S.I. No. 230/2019 - Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019

1. Financial Materials

(a) details of all money received and expended by the management company whether on its own behalf or on behalf of any investment fund that is under its management, together with details of how such receipts and payments arose;

(b) a record of all income and expenditure of the management company explaining its nature;

(c) a record of all assets and liabilities of the management company, long and short positions and off-balance sheet items, including any commitments or contingent liabilities;

(d) details of all purchases and sales of investment instruments by the management company distinguishing those that have been made by the management company on its own account and those that have been made on behalf of any investment fund that is under its management;

(e) any working papers that are necessary to show the preparation of any return that has been submitted to the Bank.

2. Management Information

Management information records maintained in a manner such that they disclose, or are capable of disclosing, in a prompt and appropriate manner, the financial and business information that will enable the management company to -

(a) identify, quantify, control and manage the management company’s risk exposures,

(b) make timely and informed decisions,

(c) monitor the performance of all aspects of the management company’s business on an up-to-date basis, and

(d) monitor the quality of the management company’s assets.

Signed for and on behalf of the CENTRAL BANK OF IRELAND on this the.

27 day of May 2019

DERVILLE.ROWLAND,

Director General Financial Conduct

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

These Regulations set out requirements for UCITS, UCITS management companies and depositaries of UCITS.

3. Redeemable Subordinated Loan Capital

Without prejudice to paragraph 4 of this Schedule, the following conditions also apply to redeemable subordinated loan capital

(a) the extent to which redeemable subordinated loan capital ranks as own funds, for the purposes of calculating own funds, will be reduced on a straight-line basis over the five years immediately preceding the repayment date;

(b) the qualifying amount of redeemable subordinated debt is calculated as follows

Remaining term to maturity____________________

______________________________

Gross Amount_________________

Less Amortisations_____________________

= Qualifying Amount_____________________

4. Eligible Assets

(a) An eligible asset must be -

(i) accessible easily,

(ii) free from any lien or charge, and

(iii) maintained outside the depositary’s group.

(b) The eligible assets shall be held in an account that is separate to the account that is, or the accounts that are, used by a depositary for the day-to-day running of its business.

(c) The Bank must be provided with a recent written statement, from a source independent of the depositary, evidencing the location of every eligible asset.

(d) Eligible assets are calculated as the value of total assets of the depositary less the aggregate value of the items of the depositary that are set out in clauses (i) to (xii) -

(i) fixed assets,

(ii) intangible assets,

(iii) cash or cash equivalents held with group companies,

(iv) debtors,

(v) bad debt provisions,

(vi) prepayments,

(vii) intercompany amounts (gross),

(viii) loans issued,

(ix) investment funds that are not daily dealing,

(x) investments in any investment fund that is promoted by a group company of the depositary or to which a group company of the depositary provides services,

(xi) any other asset that is not accessible easily and which is not included in clauses (i) to (x), and

(xii) accounts used by the depositary for the day to day running of its business,

where “total assets” are non-current assets plus current assets.

SCHEDULE 10

Regulation 101

Managerial functions of the Management company

The board of a management company shall be responsible for the following managerial functions

(a)

Regulatory compliance

: The board shall put in place, and ensure adherence to, procedures designed to ensure compliance with all applicable legal and regulatory requirements of the management company itself and all investment funds under management. The board shall have arrangements in place to ensure that complaints from unitholders regarding matters other than distribution are addressed promptly and effectively;

(b)

Fund risk management

: The board shall put in place, and ensure adherence to, procedures designed to ensure that all applicable risks pertaining to the investment funds under management can be identified, monitored and managed at all times;

(c)

Operational risk management

: The board shall put in place, and ensure adherence to, procedures designed to ensure that all applicable risks pertaining to the management company can be identified, monitored and managed at all times;

(d)

Investment management

: The board shall put in place, and shall ensure adherence to, procedures to -

(i) ensure and verify that the investment approach of each investment fund is complied with, and

(ii) ensure availability of up to date information on portfolio performance;

(e)

Capital and financial management

: The board shall put in place, and ensure adherence to, procedures to ensure compliance with regulatory capital requirements of the management company. The board shall put in place, and ensure adherence to, procedures to ensure all relevant accounting records of the management company and of the investment funds under management are properly maintained and are readily available, including production of annual and half-yearly financial statements. The board shall put in place, and ensure adherence to, procedures to ensure that proper accounting policies and procedures are employed in respect of the management company and all investment funds under management;

(f)

Distribution

: The board shall put in place, and shall ensure adherence to, procedures to ensure and verify that the distribution strategy of each investment fund is complied with. The board shall have arrangements in place to ensure that complaints from regarding distribution matters are addressed promptly and effectively.

SCHEDULE 11

Regulation 108

Records of a Management company

The types of material and level and nature of content for the purposes of Regulation 109 are

5. (a) Open financial derivative positions at the reporting date of the half-yearly report shall be marked to market and identified specifically in the portfolio statement required by paragraph 4 of Schedule 12 to the UCITS Regulations;

(b) For the purposes of subparagraph (a), information on open option positions shall include -

(i) the strike price,

(ii) the final exercise date, and

(iii) an indication of whether or not such positions are covered;

(c) Counterparties to OTC derivatives shall be identified in the half-yearly report, in the same section in which open financial derivative positions are identified;

6. In the case of open financial derivative positions, a full portfolio statement with disclosure for all open positions shall be provided.

Alternatively, where the volume of positions is high, the portfolio statement can be prepared on a condensed basis listing individual open financial derivative positions representing 5% or more of net assets individually and any other open financial derivative positions that individually represent less than 5% of net assets on an aggregated basis analysed by the following groupings

(a) each derivative type;

(b) each derivative type by currency and maturity;

(c) each derivative type by industry sector;

(d) each derivative type by geographic region.

For each derivative type within the respective groupings the leverage generated by those derivatives must be provided. The overall leverage for each grouping should be consistent.

The leverage approach used for this purpose is to be consistent with the approach used by the UCITS per paragraph (12) of Schedule 9 to the UCITS Regulations and in accordance with that outlined in the UCITS Risk Management Process (ie Sum-of-the-Notionals or Commitment approach).

Open financial derivative positions representing less than 5% of net assets should be aggregated in so far as open derivatives in an asset and liability position are not offset and in the case of OTC derivatives they are held with the same counterparty.

Where a condensed portfolio statement is presented, the UCITS must make the full portfolio statement available to investors on demand free of charge;

7. In the case of a UCITS that engages in financial derivative transactions or in efficient portfolio management techniques and instruments (or in both), an explanation of the treatment of realised and unrealised gains or losses arising from such financial derivative transactions and from the use of such efficient portfolio management techniques and instruments;

8. In the case of a UCITS that engages in efficient portfolio management techniques and instruments, information on -

(a) the exposure obtained through efficient portfolio management techniques and instruments,

(b) the identity of the counterparty to the relevant efficient portfolio management techniques and instruments,

(c) the type and amount of collateral received by the UCITS to reduce counterparty exposure, and

(d) the revenues arising from efficient portfolio management techniques and instruments for the entire reporting period, together with the direct and indirect operational costs and fees incurred;

9. In the case of an index-tracking UCITS, information on the size of the tracking error at the end of the period under review;

10. Details of any distribution out of capital;

11. A description of any material changes in the prospectus during the reporting period;

12. A list of exchange rates used in the half-yearly report;

13. A report from the board of directors in accordance with Regulation 81 (4);

14. Details of all sub-investment managers engaged by the investment manager to act in relation to the UCITS;

15. An up-to-date list of all share classes of the UCITS in issue during the reporting period and identifying whether the relevant share class is hedged.

SCHEDULE 9

Regulation 115

Minimum Capital Requirement Report

The requirements for the preparation of a minimum capital requirement report are the following

16. Details of any distributions out of capital;

17. A description of any material changes in the prospectus during the reporting period;

18. A list of exchange rates used in the annual report;

19. A report from the board of directors, in accordance with Regulation 82(4);

20. Details of all sub-investment managers engaged by the investment manager to act in relation to the UCITS;

21. The identity of the issuer where collateral received from the issuer has exceeded 20 per cent of the net asset value of the UCITS and indicate whether the UCITS has been fully collaterised in securities issued or guaranteed by a Member State;

22. An up-to-date list of all share classes of the UCITS in issue during the reporting period and identifying whether the relevant share class is hedged.

SCHEDULE 8

Regulation 83(1)

Additional Information to be Included in the Half-Yearly Report

The information to which Regulation 83(1) refers is the following

23. (1) A responsible person shall only use efficient portfolio management techniques and instruments for the purposes of Regulation 69(2) of the UCITS Regulations where same are in the best interests of the UCITS.

(2) A responsible person shall ensure that all the revenues arising from efficient portfolio management techniques, net of direct and indirect operational costs, are returned to the UCITS.

Collateral

24. (1) A responsible person shall ensure, in engaging in efficient portfolio management techniques and instruments, that -

(a) every asset that is received by a UCITS as a result of engaging in efficient portfolio management techniques and instruments is treated as collateral,

(b) such techniques comply with the criteria set down in paragraph (2), and

(c) at all times, collateral that is received by a UCITS meets the criteria specified in Schedule 3.

(2) A responsible person shall ensure that the UCITS risk management process identifies, manages and mitigates risks linked to the management of collateral, including operational risks and legal risks.

(3) (a) Where a UCITS receives collateral on a title transfer basis, the responsible person shall ensure that that collateral is held by the depositary.

(b) Where a UCITS receives collateral on any basis other than a title transfer basis, that collateral may be held by a third party depositary provided that that depositary is subject to prudential supervision and is unrelated and unconnected to the provider of the collateral.

(4) A responsible person shall not sell, pledge or re-invest the non-cash collateral received by the UCITS.

(5) Where a responsible person invests the cash collateral received by the UCITS, such investments shall only be made in one or more of the following

(a) a deposit with a credit institution referred to in Regulation 7;

(b) a high-quality government bond;

(c) a reverse repurchase agreement, provided the transaction is with a credit institution referred to in Regulation 7 and the UCITS is able to recall at any time the full amount of cash on an accrued basis;

(d) a short-term MMF as defined in Article 2(14) of the Money Market Funds Regulation;

(e) a Short-Term Money Market Fund as defined in Regulation 89 where such investment is made prior to 21 January 2019.

(6) Where a responsible person invests the cash collateral received by the UCITS -

(a) that investment shall comply with the diversification requirements applicable to non-cash collateral, and

(b) invested cash collateral shall not be placed on deposit with the counterparty or with any entity that is related or connected to the counterparty.

