration or marketing services to investment funds under delegation

arrangements.

22. A fund management company may be authorised to provide collective portfolio

management and individual portfolio management services. It may not be

authorised solely to provide individual portfolio management services. A fund

management company which is authorised to provide individual portfolio

management services may also be authorised to provide investment advice and

safekeeping and administration in relation to units of investment funds.

Information to be incorporated in a detailed business plan – Organisation structure

23. Requirements in relation to organisation of fund management companies,

including the responsibilities of senior management, are set down in the UCITS

Regulations and in the Central Bank UCITS Regulations and/or the AIFM

Regulations and the AIF Rulebook.

24. Regulation 17(3) of the UCITS Regulations and Regulation 9(1)(a)(iii) of the

AIFM Regulations provide that the conduct of a fund management company’s

business shall be decided by at least 2 persons of sufficiently good repute and

are sufficiently experienced in relation to the type of investment funds to be

managed

. The organisation of a fund management company should be

structured such that no one person can decide on the direction of the fund

management company without the endorsement of another.

25. In accordance with the UCITS Regulations and/or AIFM Regulations, fund

management companies should take into account the nature, scale and

complexity of their business and the nature and range of services and activities

undertaken in the course of that business when applying certain requirements of

the UCITS Regulations and/or AIFM Regulations. The business plan submitted

by an applicant fund management company in accordance with paragraph 1(c)

Regulation 42 (4)(a)(iii) of the UCITS Regulations imposes a similar requirement in relation to self-

managed investment companies.

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above should outline at the outset the range of activities to be undertaken

together with the number, type and size of the investment funds to which

services will be provided. It should indicate how the relevant requirements have

been addressed through the employment of appropriate resources and taking

into account the extent to which the fund management company will delegate

activities.

26. In assessing the nature, scale and complexity of its business the following

should, at least, be taken into account:

(a) the number of investment funds, including sub-funds of umbrella

investment funds, under management;

(b) the size of investment funds, including sub-funds of umbrella

investment funds, under management;

management;

(d) investment strategies of the investment funds, including the extent to

which the investment funds will employ leverage;

(e) types of investments and investment location

(f) distribution model and investor base.

27. Where the fund management company provides services to third party

investment fund where it is not the designated fund management company,

these activities should also be considered in accordance with the above criteria

when assessing the nature, scale and complexity of the business of the applicant

fund management company.

28. The following should be submitted to the Central Bank:

(a) Proposed organisational chart to include:

• reporting lines, in particular between directors/senior

management and delegates;

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• functions distinguishing between functions retained by the fund

management company and those delegated to /third parties; and

• proposed staffing – key personnel (with titles) should be

identified.

The Central Bank will also consider proposals under which individuals,

including individuals from service providers to the applicant will, on a

secondment basis, carry out some or all of the management functions. These

individuals must be sufficiently qualified to undertake the relevant functions.

Secondees should complete an IQ to enable the Central Bank be satisfied in this

regard. Information will be required in relation to the contract of employment

between the applicant and the service provider/secondee(s). The contract

should identify potential conflicts of interest and how these will be addressed.

(b) Where a fund management company intends to delegate its functions the

business plan should contain the following details in relation to each of

the managerial functions identified in Schedule 10 of the Central Bank

UCITS Regulations and Chapter 3 of the AIF Rulebook:

i. identity of the director/employee/seconded individual (hereafter

“designated person”) responsible for that function to include a

description of the role which will be carried out by that

designated person and a copy of the existing or proposed

procedures that will apply to the function;

ii. role of the relevant service providers in relation to that function;

and

iii. details of the reports that the designated person will receive from

the service providers and other parties (see paragraph 30).

Bank expects to be provided with the following information:

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i. Regulatory compliance: confirmation as to whether the

designated person will be advised of all compliance issues or

only those that are considered material, indicating what criteria

will determine materiality;

1. the Central Bank acknowledges that while the

monitoring of compliance with respect to investment

restrictions may be carried out by a related third party

outside the State, there should be sufficient evidence that

this process is controlled by the firm.

