1. APPROACHING DEADLINES

Approaching deadlines

Q3 2020

Immediately

Clients to consider revising the SRRI in their KIIDS/KID in light of market volatility caused by COVID 19 if they have not already done so.

30 September

MMF quarterly reports for Q1 and Q2 to be sent to the Central Bank for both Q1 and Q2.

30 September

New Liquidity Stress Testing Framework will apply to all management companies and SMIC/internally managed AIF under the ESMA Guidelines on Liquidity Stress Testing.

Q4 2020

11 October

UCITS management companies and AIFMs will be required to report all relevant SFT transactions concluded by funds under management with effect from 11 October 2020.

27 November

UCITS management companies must ensure by 27 November 2020 that performance fees charged to UCITS funds only crystallise annually and are only paid once a year.

2. UCITS & AIFMD

2.1 Final Report - Guidelines on performance fees in UCITS and certain types of AIFs

On 3 April 2020, the European Securities and Markets Authority (ESMA) published a report on performance fees in Undertakings for the Collective Investment in Transferable Securities (UCITS) and certain types of Alternative Investment Funds (AIFs). A consultation on proposed Guidelines had been published on 16 July 2019.

This final report details the Guidelines on performance fees and explains how ESMA took the feedback received from interested parties into account. National Competent Authorities (NCAs) must indicate to ESMA within a two month period if they intend on complying with the Guidelines or not. They will then come into effect at the end of this two month period. The Central Bank revised the rules applicable to UCITS performance fees in June of last year which broadly align with the principles set down in the Guidelines. It also imposes similar rules on RIAIF funds.

A Dillon Eustace article entitled “ESMA Finalises Guidance on Performance Fees for Funds Marketed to Retail Investors” can be accessed here .

As set out in the Dillon Eustace article under the heading “Timing of the Guidelines” a transitional period will be afforded to Management Companies of existing funds which already provide for a performance fee. The Management Companies of all new in-scope funds established after the application date of the Guidelines and all existing in-scope funds which are subject to a performance fee for the first time after that date must comply with its provisions immediately.

The final report can be accessed here .

Action

At present, we do not yet know how exactly the Guidelines will be implemented in Ireland. Once the Central Bank has confirmed how it intends to implement the Guidelines, Management Companies will need to determine what changes, if any, will need to be made to the performance fee model and methodology currently used by UCITS and “in scope” AIFs.

2.2 Publication of draft legislation amending the UCITS Directive and AIFMD Frameworks

On 8 June 2020, the European Commission published for consultation draft Commission Delegated Regulations to amend UCITS Directive (Directive 2009/65/EC), the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (AIFMD) as part of the EU's action plan on sustainable finance to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth. This follows the publication of ESMA's technical advices on integrating sustainability risks and factors in the UCITS Directive and AIFMD to the European Commission in April 2019.

To read the full article click here

Originally published 10 July, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.