(7) A responsible person shall ensure that, where a UCITS receives collateral for at least 30 per cent of its assets -

(a) there is in place a stress testing policy that prescribes the components set out in paragraph (8), and

(b) stress tests are carried out regularly under normal and exceptional liquidity conditions to enable the responsible person to assess the liquidity risk attached to the collateral.

(8) The components of the stress-testing policy to which paragraph (7) refers are the following

(a) the design of stress test scenario analysis including calibration, certification and sensitivity analysis;

(b) the empirical approach to impact assessment, including back-testing of liquidity risk estimates;

(c) the reporting frequency and the threshold(s) for limits and losses;

(d) the mitigation actions to be taken to reduce loss including haircut policy and gap risk protection.

(9) A responsible person shall, in accordance with paragraph (10), establish and ensure adherence to a haircut policy for the UCITS, adapted for each class of assets received as collateral.

(10) The requirements to which paragraph (9) refers are the following

(a) when devising the haircut policy, a responsible person shall take into account the characteristics of the assets, such as the credit standing or the price volatility, as well as the outcome of the stress tests performed in accordance with Regulation 21;

(b) the responsible person shall document the haircut policy;

(c) the responsible person shall justify and document each decision to apply a specific haircut or to refrain from applying any haircut, to any specific class of assets.

(11) Where a counterparty to a repurchase or a securities lending agreement, which has been entered into by the responsible person on behalf of the UCITS -

(a) was subject to a credit rating by an agency registered and supervised by ESMA that rating shall be taken into account by the responsible person in the credit assessment process, and

(b) where a counterparty is downgraded to A-2 or below (or comparable rating) by the credit rating agency referred to in subparagraph (a) this shall result in a new credit assessment being conducted of the counterparty by the responsible person without delay.

(12) A responsible person shall ensure that it is at all times able to recall any security that has been lent out or to terminate any securities lending agreement to which it is party.

Repurchase and reverse repurchase agreements

25. (1) A responsible person that enters into a reverse repurchase agreement on behalf of a UCITS shall ensure that the UCITS is at all times able to recall the full amount of cash or to terminate the relevant agreement on either an accrued basis or a mark-to-market basis.

(2) In circumstances in which cash is, by virtue of the obligation under paragraph (1), recallable at any time on a mark-to-market basis, the responsible person shall use the mark-to-market value of the reverse repurchase agreement for the calculation of the net asset value of the UCITS.

(3) A responsible person that enters into a repurchase agreement shall ensure that a UCITS is at all times able to recall any securities that are subject to the repurchase agreement or to terminate the repurchase agreement into which it has entered.

Chapter 5

Share Classes

Creation of share classes in a UCITS

26. (1) Subject to paragraphs (2) and (3), a responsible person may create a share class, or more than one share class, within the relevant UCITS, or within a sub-fund of an umbrella UCITS, only if the following conditions are satisfied

(a) the constitutional document of the UCITS provides for the creation of share classes and, in the case of an umbrella UCITS, the provision in the constitutional document to establish the way in which sub-funds, and share classes within sub-funds, are created, is clear and unambiguous;

(b) each UCITS and, in the case of umbrella UCITS, each sub-fund thereof consists of a single common pool of assets;

(c) the capital gains or losses and income arising from the common pool of assets must be distributed or must accrue equally to each unit-holder relative to their participation in the UCITS or sub-fund thereof, or must both be distributed and accrue in that manner;

(d) unit-holders in a share class must be treated equally and fairly, or where there is more than one share class all unit-holders in the different share classes must be treated fairly.

(2) A responsible person shall ensure that all share classes within the UCITS or sub-funds thereof have the same dealing procedures and frequencies.

(3) Where a UCITS engages in currency hedging at the level of a share class, the responsible person shall do the following

(a) ensure that over-hedged positions do not exceed 105 per cent of the net asset value of the share class and under-hedged positions do not fall below 95 per cent of the portion of the net asset value of the share class where it is to be hedged against currency risk;

(b) keep hedged positions under review to ensure that over-hedged positions and under-hedged positions do not exceed the level permitted by subparagraph (a);

(c) in the review that is required by virtue of subparagraph (b), incorporate a procedure to ensure that any position that is materially in excess of 100 per cent of net assets shall not be carried forward from month to month;

(d) clearly attribute transactions to a specific class;

(e) not combine or offset currency exposures of different currency classes or allocate currency exposures of assets of the UCITS to separate share classes;

(f) ensure that the costs and gains or losses of the hedging transactions will accrue solely to the relevant class;

(g) implement stress tests to quantify the potential impact of losses on all share classes within the UCITS in the event of a share class exceeding its net asset value. The results of such stress test shall be made available to the Central Bank on request;

(h) ensure that where the introduction of the share class gives rise to administrative costs, those costs are borne by the relevant share class;

(i) ensure that –

(I) any risk, or

(II) any administrative costs,

arising from the use of derivative overlay to hedge the currency risk in a share class is borne by the relevant share class only;

(j) ensure the coverage available to a share class, either in the form of the underlying financial instrument or in the form of liquid assets, is sufficient to meet all future obligations of that share class;

(k) ensure the notional of the derivative transaction does not lead to a payment or delivery obligation with a value exceeding that of the share class;

(l) ensure that counterparty exposure is assessed at the level of the share class in accordance with Regulation 70(1)(c) of the UCITS Regulations.

Chapter 6

Constitutional Documents

Fees

27. (1) (a) Subject to subparagraph (b), a responsible person shall ensure that the constitutional document of the UCITS specifies, as applicable -

(i) the maximum fee that may be charged by the management company, and

(ii) the maximum fee that may be charged by an investment manager appointed by the responsible person, where that fee is paid directly out of the assets of the UCITS.

(b) In the case of a UCITS constituted as an ICAV or investment company the matters specified in subparagraph (a) may be included in either the constitutional documents of the UCITS or in the relevant management agreement.

(2) Any fee, under paragraph (1) that is specified as being payable to a management company or to an investment manager shall include any performance related fee that that management company or investment manager (as the case may be) may charge.

(3) (a) The maximum fee that may be charged by a management company or an investment manager pursuant to paragraph (1) shall not be increased without approval of the unit-holders of the UCITS on the basis of a simple majority of votes cast in general meeting or such other majority as is specified in the constitutional document of the relevant UCITS or with the prior written approval of all unit-holders of the fund (in accordance with the constitutional documents).

(b) If a fee that is disclosed in the prospectus for a UCITS is less than the maximum relevant fee that is permitted in the constitutional document, prior unit-holder approval is required for any proposed increase in the fee that is disclosed in the prospectus, unless the prospectus also provides that a fee greater than the fee disclosed in the prospectus may be charged.

(4) (a) A responsible person shall provide unit-holders of a UCITS with reasonable notice in the event of an increase in the maximum fee that may be charged by a management company or an investment manager.

(b) Notice given for the purposes of subparagraph (a) must be sufficient to enable a unit-holder to redeem some or all of the unit-holder’s units prior to the implementation of the proposed increase.

Investment

28. A responsible person shall include a list of the stock exchanges, markets and regulated derivatives markets in which the UCITS may invest in the constitutional document of the UCITS.

Umbrella UCITS

29. A responsible person shall ensure that the constitutional document of an umbrella UCITS provides that the assets of each sub-fund -

(a) belong exclusively to the relevant sub-fund, and

(b) may not be used to discharge, directly or indirectly, the liabilities of or claims against any other sub-fund and are not available for any such purpose.

Distributions out of, and charging of fees and expenses to, capital

30. (1) A responsible person shall not make any distribution from, or charge any fee or expense to, the capital of a UCITS, unless permitted by the constitutional document of the UCITS.

(2) Where, in accordance with paragraph (1), a responsible person is permitted by the constitutional document of a UCITS to make distributions from or charge fees and expenses to the capital of a UCITS, every such distribution or charge must be in accordance with any provisions contained in that constitutional document concerning the making of a distribution or the imposition of a charge.

(3) A responsible person of a UCITS which proposes to make distributions out of capital shall -

(a) include the risk warning in its prospectus, as specified in Regulation 70(1)(b),

(b) ensure that any income statement issued to unitholders includes a statement to explain the effect of this accounting policy, including wording to the effect that the investor’s capital amount has been reduced, and

(c) include the following in bold text in the subscription application form, if fees and expenses which may be charged to capital include management fees

“Unit holders should note that all or part of fees and expenses including (if applicable) management fees may be charged to the capital of the UCITS. This will have the effect of lowering the capital value of your investment.”

Dealing in specie

31. (1) A responsible person shall ensure that, where the constitutional document of a UCITS provides for subscription in specie, it also contains provisions that require, in respect of such a subscription in specie, that -

(a) the nature of the assets to be transferred into the UCITS would qualify as investments of the UCITS in accordance with the investment objectives, policies and restrictions of the UCITS,

(b) assets that are to be transferred must be vested with the depositary or arrangements must be made to vest the assets with the depositary,

(c) the amount of units to be issued must not exceed the amount that would be issued for the cash equivalent of the subscription in specie, and

(d) the depositary is satisfied that either -

(i) the terms of any exchange will not be such as are likely to result in any material prejudice to the existing unit-holders of the UCITS, or

(ii) there is unlikely to be any material prejudice to the existing unit-holders of the UCITS.

(2) (a) This paragraph does not apply to a UCITS ETF the original subscription to which was made in specie.

(b) Subject to subparagraph (a), a responsible person shall ensure that, where the constitutional document of a UCITS provides for redemption in specie, it also contains provisions that require, in respect of such a redemption in specie, that -

(i) redemption in specie is at the discretion of the UCITS and with the consent of the redeeming unit-holder, and

(ii) asset allocation is subject to the approval of the depositary.

(c) Notwithstanding subparagraph (b), where the redeeming unit-holder requests redemption of a number of units that represent 5 per cent or more of the net asset value of the UCITS, the responsible person may, without the consent of the redeeming unit holder, where utilising the discretion of the UCITS, determine to provide redemption in specie subject to such redemption being provided for in the constitutional documents and -

(i) in that event the UCITS shall, if requested to do so, sell the assets on behalf of the unit-holder after the redemption has been effected, and

(ii) the cost of any sale in accordance with clause (i) can be charged to the unit-holder.

(3) A responsible person shall ensure that, where the constitutional document of a UCITS provides for distribution in specie upon a winding up, it shall also require that, in respect of such a distribution in specie upon a winding up -

(a) an ordinary resolution or the prior written approval of all unit-holders of the relevant fund or a resolution passed by such majority as is specified in the constitutional document, is required, and

(b) the UCITS must sell the assets if a unit-holder requests it to do so, in which event the costs of such sale may be charged to the redeeming unit-holder.