2. Monitoring of compliance includes the maintenance of

logs in respect of investment breaches, pricing errors,

complaints and compensation payments, all of which

should be available for inspection by the Central Bank.

3. Compliance procedures should be included within the

business plan. A compliance officer should be appointed

and should be responsible for the compliance function

and for any reporting on a frequent basis, and at least

annually, to the senior management on matters of

compliance indicating in particular whether the

appropriate remedial measures have been taken in the

event of any deficiencies.

4. The business plan should include details of the

procedures in place to ensure that all complaints other

than those related to distribution are escalated to the

board of the applicant firm.

5. The Central Bank UCITS Regulations and the AIF

Rulebook permit UCITS, Retail Investor AIF and

Qualifying Investor AIF to engage in transactions with

connected parties, subject to the rules set out therein. The

business plan should provide for the procedures that will

be applied to:

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• ensure compliance with those requirements when

transactions are envisaged; and

• ensure compliance with the required disclosure

and reporting of transactions entered into.

ii. Fund risk management: The UCITS Regulations and the

Central Bank UCITS Regulations and AIFM Regulations and

AIF Rulebook contain detailed requirements in relation to a risk

management function and risk management policy. These

requirements should be reflected in the business plan. In addition

to the risk management process required by Regulation 69(1) of

the UCITS Regulations and the section headed “Risk

management process and reporting” in the Retail Investor AIF

Requirements chapter of the AIF Rulebook, in the context of the

use of financial derivatives instruments by UCITS or Retail

Investor AIFs, details should also be provided in relation to more

general risks that will be regularly monitored (e.g. static security

prices, stock reconciliation, failed trades, etc) and all operational

risks pertinent to the applicant firm.

With regard to collateral management, the business plan should,

if relevant, provide for the systems, operational capabilities and

legal expertise which will be employed to address risks attached

to this activity.

Confirmation is required as to whether the designated person

will become aware of all risk management issues or only those

that are considered material or exceed a certain

timeframe/tolerance.

iii. Operational risk management: The business plan should set

out what procedures are being designed to ensure that all

applicable risks pertaining to the management company will be

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identified, monitored and managed at all times. It should also

describe how the relevant designated person will perform this

managerial function, the reporting to be received and the

escalation procedures in place.

iv. Investment management: Reports should be sufficient to

enable the designated person ensure and verify that the

investment strategies and policies of each investment fund under

management are complied with and to measure the performance

of the investment fund (e.g. total return on monthly, quarterly

and year-to-year basis, performance versus benchmark, yield

calculations, etc.) “Investment strategies” refer to a set of

general indications concerning the strategic asset allocation of

the investment fund and the investment techniques which are

needed to adequately and effectively implement the investment

policy.

v. Capital and financial management: The following

information should be provided:

1. procedures for the production, and submission to the

Central Bank, of annual and semi-annual financial

statements of the applicant firm;

2. the role of the board of directors in the approval of such

accounts;

3. confirmation as to whether the auditors of the applicant

firm will attend the board meetings, at which the annual

financial statements are considered, to report on the audit

process and to answer any questions which may arise in

connection with the audit;

4. the authorised signatory list of the firm and details of

payments process;

5. a description of the other areas that will be kept under

review in relation to the financial control function e.g.

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preparation of profit and loss account for the applicant

firm showing realised and unrealised gains, breakdown

of expenses, cash and stock positions, expenses accrued

etc;

6. a description of how monitoring compliance with capital

requirements will be conducted on an on-going basis and

include provision for circumstances where capital falls

below the required amount and what action will be taken

to restore compliance;

7. a description of how compliance with accounting

requirements in respect of the accounts prepared in

respect of the fund management company and all

investment funds under management will be monitored.

