Central Bank fast-track process for SFDR updates

Introduction

In our recently published article, we flagged that the Central Bank of Ireland (the "Central Bank") intended to set up a self-certification "fast-track" process (the "Self-Cert Process") for UCITS management companies and AIFMs on behalf of their funds as well as for self-managed funds¹ (each a "Responsible Person"). This is in anticipation of the high volume of fund documentation ("Prospectus") updates required to be noted by 10 March 2021 as part of level 1 of the EU's Sustainable Finance Disclosure Regulation ("SFDR"), (in particular Articles 8 and 9).

Fast-track process summary

In a letter to Irish Fund's published on 17 December 2020, the Central Bank has provided further guidance on the Self-Cert Process and outlined its core assumptions. Key among these:

1. Post-authorisation changes other than those relating to the SFDR requirements will not be eligible to avail of the Self-Cert Process.  

2. A self-certification of compliance with SFDR must accompany each filing and both new and post-authorisation filings may be subject to review by the Central Bank. The accompanying certification has not been predetermined by the Central Bank and rather should be determined by each responsible person

Eligibility for the fast-track process

As mentioned, Prospectus updates relating to SFDR only qualify automatically for the Self-Cert Process. In the case of UCITS management companies and UCITS self-managed funds, proposed disclosure updates outside of SFDR will be subject to the Central Bank's usual post-authorisation review procedures. AIFMs and self-managed AIFs may continue to avail for the 24 hour post authorisation process in place.

New sub-funds (both UCITS and AIFs) will be subject to the Central Bank's existing authorisation and approval process.

Timing

UCITS applications that were previously submitted for review or have been cleared of comment by the Central Bank by Monday, 11 January 2021 should be noted by the particular reader in due course.

Prospectus changes filed prior to Wednesday, 10 March 2021 containing both SFDR and non-SFDR disclosures should consider splitting such filings into two parts ie an SFDR fast-tracked application and a second non-SFDR application. This will depend both on the nature, scale and complexity of the non-SFDR related changes sought and the timing of the filing.

CBI email submission

All eligible filings may be made from Monday, 11 January 2021 via email to SFDR@centralbank.ie. The Central Bank has advised that this inbox is for the submission of both final dated revised documents and self-certifications.

Conclusion

With 10 March 2021 looming, the fast-track process offers a roadmap for market participants in preparation for compliance with the introduction of Level 1 of SFDR. The Central Bank has cautioned that the fast-track process should not be a means of providing lesser quality of disclosures than would otherwise be produced.

¹In the case of Irish AIFs with non-EU AIFMs, the AIF should make the certification itself.