Replacement of depositary

32. For the purposes of Regulation 49, a responsible person shall ensure that the constitutional document of a UCITS provides that -

(a) the appointment of the new depositary must be approved in advance by the Bank,

(b) the current depositary may not retire until a new depositary is appointed in accordance with paragraph (a), and

(c) if -

(i) despite attempts by the responsible person to appoint a new depositary, no replacement for the current depositary has been appointed in accordance with this Regulation, and

(ii) the current depositary is unwilling or unable to continue to act as such,

then -

(i) a general meeting of the UCITS shall be convened at which an ordinary resolution, or such a resolution passed by such majority as is specified in the constitutional document, to wind up or otherwise dissolve the UCITS is proposed, and

(iI) the appointment of the current depositary may be terminated only upon the revocation of the authorisation of the UCITS.

Chapter 7

Dealing

Subscriptions and redemptions

33. (1) (a) Subject to subparagraph (b), a responsible person shall not accept an application for subscription or redemption of units in a UCITS after the dealing deadline.

(b) A responsible person may in exceptional circumstances accept an application for subscription or redemption of units in a UCITS after the dealing deadline, and before the valuation point, provided that -

(i) the decision to accept the application after the dealing deadline has been approved by senior management of the responsible person, and

(ii) the exceptional circumstances under which the application was received is fully documented by the responsible person.

(2) A responsible person shall pay the redemption proceeds to a redeeming unit-holder within ten business days of the relevant dealing deadline.

(3) Where -

(a) the total requests for redemption on any dealing day for a UCITS or a sub-fund thereof exceed at least 10 per cent of the total number of units in the UCITS or sub-fund or at least 10 per cent of the net asset value of the UCITS or sub-fund, and

(b) the responsible person decides to refuse to redeem any units in excess of 10 per cent of the total number of units in the UCITS or sub-fund or 10 per cent of the net asset value of the UCITS or sub-fund or such higher percentage that the responsible person may determine,

the UCITS shall reduce pro rata any request for redemption on that dealing day and shall treat the redemption requests as if they were received on each subsequent dealing day until all the units to which the original request related have been redeemed.

(4) Where a UCITS temporarily suspends the repurchase or redemption of units in a UCITS in accordance with Regulation 104(2)(a)(i) of the UCITS Regulations, a responsible person shall –

(a) notify the Bank immediately upon the lifting of that temporary suspension by the UCITS, and

(b) without prejudice to subparagraph (a), and in circumstances where the temporary suspension has not been lifted within 21 working days of application, provide the Bank with an update on the temporary suspension at the expiration of the 21 working day period and each subsequent period of 21 working days where the temporary suspension continues to apply.

Chapter 8

Valuation

Valuation policy

34. (1) A responsible person shall establish and ensure adherence to a valuation policy that satisfies the requirements of paragraph (2).

(2) (a) A valuation policy shall set out the valuation methodology of the assets of the UCITS, in accordance with paragraph (3).

(b) The valuation policy shall be included in the constitutional document of the UCITS.

(3) A valuation policy shall provide and ensure that -

(a) the valuation methodologies of a UCITS and the pricing of units treat incoming, existing and outgoing investors in the UCITS fairly,

(b) where the valuation policy is to calculate both a bid and offer price for units in a UCITS, the methodologies for both must be clear, unambiguous and disclosed,

(c) the valuation methodologies, including provisions which allow for a switch from a mid-market to a bid or offer basis, are applied on a consistent basis throughout the life of a UCITS, and

(d) there is consistency in the valuation methodologies adopted throughout the various categories of assets.

Dealing

35. (1) (a) A responsible person may deal in the units of a UCITS only at forward prices.

(b) In this Regulation “forward prices” means the net asset value next computed after receipt of subscription or redemption requests.

(2) A responsible person shall ensure that the frequency of valuation set out in the constitutional document of a UCITS is consistent with dealing arrangements.

Methods of valuation

36. (1) A responsible person shall value the assets of a UCITS in accordance with Schedule 5 unless an alternative method of valuation has been agreed in advance with the Bank or the Bank has, in advance of a valuation date, required the responsible person to adopt an alternative method of valuation.

(2) Where a responsible person adjusts the value of an asset of a UCITS, the rationale for doing so must be documented clearly.

Responsibility for valuation policy

37.(1) A responsible person shall -

(a) ensure that securities prices and currency rates used by a UCITS for valuation purposes are -

(i) up-to-date, and

(ii) provided by or obtained from a source that the responsible person considers to be reputable and reliable, and

(b) keep the reliability of its sources of prices and rates under review.

(2) A responsible person shall establish and maintain systems and procedures to enable the responsible person to, at least, do the following in respect of the relevant UCITS

(a) verify uncertain prices and rates;

(b) ensure that investment restrictions are not breached;

(c) ensure that dividends, expenses and taxes are accounted for properly;

(d) provide movement thresholds at which price movements are reviewed;

(e) query prices in which there appears to be little or no movement over time;

(f) provide for the valuation policy in relation to unlisted or illiquid securities;

(g) provide for the valuation policy in relation to OTC derivatives.

(3) A responsible person shall ensure that full and detailed records of the valuations of a UCITS are maintained to permit any valuation to be reperformed.

(4) A responsible person shall ensure that reconciliation of cash, debtors and creditors of a UCITS takes place at the same frequency as the valuation.

Anti-dilution levy

37. Responsibility for valuation policy

38. A responsible person may apply an anti-dilution levy to a UCITS only if the constitutional document of the relevant UCITS provides that -

(a) in calculating the redemption price for the UCITS the responsible person may, on any dealing day on which there are net redemptions, adjust the redemption price by deducting an anti-dilution levy to cover dealing costs and to preserve the value of the underlying assets of the UCITS, and

(b) in calculating the subscription price for the UCITS the responsible person may, on any dealing day on which there are net subscriptions, adjust the subscriptions price by adding an anti-dilution levy to cover dealing costs and to preserve the value of the underlying assets of the UCITS.

Chapter 9

Remuneration Restriction on payment of certain fees

39. A responsible person shall not pay the fees and expenses of the directors of the management company directly out of the assets of the UCITS.

Performance fees

40. (1) A responsible person shall ensure that performance fees are only payable by the UCITS on –

(a) achieving a new high net asset value over the life of the UCITS, or,

(b) the out-performance of an index.

(2) Where performance fees are payable on achieving a new high net asset value, the responsible person shall ensure that -

(a) no performance fee is accrued or paid until the net asset value per share exceeds -

(i) the previous highest net asset value per share on which the performance fee was paid or accrued, or

(ii) the initial offer price, if higher. The initial offer price shall be taken as the starting price for this calculation.

(b) the performance fee is only payable or paid on the increase of the net asset value per share over the amount in subparagraph (a)(i) or (a)(ii), whichever is higher.

(3) Where performance fees are payable on the basis of out-performance of an index, the responsible person shall ensure that -

(a) the index is consistent with the UCITS investment policy,

(b) the performance fee is payable only on the amount by which the UCITS outperforms the index, and

(c) any underperformance of the index in preceding periods is cleared before a performance fee becomes due in subsequent periods.

(4) In calculating the performance fees payable, the responsible person shall ensure -

(a) that the calculation of the performance fee does not crystallise more than once per year, and

(b) the performance fee is not paid more than once per year.

(5) The responsible person shall ensure that the calculation of the performance fee is verified by the depositary.

(6) Where a UCITS has multiple managers or advisers the responsible person shall ensure that a performance fee is payable only on the performance of that part of the portfolio for which the investment manager or adviser is responsible.

Calculation of annual management fee of structured UCITS

41. (1) A responsible person shall ensure that where a UCITS charges an annual management fee calculated on the initial offer price per share of the UCITS –

(a) the UCITS is a structured UCITS which provides a pre-defined return to investors, and

(b) the fee charged is a percentage of the initial offer price per share of the UCITS.

Chapter 10

Transactions involving Connected Persons

Interpretation: Chapter 10 of Part 2

42. In this Chapter, “connected person” means the management company or depositary to a UCITS; and the delegates or sub-delegates of such a management company or depositary (excluding any non-group company sub-custodians appointed by a depositary); and any associated or group company of such a management company, depositary, delegate or sub-delegate.

Restrictions on transactions with connected persons

43. (1) A responsible person shall ensure that any transaction between a UCITS and a connected person is -

(a) conducted at arm’s length, and

(b) in the best interests of the unit-holders of the UCITS.

(2) A responsible person may enter into a transaction, on behalf of a UCITS, with a connected person only if at least one of the conditions in paragraphs (a), (b) or (c) is complied with

(a) the value of the transaction is certified by either -

(i) a person who has been approved by the depositary as being independent and competent, or

(ii) a person who has been approved by the responsible person as being independent and competent in the case of transactions involving the depositary;

(b) execution is on best terms on an organised investment exchange under the rules of the relevant exchange;

(c) execution is on terms which the depositary or, in the case of a transaction involving the depositary, the responsible person is satisfied conform to the requirements set out in paragraph (1) above.

(3) In the event of a transaction to which this Chapter applies -

(a) the depositary or, in the case of a transaction involving the depositary, the responsible person shall document how it has complied with paragraph (2), and

(b) where a transaction is conducted in accordance with subparagraph (c) of paragraph (2), the depositary or, in the case of a transaction involving the depositary, the responsible person shall document their rationale for being satisfied that the transaction conforms with the requirements set out in paragraph (1).

Chapter 11

Directed Brokerage Services

Rebates of commission

44. A responsible person shall ensure that, where a person, acting on its behalf, successfully negotiates the recapture of a portion of any commission charged by a broker or a dealer in connection with the purchase or sale of securities, the rebate of commission is paid to the UCITS.

Costs, fees and expenses of directed brokerage services

45. (1) A responsible person shall only reimburse out of the assets of the UCITS the operator of a directed brokerage service or similar arrangement for the costs, fees and expenses of that directed brokerage service or similar arrangement where the requirements set out in paragraph (2) are met.

(2) The requirements for the purposes of paragraph (1) are the following

(a) the costs, fees and expenses of the relevant directed brokerage service or similar arrangement -

(i) are reasonable and vouched properly, and

(ii) have been incurred directly by the operator in providing the relevant services or arrangement;

(b) the prospectus disclosure required by Regulation 72 has been made;

(c) the operator of the directed brokerage services or other arrangement invoices the responsible person separately for the relevant costs, fees and expenses.

PART 3

SUPERVISORY REQUIREMENTS

General conditions

46. (1) (a) Where a UCITS is authorised by the Bank as an umbrella UCITS, the responsible person shall on behalf of the UCITS obtain the prior approval of the Bank for the establishment of each sub-fund of that umbrella UCITS.