Irish accounting requirements apply to the accounts of

the applicant firm. In the case of investment fund

accounting policies of the home Member State apply;

8. the identity of the internal auditor and frequency of

internal audit visits should be provided. Depending on

circumstances, reliance may be placed on internal audit

functions of service providers provided they are of a level

which the board of directors can be satisfied will give an

appropriate level of assurance relative to the service

providers’ role and involvement in the operational

functions of the fund management company. In this

event, the business plan should identify the relevant

service providers.

vi. Distribution: The business plan should outline the procedures

to ensure and verify that the distribution strategy of each

investment fund under management is complied with. It should

also describe how the arrangements in place to ensure that

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complaints from unitholders regarding distribution matters are

addressed promptly and effectively.

(d) Decision taking: The following details should be provided:

i. A distinction between the types of decisions falling within the

remit of the designated person and those falling within the remit

of the board of the applicant firm. Generally speaking, it is

expected that key/strategic decisions relating to the applicant

firm should be considered by the board, including, but not

limited to:

• creation/termination of new investment funds (including

new sub-funds and classes of shares);

• changes in investment objectives, policies and

restrictions;

• temporary suspension in the calculation of net asset

value;

• approval of dividends, fees and expenses of the applicant

firm;

• approval of financial statements of the applicant firm;

and

• any other decisions of a strategic nature.

ii. The frequency of board meetings and the identity of parties

required to attend such meetings. As a general rule, the board

should meet at least quarterly and it would be expected that at

least these four meetings be held in the State. Additional board

meetings may be held outside the State if circumstances justify.

(e) Regulation 102(3) of the Central Bank UCITS Regulations and

paragraph 5 of the section headed Organisational requirements in the

AIFM Requirements chapter of the AIF Rulebook require inter alia that

where a fund management company delegates activities the business

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plan should formally adopt a statement of responsibility in relation to

the management functions and the procedures which will apply in each

case. A standard statement of responsibility is attached in Annex 1.

(f) Information provided by the applicant should be sufficient to show that

the "mind and management" of the fund management company takes

place in Ireland where the management functions can be subject to

supervision by the Central Bank.

(g) An applicant who proposes to engage in individual portfolio

management services should also provide the information included in

Annex 2.

Information to be incorporated in a detailed business plan – Provision of information

on an on-going basis

29. Regulation 18(2) of the UCITS Regulations and Regulation 13(1)(c) of the

AIFM Regulations require inter alia that the applicant fund management

company will have and will follow established procedures. Applicant fund

management companies should provide, where relevant:

• proposed staffing numbers at authorisation stage and projected staff

numbers for first three years of operation;

• details of systems being utilised by the firm;

• operating procedures appropriate to the activities being performed

including internal controls, business continuity plans, staff training and

recruitment procedures;

• compliance procedures including those related to anti-money

laundering.

Information to be incorporated in a detailed business plan – Reports

30. Regulation 102(4) of the Central Bank UCITS Regulations and paragraph 6 of

the section headed Organisational requirements in the AIFM requirements

chapter of the AIF Rulebook require that where a fund management company

delegates activities, the business plan should include procedures pursuant to

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which designated persons will receive and review reports specific to the

managerial functions. The following provides additional guidance regarding

the Central Bank's requirements in relation to the reports to be received in the

context of each function and the required action in each case.

(a) Types of reports received - The information contained in each report

should be comprehensive to allow for effective monitoring.

(b) Frequency of the reports - Typically reports should be received at least

monthly but may be more frequently in some cases (depending on

dealing frequency, for example).

business plan should provide examples of the circumstances where

action by the designated person would be required following receipt of

the report, for example, a breach by the applicant firm of its capital

requirement, investment restrictions or reporting requirements.

Exceptional Reporting – The business plan should also provide for the

following:

• delegates are required to submit exceptional reports to the designated

person in relation to the activities of the fund management company in

accordance with thresholds / trigger events which the board will from

time to time determine, details of which are provided to the Central

Bank;

• the business plan should set out details of thresholds/trigger events and

procedures which should be adopted on receipt of exceptional reports;

• reports should be maintained where they can be subject to inspection by

the Central Bank.

