Redesign of Irish Investment Funds Regulation 

Press Release 29 October 2012

The Central Bank of Ireland will tomorrow initiate a consultation on the Irish regulatory regime for non-UCITS funds.  The consultation will outline the changes to be introduced in connection with the implementation of the Alternative Investment Fund Managers Directive (‘AIFMD’) in July 2013.

The AIFMD has presented the Central Bank with an opportunity to redesign the framework for the regulation of non-UCITS funds.  The Central Bank is proposing an approach to non-UCITS regulation which aims to turn the Irish regulations into a proportionate investment funds framework which accommodates investors across a wide spectrum of capability and sophistication.

Following detailed preliminary discussions with industry on the implications of the forthcoming AIFMD, the Central Bank will set out a number of significant changes to its current regime for the regulation of funds authorised under Irish law.  These proposals will be published in a draft ‘AIF Handbook’ which will consolidate all its current rules into a single rulebook for non-UCITS funds, and which will also include a number of major changes to its current approach.

Key highlights

Principal among the changes is a proposal to bring an end to the current Promoter approval process.  Instead, the Central Bank is proposing to place additional reliance on the Alternative Investment Fund Manager (the ‘AIFM’) which must be appointed, under the terms of the AIFMD.  The consultation also develops current requirements setting out the role of directors.

The proposed AIF Handbook also includes changes to loosen the current investment constraints on retail non-UCITS funds.  A range of investment limits which currently apply to retail non-UCITS funds will be changed so as to allow retail investors to use Ireland’s new non-UCITS regime to invest in unlisted securities, derivatives and other asset classes to an extent which has not been possible for such investors up to now.

The current ‘QIF’ regime will be replaced by a similar ‘QIAIF’ (Qualifying Investor Alterative Investment Fund) regime, but with fewer requirements in areas such as share classes, dealing frequencies, counter-party eligibility, issuance of partly paid units, duration of closed funds and disclosure requirements across a broad range of areas.

The Central Bank is also flagging its intention to look at bringing what are called ‘Exempt Unit Trusts’ under the regulatory umbrella.

Next steps

In light of the extensive discussions which have taken place in advance of the consultation and the pressing need to have as much certainty as possible about the details of the new regime at an early date, the Central Bank has decided on a short public consultation period of six weeks.  Early in 2013 it will issue a response to the consultation, which will set out its stance on the policy issues raised in the consultation.  A finalised rulebook will issue thereafter following a technical review.

Notes for Editors

The consultation paper will be available here.