(b) An application to the Bank for approval for the purposes of subparagraph (a) shall include -

(i) details of proposed sub-funds, and

(ii) the proposed amendment or the proposed supplement (as the case may be) to the prospectus which will set out the investment objectives and policy of each of the proposed new sub-funds.

(c) The responsible person of a UCITS shall, unless disclosed in the annual report, ensure that the prospectus of the UCITS discloses the following

(i) a statement to the effect that relevant direct and indirect operational costs and fees, arising from efficient portfolio management techniques, may be deducted from the revenue delivered to the UCITS. These costs and fees should not include revenue;

(ii) the identity of the entity to which the relevant direct and indirect operational costs and fees are paid;

(iii) if the entity to which the relevant direct and indirect operational costs and fees are paid is a related party to the management company or the depositary, that fact.

(2) Subject to paragraph (4), a responsible person shall notify the Bank of each of the following, should it arise

(a) any proposal to amend the prospectus of the UCITS;

(b) any proposal to amend any material agreement that has been entered into with a third party by or on behalf of a UCITS;

(c) any proposal to replace a third party that has entered into a material agreement with the UCITS;

(d) any proposal to change the auditor of the UCITS and the reasons for the proposed change.

(3) A notification made for the purposes of paragraph (2) shall include sufficient information on the proposal to enable the Bank to consider and assess the proposal.

(4) If the Bank objects to a proposal notified to the Bank pursuant to paragraph (2)(a), (b) or (c), it shall not proceed.

Relationship with the Bank

47. A responsible person shall ensure that -

(a) each UCITS which has been authorised by the Bank establishes and maintains an email address for correspondence with the Bank,

(b) the email address in subparagraph (a) is monitored on a daily basis, and

(c) the Bank is informed in writing promptly of any change to the email address in subparagraph (a).

Charges for redemption or repurchase of units

48. (1) Subject to paragraph (2), a responsible person shall not increase the maximum relevant charge without the prior approval of unit-holders given on the basis of a simple majority of votes cast in general meeting or with the prior written approval of all unit-holders of the relevant UCITS (in accordance with the constitutional document) or such other majority as is specified in the constitutional document of the relevant UCITS.

(2) A responsible person shall -

(a) provide unit-holders with reasonable notice of any proposed increase in the relevant charge, and

(b) permit a unit-holder to redeem any or all of the unit-holder’s units prior to the implementation of the proposed increase.

(3) In this Regulation, “relevant charge” means, in the context of a particular UCITS, a charge relating to the redemption or repurchase of units in that UCITS.

Replacement of depositary

49. (1) A responsible person shall establish and implement procedures that are to be followed for the purpose of replacing a depositary, which shall be approved by the board of the responsible person.

(2) Where a UCITS replaces its depositary, each of the retiring depositary and the new depositary shall notify the Bank as soon as practicable of whether that retiring depositary or new depositary (as the case may be) is satisfied or dissatisfied with the transfer of assets.

(3) A responsible person may terminate the appointment of the depositary only -

(a) upon the appointment of a new depositary, or

(b) upon the revocation of the authorisation of the UCITS.

Replacement of management company or third party

50. (1) A responsible person shall establish and implement procedures that are to be followed for the purpose of replacing the management company or administration company.

(2) The procedures for the replacement of a management company or an administration company shall be approved by the board of the responsible person.

Monthly returns

51. (1) A responsible person shall submit to the Bank periodic returns each of which complies with the requirements of paragraph (2).

(2) The requirements for the purposes of paragraph (1) are the following

(a) returns shall be made on a monthly basis;

(b) each return shall relate to a complete calendar month;

(c) a return shall be made to the Bank not later than the tenth business day of the month that is subsequent to the month to which the return relates;

(d) each return subsequent to the first return shall be in respect of the calendar month that is subsequent to the month to which the most recently submitted return relates;

(e) a return must be denominated in the base currency of the relevant UCITS;

(f) a return shall include the following

(i) the Bank code issued to the sub-fund of the UCITS;

(ii) the base currency of the UCITS;

(iii) the type of UCITS, designated by investment strategy;

(iv) the total gross asset value of the UCITS at month-end;

(v) the total net asset value of the UCITS at month-end;

(vi) the number of units in circulation at month-end;

(vii) the net asset value per unit at month-end;

(viii) payments received from the issues of units during the relevant month;

(ix) payments made for the repurchase of units during the relevant month;

(x) the net amount from issues and repurchases during the relevant month;

(xi) the profit or loss arising from the operations of the UCITS in the relevant month;

(xii) investment management fees (excluding performance fees) -

(I) accrued, and

(II) paid,

in the relevant month;

(xiii) all other charges, fees and expenses (excluding investment management fees) -

(I) accrued, and

(II) paid,

in the relevant month.

Quarterly returns

52. (1) A responsible person shall submit to the Bank periodic returns in the format prescribed by the Bank from time to time and each of which complies with the requirements of paragraph (2).

(2) The requirements for the purposes of paragraph (1) are the following

(a) each return shall be known as a Money-Market and Investment Fund return;

(b) returns shall be made on a quarterly basis;

(c) each return shall relate to a period of three complete and consecutive calendar months;

(d) a return shall be made to the Bank not later than the tenth business day of the month that is subsequent to the last of the months to which the return relates;

(e) each return subsequent to the first return shall be in respect of the three-month period that is subsequent to the last of the months to which the most recently submitted return relates.

PART 4

PROSPECTUS REQUIREMENTS

General requirements

53. (1) A responsible person shall ensure that it and the UCITS complies with the terms of the UCITS prospectus.

(2) A responsible person shall translate a prospectus of a UCITS into another language only if such translation contains the same information and has the same meaning as in the prospectus that has been submitted to the Bank.

(3) (a) A responsible person shall not make any change to the investment objectives, or any material change to the investment policy, of a UCITS, each as disclosed in the prospectus, unless unit-holders have, in advance and on the basis of a simple majority of votes cast in general meeting or with the prior written approval of all unit-holders of the relevant UCITS (in accordance with the constitutional document) or such other majority as is specified in the constitutional document of the relevant UCITS, approved the relevant change or changes.

(b) For the purposes of subparagraph (a), a change would be “material” if, were it to be made, it would alter significantly the asset type, credit quality, borrowing limits or risk profile of the relevant UCITS.

(4) (a) A responsible person shall provide all unit-holders of the UCITS with reasonable notice of the relevant change or changes in the event that, in accordance with paragraph (3), any change is made in the investment objectives or any material change is made in the investment policy.

(b) Notice given for the purposes of subparagraph (a) must be sufficient to enable a unit-holder, acting reasonably, to redeem some or all of the unit-holder’s units prior to the implementation of the relevant change or changes.

(5) A responsible person shall, in the next-occurring periodic report, notify unit-holders of material changes to the content of the prospectus.

(6) A responsible person shall ensure that the prospectus -

(a) lists those stock exchanges, markets and regulated derivatives markets on which assets of the UCITS are listed or traded, and

(b) includes only those stock exchanges, markets and regulated derivatives markets which, at the date of the prospectus, satisfy the regulatory criteria.

Advertising

54. (1) A responsible person shall ensure that the name of a UCITS and its regulatory status is shown clearly in any advertisement relating to that UCITS.

(2) A responsible person shall ensure that an advertisement relating to a UCITS shall not contain information which is false or misleading or presented in a manner that is deceptive.

(3) A responsible person shall ensure that an advertisement relating to a UCITS shall refer to the key investor information document and the prospectus issued by the relevant UCITS.

(4) A responsible person shall ensure that no advertisement relating to a UCITS is inconsistent with any relevant provision of the key investor information document or of the prospectus issued by the relevant UCITS.

(5) Without prejudice to Regulation 97, a responsible person shall comply with the advertising standards set out in Schedule 6 where the relevant UCITS is -

(a) authorised in a Member State other than the State and is marketing its units in the State, or

(b) authorised in the State and is marketing its units in the State or in a state that does not have any statutory regulation of marketing.

Prospectus: general

55. A responsible person shall ensure that the following matters are disclosed in the prospectus of a UCITS

(a) the identity and, in brief form, details of the financial group or entity that is promoting the UCITS;

(b) details of the persons who accept responsibility for information contained in the prospectus;

(c) details of the principal investment manager of the UCITS;

(d) details of sub-investment managers, if these are paid out of the assets of the UCITS directly and a statement that details of sub-investment managers not paid out of the assets of the UCITS directly, if any, shall be available on request to unit-holders;

(e) if the UCITS proposes to create hedged currency share classes, that fact;

(f) the distribution provisions on the termination or winding up of the UCITS, in particular those affecting unit-holders;

(g) details of the FDI exposures for the purposes of Regulation 15(4)(b)(iii).

Prospectus: investment policy

56. (1) A responsible person shall ensure that the investment policy of a UCITS, as it is disclosed in the prospectus in accordance with the UCITS Regulations, shall set out -

(a) the types of asset in which the UCITS proposes to invest,

(b) the basis upon which the UCITS will select its investments,

(c) the place or places in which a UCITS will invest, indicating the countries or regions in which such investments will be made, and

(d) whether it is intended to seek exposure to a country or region through investment in companies or instruments that are listed or traded on a stock exchange or market that is located in another jurisdiction.

(2) A responsible person that proposes, on behalf of a UCITS, to take short positions shall, in the prospectus of the UCITS, disclose -

(a) in relation to each of the categories of assets in which it may invest, whether the UCITS will take long positions or short positions or both, and

(b) either -

(i) the percentage, relative to the net asset value, of the anticipated -

(I) maximum value of the long positions, and

(II) maximum of the absolute values of the short positions,

or

(ii) the anticipated maximum of the ratio of the value of the long positions to the absolute value of the short positions.

(3) A responsible person shall ensure that a UCITS that uses FDI includes the following information in its prospectus

(a) a description of the types of FDI that the UCITS may use and the extent to which the UCITS may be leveraged;

(b) the method used to calculate global exposure.

(4) A responsible person that uses, on behalf of a UCITS, the VaR approach shall, in the prospectus of the UCITS and in accordance with paragraph (5), disclose -

(a) the expected level of leverage of the UCITS,

(b) that there is a possibility of higher leverage levels, and

(c) information on the reference portfolio.

(5) For the purposes of paragraph (4) -

(a) leverage shall be calculated as the sum of the notionals of the derivatives that are used,

(b) the calculation of leverage within subparagraph (a) may be supplemented with leverage calculated on the basis of a commitment approach, and

(c) the creation of leveraged exposure to an index via FDI, or the inclusion of a leverage feature in an index, shall be taken into account in assessing compliance with the prospectus disclosure requirements of paragraph (4).