Information to be incorporated in a detailed business plan – Organisational

requirements

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31. Paragraph 1(d) of Schedule 4 of the UCITS Regulations and Article 57(1)(d) of

AIFMD Level 2

require effective internal reporting and communication of

information. The business plan should at a minimum include a description of

the applicant fund management company’s internal reporting procedures.

Where functions are delegated, the business plan should provide that the board

will consider the internal processes of delegates and be satisfied with the

procedures in place.

32. Paragraph 1(e) of Schedule 4 of the UCITS Regulations and Article 57(1)(e) of

AIFMD Level 2 require maintenance of adequate and orderly records. The

business plan should include detail of the specific records which will be

maintained and where they will be maintained.

33. Paragraph 3 of Schedule 4 of the UCITS Regulations and Article 57(2) of

AIFMD Level 2 require maintenance of adequate systems and procedures. The

business plan should set out how these systems and procedures will be establish

and applied and who has responsibility in this regard. Where functions are

delegated the systems and procedures include those of the delegate. The

business plan should provide that the board will review and be satisfied with the

systems and procedures in place.

34. Paragraph 4 of Schedule 4 of the UCITS Regulations and Article 57(3) of

AIFMD Level 2 requires maintenance of an adequate business continuity

policy. The business plan should set out the procedures which apply in this

regard. Where functions are delegated the agreement entered into with the

delegate should include requirements in relation to implementing and

maintaining an adequate business continuity policy including;

• provision for reporting by delegates on their business continuity policy

including an annual presentation from delegates on business continuity

procedures;

• a requirement to maintain a log of business continuity events; and

Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012

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• a requirement to report material business continuity events to the fund

management company as and when they arise.

Information to be incorporated in a detailed business plan – Resources

35. Paragraph 31 of Schedule 5 of the UCITS Regulations and Article 75(f) of

AIFMD Level 2 requires a fund management company to retain the necessary

resources and expertise to effectively monitor the activities of delegates. The

provisions in the delegation agreements must not preclude the fund management

company from complying with relevant legislation and this must be made clear

in the business plan. Furthermore, the business plan should summarise the

service level agreements in place, particularly those regarding the delegation of

tasks relating to administration and investment management. The investment

management service level agreement should document and specify, at least, the

information which the fund management company will receive to assist it in

fulfilling its responsibility for the implementation of the general investment

policy. It should also provide for:

• KPI (Key Performance Indicator) reporting;

• detailed annual review of each delegate;

• reporting of material issues with subsequent review to ensure controls

in place prevent reoccurrence; and

• requirements to attend board meetings of the fund management

company where material issues arise.

Information to be incorporated in a detailed business plan – Accounting procedures

36. Paragraph 38 of Schedule 5 to the UCITS Regulations and Article 67(1) of

AIFMD Level 2 require a fund management company to establish appropriate

procedures to ensure the proper valuation of the assets and liabilities of an

investment fund. Paragraph 3 of Schedule 5 of the UCITS Regulations and

Article 67(1) of AIFMD Level 2 require a fund management company to ensure

transparent pricing models and valuations processes are used for investment

fund under management. Valuation procedures should, in particular, address

issues relating to the valuation of instruments valued using amortised cost, OTC

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derivatives and unlisted securities. Valuation procedures should be reviewed

before a fund management company takes on the management of new

investment fund or new sub-funds of umbrella funds to ensure it complies with

the regulatory requirements.

Information to be incorporated in a detailed business plan – Conflicts of interest

37. Paragraphs 65 to 73 of Schedule 5 of the UCITS Regulations and Articles 30 to

37 of AIFMD Level 2 set down requirements in relation to conflicts of interest.

A conflicts of interest policy which provides for these requirements should be

included in the business plan, including the criteria for identifying the types of

conflicts of interest which may arise.

Information to be incorporated in a detailed business plan – Strategies for the exercise

of voting rights

38. The business plan should include the policy in relation to voting rights. The

policy should indicate if voting rights will be exercised or not, or provide for

the circumstances where a determination will be made to exercise voting rights.

