Regulatory Update of Particular Notice

Author: Clerkin Lynch LLP

Date Published 25/11/2021

Updates to the AIFM Q&As

The Central Bank of Ireland (“CBI”) has issued a series of updated editions in September and October 2021 to its AIFM Q&A document, namely the 41st, 42nd and 43rd editions. These include the new Q&As D1146, ID 1147, ID 1148, ID 1149, ID 1150 and ID 1139. These address a diverse range of topical issues reflecting responses to market developments as well as the interplay of CBI requirements and recent ESMA communications.

Q&A ID 1146, provides that in the unusual circumstances that an AIF is of the view that it no longer meets the criteria as such per Regulation 5(1) of the AIFM Regulations then the AIFM should engage on this matter with the CBI.

Q&A ID 1147, issued in response to market developments in light of CP86 and in particular the shift for many funds from the self-managed model to the use of third party AIFMs or management companies, confirms that where new business results in a material increase in the nature, scale or complexity of a such a firm’s business, the CBI deems this to be a material change to the firm’s operating model which requires consultation with the Central Bank in accordance with Regulation 11 of the AIFM Regulations 2013. In practice this is most likely to be of relevance in the case of UCITS.
Q&A ID 1148 relates to the implementation of the ESMA Guidelines on marketing communications under the newly effective Regulation on cross-border distribution of funds (the “ESMA Guidelines”) and clarifies that the sample wording used with regard to past performance in the ESMA Guidelines satisfies the requirements of Central Bank pertaining to RIAIFs applicable under 9.36 of the Consumer Protection Code even though the wording is not identical.
Q&A IDs 1149 and 1150 relate to investment by QIAIFs and RIAIFs, respectively, into UK investment funds, which following Brexit now constitute non-EU AIFs. THE CBI has clarified that, while it is still considering the position relating to UK funds originally authorised as UCITS, for the moment the default position is that UK AIFs should be treated as category 2 investment funds as provided for in the CBI’s rules pertaining to both QIAIFs and RIAIFs.

The amended Q&A, ID 1139 updates the list of permissible non-financial asset classes that an entity authorised as a Depositary of Assets other than Financial Instruments (“DAoFI”) may safe-keep and clarifies that this includes aircraft.

Action: it is recommended to request confirmation from KBA as AIFM that it continues to have adequate resources to act as AIFM to the GTS ICAV and that its onboarding of new business will not imperil this. The issues pertaining to the Cross Border Fund Distribution regime is addressed further below.