(6) A responsible person that uses, on behalf of a UCITS, total return swaps, or other FDI with the same characteristics as a total return swap, shall include the following in the prospectus of the UCITS

(a) information on the underlying strategy or index and composition of the investment portfolio or index;

(b) information on the counterparty to the transactions;

(c) a description of the risk of counterparty default and the effect of any such default on investor returns;

(d) details of the extent to which the counterparty assumes any discretion over the composition or management of the UCITS investment port-folio or over the underlying of the FDI;

(e) whether the approval of the counterparty is required in relation to any UCITS investment portfolio transaction.

(7) If a counterparty has discretion over the composition or management of the UCITS investment portfolio or of the underlying of the FDI then the responsible person shall, in the prospectus of the UCITS, identify the counterparty as an investment manager.

Financial index

57. (1) A responsible person that uses, on behalf of a UCITS, a financial index for investment purposes shall, in the prospectus of the UCITS, provide sufficient disclosure to allow a prospective investor understand the following

(a) the market that the index is representing;

(b) why the index is being used as part of the investment strategy of the UCITS;

(c) whether the investment will be made directly, through investment in the constituents of the index, or indirectly, through an FDI;

(d) where additional information on the index may be obtained.

(2) A responsible person that intends to make use, on behalf of a UCITS, of the increased diversification limits referred to in Regulation 71 of the UCITS Regulations, shall, in the prospectus of the relevant UCITS -

(a) disclose the intention to make use of the increased diversification limits, and

(b) provide a description of the exceptional market conditions that necessitate this investment.

(3) A responsible person shall, in the prospectus of the relevant UCITS, disclose the rebalancing frequency of the financial index in which it invests and its effects on the costs within the index.

Structured UCITS

58. A responsible person of a structured UCITS shall ensure that the prospectus of the UCITS includes, in clear language that can be understood easily by a retail investor, disclosure of -

(a) its investment policy,

(b) the underlying exposure,

(c) payoff formulas, and

(d) where relevant –

(i) the fee paying arrangement for an annual management fee, and

(ii) a risk warning that such fee is fixed and not subject to the performance of the UCITS.

(2) A responsible person of a structured UCITS shall include in the prospectus of the UCITS a prominent risk warning informing investors who redeem their investment prior to maturity that they do not benefit from the pre-defined payoff and may suffer significant losses.

Fund of funds

59. A responsible person that is permitted to invest more than 20 per cent of the net assets of the relevant UCITS in other investment funds shall, in the prospectus of that relevant UCITS and in any promotional literature issued, include a prominent statement to this effect.

Index-tracking funds

60. (1) A responsible person of an index-tracking UCITS shall include the following in the prospectus of the UCITS

(a) a description of the index including information on the underlying components or details of where the exact composition of the index is published;

(b) information on how the index will be tracked and the implications of the chosen method for unit-holders in terms of their exposure to the underlying index and counterparty risk;

(c) information on the anticipated level of tracking error in normal market conditions;

(d) a description of factors that are likely to affect the ability of the UCITS to track the performance of the index, including transaction costs, small illiquid components and dividend re-investments.

(2) A responsible person of an index-tracking leveraged UCITS shall include the following information in the prospectus of the UCITS

(a) a description of the leverage policy and how the leverage policy is implemented;

(b) the cost of the leverage (where relevant);

(c) the risks associated with the leverage policy;

(d) a description of the impact of any reverse leverage;

(e) a description of how the performance of the UCITS may differ significantly from the multiple of the index performance over the medium term to the long term.

Efficient portfolio management

61. (1) A responsible person shall, in the prospectus of the relevant UCITS, include the following

(a) a description of its intentions regarding techniques and instruments which may be used for the purposes of efficient portfolio management. This should include reference to the techniques and instruments which the UCITS can utilise and a detailed description of the inherent risks, including counterparty risk and potential conflict of interest, that may arise;

(b) information on the impact of efficient portfolio management techniques and instruments on the performance of the UCITS;

(c) information on the policy regarding direct and indirect operational costs and fees arising in the context of these techniques;

(d) information on the collateral policy of the UCITS arising from (as the case may be) OTC derivatives or efficient portfolio management techniques and instruments or both.

(2) A disclosure for the purposes of paragraph (1) shall include the following

(a) permitted types of collateral;

(b) the level of collateral required;

(c) the haircut policy;

(d) in the case of cash collateral -

(i) the re-investment policy, and

(ii) the risks arising from the re-investment policy.

Dealing

62. (1) A responsible person shall, in the prospectus of the relevant UCITS, disclose the following information in respect of dealing

(a) the initial offer period;

(b) the initial offer price;

(c) in bold typeface, prominently at the beginning of the prospectus (or the relevant supplement to the prospectus, where appropriate), the maximum redemption charge;

(d) the time limits within which the equivalent of the net issue price is to be paid into the assets of the UCITS.

(2) A responsible person that proposes to apply an anti-dilution levy to subscriptions or redemptions shall, in the prospectus of the relevant UCITS, include a provision to the following effect -

“In calculating the subscription or redemption price for the UCITS the directors may, on any dealing day on which there are net subscriptions or redemptions, adjust (as relevant) the subscription or redemption price by adding or deducting an anti-dilution levy to cover dealing costs and to preserve the value of the underlying assets of the UCITS.”

Redemption in specie

63. (1) Subject to paragraph (3), where the prospectus of a UCITS provides for redemption in specie, the responsible person shall, in the prospectus of the relevant UCITS, also provide as follows

(a) redemption in specie is -

(i) at the discretion of the UCITS, and

(ii) subject to the consent of the redeeming unit-holder;

(b) asset allocation is subject to the approval of the depositary;

(c) a determination to provide redemption in specie may be at the sole discretion of the responsible person where the redeeming unit-holder requests redemption of a number of units that represent at least 5 per cent of the net asset value of the UCITS.

(2) In the event of a redemption in specie in accordance with subparagraph (c) of paragraph (1) -

(a) the responsible person shall, if so requested by the redeeming unit-holder, sell the assets on behalf of that unit-holder, and

(b) the cost of the sale of the relevant units may be charged to the unit-holder.

(3) Paragraph (1) does not apply to an exchange-traded fund where the original subscription was made in specie.

Remuneration and costs arising

64. (1) A responsible person shall ensure that the prospectus of the relevant UCITS includes -

(a) in the same section of the prospectus and in a form that can be easily understood and analysed by unit-holders and prospective investors, information on remuneration, costs and expenses to be borne by the UCITS, and

(b) the policy of the UCITS regarding direct and indirect operational costs and fees arising from efficient portfolio management techniques that may be deducted from the revenue delivered to the UCITS.

(2) A responsible person of an umbrella UCITS shall state clearly in the prospectus the charges (if any) that are applicable to the exchange of units in one sub-fund of the umbrella UCITS for units in another sub-fund of the umbrella UCITS.

Umbrella UCITS

65. (1) A responsible person of an umbrella UCITS investment company shall include the following statement in the prospectus -

“An umbrella fund with segregated liability between sub-funds”.

(2) Where an umbrella UCITS issues a supplement to the prospectus in relation to the establishment of a new sub-fund, the supplement shall -

(a) state that the UCITS is constituted as an umbrella UCITS, and

(b) name the other existing sub-funds of that umbrella UCITS or ensure that the prospectus is updated to include the names of all existing sub-funds.

(3) Where an umbrella UCITS investment company was authorised by the Bank and commenced trading before 30 June 2005 and does not have segregated liability between sub-funds, the responsible person shall disclose clearly in the relevant prospectus the potential risks to investors arising from the absence of the segregation of liability between sub-funds.

Authorisation status

66. A responsible person shall ensure that the prospectus of the UCITS -

(a) states that the authorisation of the UCITS by the Bank is not an endorsement or guarantee of the UCITS by the Bank,

(b) states that the Bank is not responsible for the contents of the prospectus, and

(c) includes the following statement -

“The authorisation of this UCITS by the Central Bank of Ireland shall not constitute a warranty as to the performance of the UCITS and the Central Bank of Ireland shall not be liable for the performance or default of the UCITS.”

Risk disclosures

67. (1) A responsible person shall, in the prospectus of the UCITS, disclose, and describe in a comprehensive manner, the risks that are applicable to investing in that particular UCITS.

(2) A disclosure for the purposes of paragraph (1) shall make reference to at least the following

(a) the fact that prices of units may fall as well as rise;

(b) that investors are recommended to consult a stockbroker or financial adviser about the contents of the prospectus;

(c) where relevant, the fact that the difference at any one time between the sale and repurchase price of units in the UCITS arising from the repurchase charge means that the investment should be viewed as medium term to long term investment.

(3) A responsible person of a UCITS that has investment objectives or an investment policy that involves investing -

(a) more than 20 per cent of the assets of the UCITS in emerging markets,

(b) more than 30 per cent of the assets of the UCITS in bonds or warrants that are below investment grade,

or both, shall insert a risk warning informing investors that an investment in the UCITS should not constitute a substantial proportion of an investment portfolio and may not be appropriate for all investors.

(4) A risk warning notice for the purposes of paragraph (3) -

(a) shall be inserted and highlighted at the beginning of the prospectus (or the relevant supplement to the prospectus, where appropriate), and

(b) must cross-refer to the more detailed disclosure of risk factors which are contained in the body of the prospectus (or supplement).

(5) Where paragraph (3) applies the relevant prospectus (or the relevant supplement to the prospectus, where appropriate) shall contain a full description of the risks that are involved.

UCITS that use financial derivative instruments

68. A responsible person of a UCITS that intends to invest principally in FDIs shall insert a warning of this intention at the beginning of the relevant prospectus (or the relevant supplement to the prospectus, where appropriate) and of any other promotional literature.

Cash and money-market funds

69. A responsible person of a UCITS that has an investment objective or an investment policy that involves investing substantially in deposits or money-market instruments shall provide a risk warning in the prospectus drawing attention to the difference between the nature of a deposit and the nature of an investment in the UCITS, with particular reference to the risk that the value of the principal invested in the UCITS may fluctuate.

Distributions out of capital

70. (1) A responsible person may only make a distribution out of capital where the prospectus of the relevant UCITS includes each of the following

(a) an explanation of the rationale underlying the policy to make distributions out of capital;

(b) in accordance with paragraph (2), a risk warning, set out prominently at the front of the prospectus, that describes the effects of making a distribution from capital;

(c) a statement that a distribution out of capital may have different tax implications to a distribution of income so that investors are recommended to seek advice in this regard;

(d) a statement indicating the greater risk of capital erosion that exists and the likelihood that, due to capital erosion, the value of future returns would also be diminished.