Voting policies devised by a fund management company should be adopted for

the exclusive benefit of the investment funds under management.

Information to be incorporated in a detailed business plan – Ability to supervise firm

39. The following information should be provided:

(a) a complete group structure showing the name of each undertaking within

the group, the country in which each such undertaking is incorporated

and the country in which its head office is located. (All associated and

related undertakings should be identified);

(b) a brief description of the activities of all undertakings in the group;

companies and the applicant fund management company;

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(d) details of the regulatory status, if any, of undertakings within the group.

In this context note that Regulation 18(8) of the UCITS Regulations and

Regulation 9(2) of the AIFM Regulations require that the Central Bank

shall consult the competent authorities of other Member States in certain

cases.

40. Where an applicant fund management company is part of a large international

group, the information required above can be limited to direct, significant

indirect and ultimate parents.

Information to be incorporated in a detailed business plan – Other

41. Having examined the material provided, any additional information required to

enable the Central Bank to make a decision under this sub-heading will be

notified to the applicant fund management company. In general the business

plan should be sufficiently detailed to make it clear that the applicant fund

management company has sufficient resources to effectively conduct its

business within the requirements of the supervisory regime. Details of any

situations or events of which the applicant fund management company is aware

which impact, or may potentially impact on the applicant fund management

company in any way should be included in the application.

Submission of parent company’s accounts

42. The Central Bank may request that a fund management company submits the

annual audited accounts of the direct parents of the fund management company

together with the accounts of any company within the group specified by the

Central Bank.

Capital requirement

43. The capital requirement of a fund management company is set out in Regulation

17 of the UCITS Regulations and/or Regulation 10 of the AIFM Regulations.

However, the Central Bank reserves the right to increase this amount should it

be deemed not to reasonably reflect the current position of the fund management

company.

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Investment companies that have not designated a fund management company (“self-

managed investment company”)

44. Regulation 42(4)(a)(i) of the UCITS Regulations and/or Regulation 10(1) of the

AIFM Regulations each require a self-managed investment company to have

initial capital of €300,000. In the case of newly established investment

companies, the board of directors of the investment company should confirm

compliance with this requirement and provide an original bank statement to the

Central Bank as evidence of such compliance.

45. The initial capital requirement may be provided to an investment company by

the promoter/investment manager and may be withdrawn upon receipt of

subscriptions into the company to the value of €300,000 provided that the

company maintains a minimum of €300,000.

46. With regard to paragraph 15, a director of the promoter may endorse the IQ of

a proposed director of the investment company.

Relationship with the Central Bank

47. A fund management company should be open and co-operative in its dealings

with the Central Bank and with all other relevant supervisory authorities.

48. A fund management company should participate in such meetings as the Central

Bank considers necessary to review its operations and its business

developments. The fund management company should, for the purposes of such

meetings supply any additional material as may be specified by the Central

Bank, including internal auditors’ reports, operating procedures and

management letters issued by the fund management company’s auditors and/or

by the auditors of investment funds under management. In addition, the Central

Bank may conduct inspections of the operations of a fund management

company if these are deemed necessary or appropriate.

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49. A fund management company should respond to correspondence and to any

requests for information from the Central Bank in a timely and thorough manner

and within any period of time that may be specified by the Central Bank.

50. The Central Bank may request information on investment funds not authorised

by the Central Bank in its role as supervisor of Irish authorised fund

management companies. Such requests do not imply any regulatory or

supervisory role for the Central Bank in respect of such investment funds.

Fund management company passport - General

51. A fund management company authorised by the Central Bank may carry on

activities for which it has been authorised under the UCITS Regulations and/or

AIFM Regulations in another Member State either by the establishment of a

branch or under the freedom to provide services. This is commonly known as

the ‘fund management company passport’. Regulations 27 and 28 of the UCITS

Regulations and Regulation 34 of the AIFM Regulations set out the procedures

which a fund management company authorised by the Central Bank should

follow if it wishes to avail of the fund management company passport. The

purpose of this part of the guidance is to provide guidance to assist these fund

management companies.

