Central Bank of Ireland publishes Markets Update No 10 of 2023

On 27 November 2023, the Central Bank of Ireland (the Central Bank) published Issue No 10 2023 of its regular Markets Update, in which it sets out alerts of interest to Irish regulated firms and other market participants.

For our summaries of the previous issues, please see the right-hand column of this page.

The new Update contains the following items.

The Central Bank updates its UCITS Q&A

On 27 November 2023, the Central Bank published the 40th Edition of its UCITS Q&A.

This update revises Question ID 1109 to clarify that, from 1 January 2024, the Responsible Person of a UCITS which was authorised prior to 1 January 2023 and which must provide a PRIIPs KID should submit this to the Central Bank through the Portal in accordance with the guidance on the Central Bank's website.

UCITS authorised prior to 1 January 2023 that are required to provide a PRIIPs KID should submit the PRIIPs KID to the Central Bank through the Portal in accordance with the guidance on the Central Bank's website.

More information on filing a PRIIPs KID can be found here.

The Central Bank updates its AIFMD Q&A

On 27 November, the Central Bank published the 49th Edition of its AIFMD Q&A.

The update

• revises Question ID 1126 to clarify that where an AIF is required to produce a PRIIPs KID, this should be filed through the Portal through the Portal in accordance with the guidance on the Central Bank's website.

• includes three new Q&As - IDs 1157, 1158 and 1159 on what is permitted when a QIAIF / RIAIF invests through a subsidiary. In particular:

  Question ID 1157 confirms that where a QIAIF/RIAIF intends to invest through a wholly owned company or a subsidiary which has been established with the intention of the QIAIF/RIAIF using it for investment purposes, the wholly owned company or subsidiary can be considered as being established by the QIAIF/RIAIF, even where it existed prior to the establishment of the QIAIF/RIAIF.

  Question ID 1158 confirms that where a QIAIF/RIAIF intends to invest through a wholly owned company or subsidiary, which has been established with the intention of the QIAIF/RIAIF using it for investment purposes, the wholly owned company or subsidiary can establish or participate in the establishment of a further vehicle that is also used for investment purposes, subject to adherence with (a) the Central Bank's requirements in relation to subsidiaries as set out in the AIF Rulebook and (b) the requirements of Questions ID 1157 and ID 1159.

  Question ID 1159 confirms that a QIAIF/RIAIF may invest through a co-investment vehicle that includes other third party investors and is not a wholly owned subsidiary of the QIAIF / RIAIF.

Ownership / control of the co-investment vehicle must reflect the actual economic interest that the QIAIF/ RIAIF has in that vehicle while the QIAIF / RIAIF must demonstrate that the arrangements reflect the true economic interests of the parties holding shares in that vehicle.

The Board of the AIFM must document  the reasons for using a co-investment vehicle, rather than a wholly owned subsidiary. These must be approved in writing by the depositary and be available to the Central Bank on request.

The arrangement must not be structured so as to circumvent the policy objectives of Question 1159.

The Central Bank publishes Feedback Statement to Consultation Paper CP152

On 27 November 2023, the Central Bank published a Feedback Statement "Consultation Paper 152: Own Funds requirements for UCITS Management Companies and AIFMs authorised to provide discretionary portfolio management".

In it, the Central Bank confirmed the amendment of the additional capital requirement imposed on UCITS Management Companies and AIFMs authorised for discretionary portfolio management services.

For UCITS ManCos, the new requirements are set out in S.I. No. 565 of 2023 and will apply .

• from 27 May 2024 - for UCITS ManCos authorised for discretionary portfolio management services on or before 27 November 2023

• from authorisation - for UCITS ManCos authorised for discretionary portfolio management services on or after 28 November 2023.

For AIFMs authorised for discretionary portfolio management services, the new requirements are included in Chapter 3, Part B of the AIF Rulebook.

Again, where an AIFM had been authorised for discretionary portfolio management services on or before 27 November 2023, the new own funds requirements will not apply to it until 27 May 2024., although "the current condition of authorisation continues to apply" pending the application of the new own funds requirements. For AIFMs authorised after 7 November 2023, the new requirements apply from authorisation.