(2) A risk warning referred to in paragraph (1)(b) shall highlight that, in the event of the making of a distribution out of capital -

(a) capital will be eroded,

(b) the distribution is achieved by forgoing the potential for future capital growth, and

(c) this cycle may continue until all capital is depleted.

(3) A responsible person shall charge fees and expenses, including management fees, to the capital of a UCITS only if the prospectus of the relevant UCITS includes each of the following

(a) a statement that fees and expenses, including management fees, or a portion of any such fee or expense, may be charged to capital;

(b) an explanation of the rationale underlying the policy to charge fees and expenses to capital;

(c) a risk warning, set out prominently in bold text at the front of prospectus, which states -

“Unit-holders should note that all or part of fees and expenses, including (if applicable) management fees, may be charged to the capital of the UCITS. This will have the effect of lowering the capital value of your investment”;

(d) a description of the effects that the charging of fees and expenses (including management fees) to capital may have, including that capital may be eroded.

(4) Where a UCITS invests more than 20 per cent in fixed-income instruments and the priority of the UCITS is the generation of income rather than capital growth, the responsible person shall ensure that -

(a) this priority is disclosed in the prospectus of the relevant UCITS, and

(b) the prospectus of the relevant UCITS includes a statement that a distribution made during the life of the UCITS must be understood as a type of capital reimbursement.

Conflicts of interest

71. (1) A responsible person shall include in the prospectus of the relevant UCITS a description of the potential conflicts of interest that could arise between the management company, investment manager and the UCITS and, where applicable, details of how such conflicts will be managed.

(2) A responsible person shall include in the prospectus of the relevant UCITS a description of soft commission arrangements that may be entered into by a responsible person or a connected person.

(3) Where it is envisaged that a UCITS and connected persons may enter into transactions with each other, the responsible person shall ensure that the prospectus discloses the fact that such transactions may occur.

(4) In this Regulation “connected person” has the meaning given to the term in Regulation 42.

Directed brokerage services and similar arrangements

72. A responsible person shall, in the prospectus of the UCITS, disclose details of any directed brokerage services or similar arrangements that are operated in relation to the UCITS, including details of the services provided.

Share classes

73. (1) A responsible person that uses FDI at share class level shall include in the UCITS prospectus a clear description of the strategies that the UCITS pursues and the effect that this may have on the relevant share class.

(2) A responsible person shall ensure that the prospectus of the relevant UCITS includes the following

(a) a description of the general currency hedging strategies of the UCITS and the features of individual currency share classes;

(b) where a UCITS intends to invest in any asset that is denominated in a currency other than the base currency at share class level, a disclosure -

(i) as to whether it is the intention of the UCITS to hedge the resulting currency exposure back into the base currency and, if it is so intended, to what extent, and

(ii) of the general costs and, if relevant, exchange rate risk that is associated with the currency strategy;

(c) where a UCITS has established an unhedged currency share class, a disclosure -

(i) that a currency conversion will take place upon subscriptions, redemptions and distributions at prevailing exchange rates, and

(ii) that the value of the share expressed in the class currency will be subject to exchange rate risk in relation to the base currency;

(d) where a UCITS has established hedged share classes, a disclosure of this fact, in accordance with paragraph (3).

(3) A disclosure for the purposes of paragraph (2) (d) shall state -

(a) that, to the extent that hedging is successful, the performance of the class is likely to move in line with the performance of the underlying asset or assets,

(b) that investors in the hedged class will not benefit if the class currency falls against the base currency or against the currency in which the assets of the UCITS are denominated,

(c) the implications (for unit-holders) of the hedging policy, including at least the following -

(i) a statement indicating the extent to which the UCITS intends to hedge against currency fluctuations and noting that, while not the intention, nonetheless over-hedged or under-hedged positions may arise due to factors outside of the control of the UCITS,

(ii) a statement that over-hedged positions shall not exceed 105 per cent of the net asset value of the class and under-hedged positions shall not fall below 95 per cent of the net asset value of the class,

(iii) a statement that the hedged positions will be kept under review to ensure that over-hedged positions and under-hedged positions do not exceed the permitted level,

(iv) a statement that transactions will be attributable clearly to a specific class,

(v) a statement that currency exposures of different currency classes may not be combined or offset and that currency exposures of assets of the UCITS may not be allocated to separate share classes, and

(vi) a statement that the costs and gains or losses of the hedging transactions will accrue solely to the relevant class.

(4) A review for the purposes of paragraph 3(c)(iii) shall incorporate a procedure to ensure that any position materially in excess of 100 per cent of net assets is not carried forward from month to month.

Performance fees

74. (1) Where a UCITS provides for the payment of performance fees, a responsible person shall, in the prospectus of the relevant UCITS, disclose the following

(a) that the UCITS provides for the payment of performance fees;

(b) the calculation period for determining the performance fees;

(c) the first calculation period;

(d) how the performance fees are calculated;

(e) the percentage performance fee payable;

(f) the accrual basis of the performance fees and when the performance fees are actually paid;

(g) a risk warning that performance fees are based on net realised and net unrealised gains and losses as at the end of each calculation period and as a result, performance fees may be paid on unrealised gains which may subsequently never be realised;

(h) where a UCITS has multiple managers or advisers, a risk warning that it is possible that performance fees may be payable to one or more of the investment managers or advisers where the overall net asset value of the fund may not have increased.

PART 5

KEY INVESTOR INFORMATION DOCUMENT

General

75. A responsible person shall ensure that a KIID for a UCITS complies with the following

(a) the ESMA Guidelines on clear language and layout of the key investor information document (Ref: CESR/10-1320);

(b) the ESMA Guidelines on the methodology for calculation of the ongoing charges figure in the Key Investor Information Document (Ref: CESR/10-674);

(c) the ESMA Guidelines on the methodology for the calculation of the synthetic risk and reward indicator in the Key Investor Information Document (Ref.: CESR/10-673);

(d) the ESMA template for the Key Investor Information Document (Ref.: CESR/10-1321);

(e) the ESMA Guidelines selection and presentation of performance scenarios in the Key Investor Information document for structured UCITS (Ref.: CESR/10-1318).

Investment objective and policy

76. (1) A responsible person shall ensure that the following are included in the KIID

(a) where a UCITS is established as an index-tracking UCITS, the KIID shall include, in summary form, information on how the index will be tracked and the implications of the chosen method for unit holders in terms of their exposure to the underlying index and counterparty risk;

(b) where a UCITS is established as an index-tracking leveraged UCITS, the KIID shall include, in summary form, the following information

(i) a description of the leverage policy, how this is achieved (i.e. whether the leverage is at the level of the index or arises from the way in which the UCITS obtains exposure to the index), the cost of the leverage (where relevant) and the risks associated with this policy;

(ii) a description of the impact of any reverse leverage;

(iii) a description of how the performance of the UCITS may differ significantly from the multiple of the index performance over the medium to the long term.

(2) In relation to a structured UCITS, if the pre-determined pay-off is available only to those investors that buy units at a certain point and hold them until a certain date, the responsible person shall ensure that the relevant KIID -

(a) includes a statement to this effect,

(b) details the consequences for an investor of buying and selling units in the UCITS other than in instances in which the pre-determined pay-off is available, and

(c) if a guarantee from an independent third party is offered, includes an explanation of such guarantee.

Risk and reward profile

77. (1) A responsible person shall calculate a synthetic risk and reward indicator in accordance with the methodology prescribed in ESMA Guidelines for the calculation of the synthetic risk and reward indicator in the Key Investor Information Document (Ref: CESR/10-673).

(2) (a) A responsible person of a UCITS established as a feeder fund shall ensure the following are included in the KIID

(i) a description of the risk and reward profile of the UCITS;

(ii) where the ancillary assets held by the feeder UCITS impact on the risk and reward profile of the UCITS, a disclosure of this fact;

(b) A description for the purposes of subparagraph (a)(i) shall not be materially different to the risk and reward profile of the corresponding master UCITS.

Filing requirements

78. (1) A responsible person of an umbrella UCITS shall submit a KIID to the Bank prior to the approval of a new sub-fund.

(2) When filed with the Bank in accordance with paragraph (1), a KIID must be accompanied by written confirmation from the responsible person or the legal adviser to the UCITS to the Bank that -

(a) the KIID complies with the requirements of the UCITS Regulations, Commission Regulation (EU) No 583/2010 and these Regulations, and

(b) the information in the KIID does not conflict with the content of the prospectus.

(3) Every new KIID and amended KIID shall be submitted by the responsible person to the Bank.

PART 6

GENERAL OPERATIONAL REQUIREMENTS

Regulated markets

79. (1) A responsible person shall, regularly, review the list of stock exchanges and regulated markets that are specified in the prospectus of the relevant UCITS to ensure that those stock exchanges and regulated markets continue to meet with the regulatory criteria.

(2) A responsible person shall consult with the depositary to ensure that adequate custody arrangements are in place before including additional stock exchanges or markets in the prospectus.

Directed brokerage services or similar arrangements

80. A responsible person shall, at least, on an annual basis, review any directed brokerage services or similar arrangements and associated costs to a UCITS, where such services or arrangements are being operated in relation to that UCITS.

PART 7

ANNUAL AND HALF-YEARLY REPORTS OF A UCITS

Publication of annual and half-yearly reports

81. (1) The responsible person shall submit to the Bank annual and half yearly reports of a UCITS to coincide with publication in accordance with Regulation 88 of the UCITS Regulations.

(2) The responsible person shall ensure that -

(a) the first annual or half-yearly report be prepared within 9 months of the launch of the UCITS and shall be published and submitted to the Bank within 2 months for half-yearly reports or 4 months for annual reports, and

(b) the first annual report with audited accounting information-

(i) is prepared within 18 months of the incorporation or establishment of the UCITS,

(ii) includes all sub-funds of the UCITS launched within the period to which that report relates, and

(iii) is published and submitted to the Bank within 4 months of the preparation of the report and in any event not later than 4 months after the expiration of the 18 month period referred to in paragraph 2(b)(i).

(3) Where an umbrella UCITS produces separate periodic reports for individual sub-funds, the responsible person shall, in the report for each sub-fund, name the other sub-funds and state that the reports of such sub-funds are available free of charge on request from the management company.

(4) Each annual and half-yearly report shall state whether the board of directors of the responsible person is satisfied that -

(a) there are in place arrangements, evidenced by written procedures, to ensure that the obligations that are prescribed by Regulation 43(1) are applied to all transactions with a connected party, and

(b) all transactions with a connected party that were entered into during the period to which the report relates complied with the obligations that are prescribed by Regulation 43(1).

Additional information to be included in the annual report

82. (1) The responsible person shall in the annual report of the UCITS -

(a) in addition to the requirements of the UCITS Regulations, include the information that is prescribed in Schedule 7;

(b) document all material changes that have occurred in the disposition of the assets of the UCITS.

