Global Trustee and Fiduciary Services News and Views Issue 48

Global Trustee and Fiduciary Services News and Views

| Issue 48 | 2017

Background

CP86 set out a number of proposed initiatives

designed to enhance the governance and

oversight framework for the following entities

(each referred to as a Fund ManCo and

collectively Fund ManCos):

• UCITS management companies

• Self-managed UCITS investment

companies/ICAVs

• Authorised AIFMs

• And internally managed AIF

investment companies/ICAVs

As a result of CP86, new rules and guidance

were issued by the CBI in relation to the

managerial functions of Fund ManCos, the

location of directors and designated persons

(DPs), who may be a DP, and the introduction

of a new organisational effectiveness role for

Fund ManCos. In addition, requirements and

guidance were issued on record retention and

retrievability, directors’ time commitments and

delegate oversight. We outline what these rules

and guidance mean for Fund ManCos and the

compliance timelines and requirements below.

Managerial functions, organisational effectiveness

role and location of directors and DPs

Prior to CP86, the CBI required Fund ManCos

that delegated activities to identify in their

business plan (BP) or programme of activity

(PoA) a designated director or other DP located

in Ireland who would have responsibility for

each of the prescribed managerial functions for

Fund ManCos.

Under the new requirements, a Fund ManCo that

delegates activities will continue to be required

to identify a designated director or other DP in

its BP/PoA who will have responsibility for each

managerial function. However, the managerial

functions for all Fund ManCos are consolidated

into the following six managerial functions:

CP86 REGULATORY CHANGES:

THE IMPACT FOR FUND

MANAGEMENT COMPANIES AND

TIMELINES FOR COMPLIANCE

The Central Bank of Ireland (CBI) issued its final rules, guidance and

transitional arrangements following three industry consultations on fund

management company effectiveness (CP86) since its first consultation

issued in September 2014.

Below we consider the implications of the final

rules and guidance for fund management companies and their promoters

and asset managers and what may need addressing before July 2018.

While the CBI has noted that divergence from its guidance will not be a

regulatory breach, the CBI’s supervisors will have reference to its guidance

when forming a view as to whether a fund management company has

complied with its regulatory obligations.

While the same person may perform more

than one managerial function, including

both of the risk management functions, the

same person will not be permitted to perform

both managerial functions relating to risk

management and investment management.

Investment management

Fund risk management

Operational risk management

Regulatory compliance

Distribution

And capital and financial management