52. Fund management companies authorised in other Member States which wish to

carry out, within the State, activities for which they have been authorised should

refer to Regulations 26, 31 and 32 of the UCITS Regulations. AIFMs authorised

in other Member States which manage Irish AIFs should refer to Regulation 34

of the AIFM Regulations.

53. Prior to transmitting the fund management company passport proposal, the

Central Bank intends to engage with the competent authority in the fund

management company’s proposed host Member State. The purpose of this

engagement is to identify whether there are any significant local requirements

which:

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• are imposed on investment funds established in that jurisdiction;

• the fund management company would be required to discharge; and

• would impact on the complexity of providing services in that specific

jurisdiction.

Fund management company passport - Managing non-Irish investment funds

54. Generally, the Central Bank would expect a greater level of resources where a

fund management company proposes to act as manager to non-Irish investment

funds given the additional scale and more complex nature of the business

involved. The Central Bank will review each fund management company

passport proposal on a case-by-case basis to determine whether the fund

management company is sufficiently resourced.

Corporate governance issues

55. A fund management company managing non-Irish investment funds should

have sufficient knowledge of the local regulatory regime in Member States into

which it passports. For example, the fund management company would need

to know the types of breaches which need to be reported to the investment

fund’s competent authority and the timeframe for this reporting. The fund

management company should also have some appreciation of the marketplace

and any particular issues of concern or topical issues in the investment fund’s

home Member State.

56. Regulation 112(2)(b) of the Central Bank UCITS Regulations provides that a

UCITS management company should describe in its programme of operations

how it will monitor compliance with regulatory requirements that are applicable

in the home state of the relevant investment fund on a day-to-day basis. This

may involve creating an additional managerial function. Alternatively, this

could fall within the remit of one of the existing managerial functions (e.g.

regulatory compliance) provided the incumbent member of staff/designated

person has or can quickly develop the requisite expertise.

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57. The fund management company may need to have representatives available to

travel to the investment fund’s home Member State to attend and report at board

meetings of the investment fund where the investment fund is structured as an

investment company. This will increase the number of meetings which fund

management company representatives should attend – they will attend the

quarterly board meetings of the fund management company itself and the board

meetings of each of the investment fund under management. The fund

management company may also need to have representatives available to travel

to deal with service provider issues as and when they arise.

58. Increasing the number of investment funds under management adds to the scale

of fund management company supervisory work. Fund management companies

applying to manage an investment fund in another Member State on a freedom

of services basis must ensure that personnel are able to allocate the necessary

time need to carry out the managerial functions, attend board meetings as well

as possessing expertise to discharge their duties that relate to the relevant funds

under management.

59. Regulation 112(2)(d) of the Central Bank UCITS Regulations requires a UCITS

management company to include in its programme of operations an analysis of

the impact that managing an investment fund that is authorised in another

Member State is likely to have on its minimum capital requirement. This will

assist the Central Bank in determining whether it has reason to doubt the

financial situation of the fund management company in accordance with

Regulation 27(2)(a) of the UCITS Regulations.

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Administrator issues

60. The administrator will have staff who work on the investment fund on a day-to-

day basis and who may have a more intimate knowledge of the day-to-day

operation of the investment fund than the non-executive directors of a

investment fund management company. Where an Irish administrator is

engaged, the Central Bank can have direct access to these staff by virtue of its

role as regulator of that entity. However, where a non-Irish administrator is

appointed, these staff may not be directly available to the Central Bank.

Accordingly, Regulation 113(3) of the Central Bank UCITS Regulations

requires that the programme of operations addresses how the fund management

company will ensure that its staff/designated persons with the requisite detailed

knowledge of the day-to-day operation of the investment fund will be available

to the Central Bank.

Fund management company passport - Notifications

61. A key component of the notification made by a fund management company

pursuant to Regulation 27(1) or 28(1) of the UCITS Regulations or Regulation

34(3) of the AIFM Regulations will be the programme of operations.