(2) For the purposes of paragraph (1)(b) -

(a) a material change is defined as aggregate purchases of a security exceeding 1 per cent of the total value of purchases for the period or aggregate disposals greater than 1 per cent of the total value of sales,

(b) if there were fewer than 20 purchases that met the material changes definition, the UCITS shall disclose those purchases and such number of the next largest purchases so that at least 20 purchases are disclosed, and

(c) if there were fewer than 20 sales that met the material changes definition, the UCITS shall disclose those sales and such number of the next largest sales so that at least 20 sales are disclosed.

(3) If a sub-fund within an umbrella investment company invests in the units of another sub-fund within that umbrella, the responsible person shall, in its annual report -

(a) disclose the fact of that investment, and

(b) explain the policies that have been adopted by the umbrella investment company to disclose cross-investments between sub-funds within that umbrella investment company.

Additional information to be included in the half-yearly report

83. (1) A responsible person shall (on behalf of the UCITS), in its half-yearly report -

(a) in addition to the requirements of the UCITS Regulations, include the information that is prescribed in Schedule 8, and

(b) document all material changes that have occurred in the disposition of the assets of the UCITS.

(2) For the purposes of paragraph (1)(b) the criteria specified in Regulation 82(2) shall apply.

(3) If a sub-fund within an umbrella investment company invests in the units of another sub-fund within that umbrella, the responsible person shall, in its half-yearly report -

(a) disclose the fact of that investment, and

(b) explain, in a note to the half-yearly report, the policies that have been adopted by the umbrella investment company to disclose cross-investments between sub-funds within that umbrella investment company.

PART 8

REQUIREMENTS IN RESPECT OF SPECIFIC TYPES OF FUND

Interpretation: Part 8

84. In this Part, references to a “Short-Term Money-Market Fund” means a money market fund referred to in Regulation 89, “Money-Market Fund” means a money-market fund referred to in Regulation 90 and “money market fund” means either a Short-Term Money-Market Fund or a Money-Market Fund.

Exchange-traded funds

85. (1) A responsible person of a UCITS ETF shall ensure that, in its name and in each of the types of document set out in paragraph (2), the relevant UCITS ETF uses the identifier “UCITS ETF” to identify it as an exchange-traded fund.

(2) The types of document to which paragraph (1) refers are, in respect of the particular UCITS ETF -

(a) the constitutional document,

(b) the prospectus,

(c) the KIID, and

(d) marketing communications.

(3) A responsible person of a UCITS ETF shall, in -

(a) the prospectus,

(b) the KIID, and

(c) the marketing communications of the UCITS ETF,

disclose the policy of the UCITS ETF regarding portfolio transparency and where information on the portfolio may be obtained, including where the indicative net asset value, if applicable, is published.

(4) A responsible person of a UCITS ETF, that calculates the indicative net asset value, shall, in its prospectus, disclose -

(a) how the indicative net asset value is calculated, and

(b) the frequency of that calculation.

(5) A responsible person of a UCITS which is not a UCITS ETF shall not use the identifier UCITS ETF, ETF or exchange-traded fund in any type of document, including those specified in paragraph (2).

Actively managed UCITS ETFs

86. A responsible person of a UCITS that is an actively managed UCITS ETF shall, in -

(a) the prospectus,

(b) the KIID, and

(c) the marketing communications of the actively managed UCITS ETF, disclose -

(i) that the UCITS ETF is an actively managed UCITS ETF, and

(ii) how the UCITS ETF will meet the stated investment policy including, where applicable, its intention to outperform an index.

Treatment of secondary market investors of a UCITS ETF

87. (1) In circumstances in which units of a UCITS ETF purchased on a secondary market may not be redeemable from the UCITS, the responsible person shall include the following wording in the prospectus and in the marketing communications of the relevant UCITS ETF

“UCITS ETF’s units purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them.”

(2) Where the stock exchange value of the units of a UCITS ETF varies significantly from its net asset value, the responsible person shall ensure that an investor who has acquired -

(a) a unit, or

(b) where applicable, any right to acquire a unit that was granted by way of distributing a respective unit,

on the secondary market, may sell the unit back to the UCITS ETF directly.

(3) Where paragraph (2) applies, the responsible person of the relevant UCITS ETF shall communicate to the relevant regulated market that the UCITS ETF accepts direct redemptions at the level of the UCITS ETF.

(4) Where paragraph (2) applies -

(a) a responsible person of a UCITS ETF shall, in its prospectus, disclose -

(i) the process that is to be followed by an investor who has purchased a unit on the secondary market, and

(ii) the potential costs involved in redeeming directly from the UCITS ETF, and

(b) the responsible person shall ensure that the costs for redeeming directly from the UCITS are not excessive.

Money-market UCITS

88. (1) A responsible person of a UCITS that is a money-market fund shall, in -

(a) the prospectus, and

(b) the KIID,

state whether the relevant UCITS is a Short-Term Money-Market Fund or a Money-Market Fund.

(2) A responsible person of a UCITS that is a money-market fund shall, in its prospectus -

(a) include a risk warning highlighting the difference between the nature of a deposit and the nature of an investment in a money-market fund, including mention of the risk that the principal invested in a money-market fund is capable of fluctuation, and

(b) provide information to investors on the risk and reward profile of the fund so as to enable an investor to identify any specific risks linked to the investment strategy of the money-market fund.

(3) Information that is provided in accordance with paragraph (2)(b) shall -

(a) in the case of every money-market fund, include, where relevant, investment in new asset classes, financial instruments or investment strategies that have unusual risk and reward profiles, and

(b) in the case of a Money-Market Fund, take account of the longer WAM and WAL.

Short-Term Money-Market Funds

89. (1) A responsible person of a UCITS that is a Short-Term Money-Market Fund shall ensure that the primary investment objectives of the UCITS are to -

(a) maintain the principal of the fund, and

(b) provide a return in line with money-market rates.

(2) A responsible person of a UCITS that is a Short-Term Money-Market Fund shall ensure that the relevant UCITS -

(a) invests only in the following

(i) high quality money-market instruments, as determined by the responsible person, that comply with the criteria for money-market instruments as set out in the UCITS Regulations;

(ii) deposits with credit institutions specified in Regulation 7;

(b) takes into account and documents the assessment by the responsible person of at least the following factors, in determining the quality of a relevant investment

(i) the credit quality of the instrument;

(ii) the nature of the asset class represented by the instrument;

(iii) in the case of a structured financial instrument, the operational and counterparty risk associated with the instrument;

(iv) the liquidity profile of the instrument;

(c) for the purposes of subparagraph (b)(i), where a money-market instrument -

(i) was subject to a credit rating by an agency registered and super-vised by ESMA that rating shall be taken into account by the responsible person in the credit assessment process, and

(ii) where a money-market instrument is downgraded below the two highest short-term credit ratings by the credit rating agency referred to in clause (i) this shall result in a new credit assessment being conducted of the instrument by the responsible person without delay, and

(d) monitors the credit quality of each of its investments on an ongoing basis.

(3) A responsible person of a UCITS that is a Short-Term Money-Market Fund shall ensure the relevant UCITS -

(a) invests only in securities or instruments that have a residual maturity until the legal redemption date of not greater than 397 days,

(b) provides daily net asset value and price calculations and has daily subscriptions and redemptions of units,

(c) ensures that the WAM of the portfolio does not exceed 60 days,

(d) ensures that the WAL of the portfolio does not exceed 120 days,

(e) takes into account the impact of FDIs, deposits and efficient portfolio management techniques and instruments when calculating the WAM and WAL,

(f) ensures that it is not exposed, directly or indirectly, to equities or commodities, including through any FDI,

(g) invests only in FDIs when these are in line with the money-market investment strategy of the UCITS,

(h) invests only in FDIs that give exposure to foreign exchange for hedging purposes,

(i) does not invest in a non-base currency unless the exposure is fully hedged,

(j) does not invest in another investment fund unless that other investment fund also is a short-term money-market fund, and

(k) has either a constant or fluctuating net asset value.

(4) For the purposes of paragraph (3)(d), when calculating the WAL for securities, including structured financial instruments -

(a) the responsible person shall base the maturity calculation on the residual maturity until the legal redemption of the instruments, and

(b) for the purposes of paragraph (a), where a financial instrument embeds a put option, the exercise date of the put option may be used instead of the legal residual maturity if the following conditions apply at all times

(i) the put option can be exercised freely by the UCITS at its exercise date;

(ii) the strike price of the put option remains close to the expected value of the instrument at the next exercise date;

(iii) the investment strategy of the UCITS implies that there is a high probability that the option will be exercised at the next exercise date.

Money-Market Funds

90. (1) A responsible person of a UCITS that is a Money-Market Fund shall ensure that the primary investment objectives of the UCITS are to -

(a) maintain the principal of the fund, and

(b) provide a return in line with money-market rates.

(2) A responsible person of a UCITS that is a Money-Market Fund shall ensure that the relevant UCITS -

(a) invests only in the following

(i) high quality money-market instruments, as determined by the responsible person that comply with the criteria for money-market instruments as set out in the UCITS Regulations;

(ii) deposits with credit institutions referred to in Regulation 7;

(b) takes into account and documents the assessment by the responsible person of at least the following factors, in determining the quality of a relevant investment

(i) the credit quality of the instrument;

(ii) the nature of the asset class represented by the instrument;

(iii) in the case of a structured financial instrument, the operational and counterparty risk associated with the instrument;

(iv) the liquidity profile of the instrument;

(c) For the purposes of subparagraph (b)(i), where a money-market instrument -

(i) was subject to a credit rating by an agency registered and super-vised by ESMA that rating shall be taken into account by the responsible person in the credit assessment process, and

(ii) where a money-market instrument is downgraded below the two highest short-term credit ratings by the credit rating agency referred to in clause (i) this shall result in a new credit assessment being conducted of the instrument by the responsible person without delay, and

(d) monitors the credit quality of each of its investments on an ongoing basis.

(3) A responsible person of a UCITS that is a Money-Market Fund shall ensure the relevant UCITS -

(a) invests only in securities or instruments that have a residual maturity until the legal redemption date of not greater than two years, provided that the time remaining until the next interest reset date is not greater than 397 days,

(b) provides daily net asset value and price calculations and has daily subscriptions and redemptions of units,

(c) ensures that the WAM of the portfolio does not exceed six months,

(d) ensures that the WAL of the portfolio does not exceed 12 months,

(e) takes into account the impact of FDIs, deposits and efficient portfolio management techniques and instruments when calculating the WAM and WAL,

(f) ensures that the UCITS is not exposed, directly or indirectly, to equities or commodities, including through FDIs,

(g) invests only in FDIs that give exposure to foreign exchange for hedging purposes,

(h) does not invest in a non-base currency unless the exposure is fully hedged,

(i) does not invest in another investment fund unless that other investment fund is a short-term money-market fund or a money-market fund, and

(j) has a fluctuating net asset value.