62. It is not envisaged that the programme of operations will be the existing business

plan of the fund management company. While relevant extracts from the

business plan may be appropriate, the Central Bank expects that the programme

of operations will be a concise yet comprehensive outline of the fund

management company’s proposal to passport, setting out all the required

elements under the UCITS Regulations or AIFM Regulations and including

details of the types of funds to be managed, resources to be applied, delegation

arrangements to be put in place and details of how the fund management

company proposes to monitor such delegates, including access to records of the

delegates as appropriate.

63. The Central Bank considers that a completed notification has been received

when all of the information and documentation required by the UCITS

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Regulations or AIFM Regulations has been received and all of the queries raised

by the Central Bank have been adequately addressed.

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Annex 1

Statement of Responsibility

The Statement of Responsibility should take the form of a formal letter, addressed to

the Central Bank, on the company’s headed paper, signed by the Chairman of the

company and incorporating the following wording.

As at …………………..

the Board of Directors of the Company hereby accept

collective responsibility for managing the affairs of the Company in accordance with

the Company's constitution and [the European Communities (UCITS) Regulations

2011, ("the UCITS Regulations”)]/ the European Union (AIFM) Regulations 2013,

(“the AIFM Regulations”).

In accordance with [Regulation 101(1)(a) of the Central Bank UCITS

Regulations]/[paragraph 2 of the section headed “Organisational requirements” in the

AIFM Requirements chapter of the AIF Rulebook], the following “designated persons”

of the Company accept responsibility for the day-to-day monitoring and control of the

management functions (as detailed below) and associated procedures.

Management Functions Director/Designated person

• Regulatory Compliance:

• Fund Risk Management:

• Operational Risk Management:

• Investment Management:

• Capital and Financial Management:

• Distribution:

Initially this date will refer to the date of authorisation of the Company by the Central Bank and

thereafter to the date of any changes in the composition of the Board and/or to the allocation of

responsibilities of the designated persons.

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It is confirmed that the Company will notify the Central Bank or seek its approval, as

appropriate, in respect of any changes to this statement involving, inter alia, the

appointment/resignation of Directors and/or reallocation of responsibility of the

designated persons.

Yours faithfully

___________________________

Chairman

For on and on behalf of

Company Name

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Annex 2

Additional information required in relation to fund management companies that

provide individual portfolio management services

Fund management companies who propose to provide individual portfolio management

services should contact the Central Bank in advance of submitting an application for

authorisation and should supply the Central Bank with the following additional

information as part of the application for authorisation.

1. An additional section to the business plan referred to in paragraph 1 of this

guidance to include the following:

a. a full description of the services to be provided;

b. details of the resources which the fund management company proposes

to put in place to support this business, namely:

i. staff;

ii. systems; and

iii. procedures.

The information provided should outline the organisational structure of

the fund management company, specifying the reporting lines and

functions. It should identify the officers responsible for each of the

compliance, financial control, internal audit, risk management and

money laundering reporting functions, where relevant, and provide a

detailed description of their respective roles within the company. Brief

details of the procedures to be adopted by the fund management

company are required, together with confirmation that the full

procedures are available to the Central Bank upon request;

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c. transaction order flows for the individual portfolio management service

showing the relationship between the fund management company,

clients, counterparties, clearing agents, custodians, brokers and relevant

markets, as appropriate;

d. any client agreement forms or other client documentation, including risk

disclosure statements, discretionary agreements, contract notes and

terms of business;

e. financial projections for the first three years in accordance with

paragraph 9 of this guidance;

f. details of how the fund management company proposes to identify,

monitor and manage risks relating to individual portfolio management

activities;

g. procedures in relation to the holding of client assets. The procedures

should be accompanied by Appendix 3 to the Central Bank's application

form for MiFID firms, duly completed.

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T +353 1 224 6000 F +353 1 671 6561 www.centralbank.ie FASDp[email protected]

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