(4) For the purposes of paragraph (2)(d), a floating rate security must reset to a money-market rate or index.

(5) (a) Subject to subparagraph (b), for the purposes of paragraph (3)(d), when calculating the WAL for a security, including a structured financial instrument, the responsible person shall base the maturity calculation on the residual maturity until the legal redemption of the instrument.

(b) When a financial instrument embeds a put option, the exercise date of the put option may be used instead of the legal residual maturity if the following conditions apply at all times

(i) the UCITS can exercise the put option, at its exercise date, freely;

(ii) the strike price of the put option remains close to the expected value of the instrument at the next exercise date;

(iii) the investment strategy of the UCITS implies that there is a high probability that the option will be exercised at the next exercise date.

Short-Term Money-Market Funds: valuation on the basis of amortised cost

91. (1) A responsible person of a UCITS that is a Short-Term Money-Market Fund shall not permit that UCITS to follow an amortised cost valuation methodology unless the UCITS or, where relevant, its delegate has demonstrated expertise in the operations of money market funds that follow this method of valuation.

(2) For the purposes of paragraph (1), expertise shall be demonstrable where any of the following conditions is satisfied

(a) the short-term money-market fund has obtained a triple-A rating from an internationally recognised rating agency;

(b) the responsible person is engaged in the management, or has been engaged in the management, of a triple-A rated money-market fund;

(c) in circumstances other than those in subparagraph (a) or subparagraph (b), where the responsible person or, where relevant, its delegate, has demonstrated to the Bank (through separate application) that appropriate expertise exists in the operation of this type of Money-Market Fund.

(3) Where a UCITS is a Short-Term Money-Market Fund which uses the amortised cost valuation methodology, the responsible person of that UCITS shall -

(a) ensure that, upon appointment and at all times thereafter, the persons responsible for the operation of that UCITS, including under any delegation arrangements, have the necessary expertise;

(b) carry out a weekly review of discrepancies between the market value and the amortised cost value of its money-market instruments;

(c) where a discrepancy in excess of 0.3 per cent occurs between the market value and the amortised cost value of the portfolio -

(i) conduct a daily review, and

(ii) notify the Bank of that discrepancy and provide to the Bank a description of the action, if any, that will be taken to reduce such discrepancy;

(d) in its constitutional document, provide -

(i) for the escalation procedure that is required by paragraph (4); or

(ii) that a review of the amortised cost valuation vis-à-vis market valuation will be carried out in accordance with the requirements of the Bank.

(4) For the purposes of the weekly review that is mandated by paragraph (3)(b), the responsible person shall have in place an escalation procedure to ensure that any material discrepancy between the market value and the amortised cost value of a money-market instrument is brought to the attention of personnel who are responsible for the investment management of the UCITS.

(5) For the purposes of paragraph (4) -

(a) a discrepancy in excess of 0.1 per cent between the market value and the amortised cost value of the portfolio shall be brought to the attention of the responsible person, and

(b) a discrepancy in excess of 0.2 per cent between the market value and the amortised cost value of the portfolio shall be brought to the attention of senior management of the responsible person, and to the attention of the depositary.

(6) A responsible person of a UCITS that is a Short-Term Money-Market Fund, which uses the amortised cost valuation methodology, shall -

(a) document the occurrence and the outcome of every weekly review, every daily review and every engagement (if any) of the escalation procedure that is set out in paragraph (4),

(b) undertake and document a monthly portfolio analysis, incorporating stress-testing of the portfolio, to examine portfolio returns under various market scenarios to determine if the portfolio constituents are appropriate to meet pre-determined levels of credit risk, interest rate risk, market risk and investor redemptions.

(7) A responsible person shall ensure that a UCITS that is a Money Market Fund shall not follow the amortised cost valuation methodology.

European Central Bank reporting requirements

92. (1) The responsible person of every UCITS that meets the definition of “Money Market Fund” in Article 1a of Regulation (EU) No 1071/2013 of the European Central Bank of 24 September 2013 concerning the balance sheet of the monetary financial institutions sector (recast) (ECB/2013/33) and domiciled within a Monetary Union Member State shall submit sets of data to the Bank at each of two frequencies -

(a) a monthly return, in accordance with paragraph (2), that shall be provided to the Bank within six business days of the last business day of the month to which it relates, and

(b) a quarterly return, in accordance with paragraph (3).

(2) A return prepared for the purposes of paragraph (1)(a) shall -

(a) consist of aggregated and summarised balance sheet data, and

(b) break down all components of assets into three general issuer categories

(i) Irish,

(ii) other Monetary Union Member States, and

(iii) the rest of the world.

(3) A return prepared for the purposes of paragraph (1)(b) shall -

(a) be prepared, on a quarterly basis, to the end of March, the end of June, the end of September and the end of December,

(b) be received by the Bank within ten business days of the last business day of the quarter to which it relates, and

(c) include a more detailed breakdown of the data that is included in the monthly return that is prepared for the purposes of paragraph (1)(a), including a profile of the issuers and the maturity of the assets that the Money-Market Fund holds.

PART 9

GUARANTEED UCITS

General

93. A responsible person shall not use the word “guaranteed” in the name of a UCITS unless there is in place, in accordance with Regulation 94, a specific legally enforceable guarantee between the UCITS and a legally independent third party of substance, for the benefit of the unit-holders.

Legal agreement

94. (1) For the purposes of Regulation 93 -

(a) the guarantee shall be evidenced in a contract that is legally enforceable under Irish law before the courts of Ireland, unless it can be demonstrated that the law of another jurisdiction or the existence of a non-exclusive foreign jurisdiction clause is best market practice,

(b) the responsible person shall satisfy itself, and retain records to demonstrate the basis for that satisfaction, that it is within the legal capacity of the guarantor to enter the guarantee, and

(c) the guarantee shall not contain any onerous provision in respect of the UCITS that would permit the guarantor to invalidate the guarantee.

(2) A responsible person shall, in advance of using the word “guaranteed” in the name of a UCITS, provide to the Bank written confirmation from the legal adviser to the UCITS that the guarantee satisfies the conditions set out in paragraph (1).

(3) The responsible person shall not act as a guarantor for the purposes of this Part.

(4) For the purposes of Regulation 93, the guarantor must be -

(a) an entity of substance and good standing, and

(b) a credit institution with paid-up share capital in excess of €100 million which is of a type that is mentioned in Regulation 7.

Disclosure

95. The responsible person of that UCITS shall, in a prominent position in its prospectus, disclose the following provisions of the guarantee

(a) the legal name and any business or trading name of the guarantor;

(b) the obligations of the UCITS under the guarantee, including detail on the cost of the guarantee;

(c) the nature, timing and terms of the guarantee;

(d) a warning to the effect that any performance of the guarantee is dependent on the solvency of the guarantor at the relevant time;

(e) a clear description of the upside limitation as well as the downside protection, sufficient for an investor to make an informed judgement about the practical and economic value of the guarantee;

(f) where relevant, the impact on an investor who sells their units prior to the maturity of the guarantee.

PART 10

CROSS-BORDER NOTIFICATION OF UCITS

Outward marketing: UCITS authorised under the UCITS Regulations

96. (1) A responsible person shall notify the Bank promptly upon that responsible person receiving approval to market the units of a UCITS in a jurisdiction other than a Member State of the EEA.

(2) A responsible person that markets units of a UCITS in a Member State of the EEA or is approved to market the units of a UCITS in a jurisdiction other than a Member State of the EEA shall notify the Bank in the event that the UCITS ceases to market units in that Member State or jurisdiction.

Inward marketing: UCITS authorised in another Member State

97. (1) A responsible person of a UCITS that is authorised in another Member State and which proposes to market its units in the State shall provide to the Bank written confirmation from the relevant facilities agent that the facilities agent has agreed to act for the UCITS.

(2) The responsible person of a UCITS that is authorised in another Member State and which markets its units in the State, shall ensure that the prospectus of the relevant UCITS provides the following information for Irish investors

(a) details of the facilities agent and of the facilities that are being maintained;

(b) relevant provisions of Irish tax laws.

(3) Where -

(a) a UCITS that is authorised in another Member State and which markets its units in the State ceases such marketing to investors in the State, or

(b) an umbrella UCITS ceases marketing any sub-fund to investors in the State,

the responsible person of the relevant UCITS or umbrella UCITS shall, in writing, inform the Bank promptly of that fact.

PART 11

MANAGEMENT COMPANIES

Chapter 1

General Requirements

Operating conditions

98. (1) A management company shall, in accordance with paragraphs (2) and (3), prepare and submit to the Bank financial accounts of the management company.

(2) A management company shall –

(a) submit to the Bank -

(i) annual audited accounts of the management company prepared in accordance with any applicable legislative requirements, and

(ii) such further information as the Bank may prescribe from time to time, and

(b) submit the information required in paragraph (a) to the Bank within four months of the year-end.

(3) A management company shall -

(a) prepare accounts of the management company twice in every financial year to cover, respectively -

(i) the first six months of the financial year of the relevant management company, and

(ii) the full twelve months of the relevant financial year, and

(b) in each case to which subparagraph (a) applies -

(i) submit the accounts for the first six months of the financial year to the Bank within two months of the end of the relevant period, and

(ii) submit the accounts for the full twelve months of the relevant financial year to the Bank within one month of the end of the relevant period, and

(c) prepare the accounts in subparagraph (a) in the format prescribed by the Bank from time to time.

(4) Every set of financial accounts specified in paragraphs (2) and (3)(a)(i) shall be accompanied by a minimum capital requirement report.

(5) A minimum capital requirement report of a management company shall be -

(a) prepared in the format prescribed by the Bank from time to time, and

(b) completed by the relevant management company.

(6) A management company shall maintain an up to date business plan.

(7) Where, by virtue of an investment in the units of another investment fund, a management company or the delegate of a management company (as the case may be) receives a commission (including a rebated commission) -

(a) the commission is the property of the investment fund on behalf of which the investment has been made, and

(b) the management company treats the commission as such property.

Remuneration policies

99. A management company shall ensure that its remuneration policies and practices as required in Regulation 24A of the UCITS Regulations are consistent with the ESMA Guidelines on sound remuneration policies under the UCITS Directive and AIFMD (Ref: ESMA/2016/411).

Capital

100. (1) (a) (i) A management company shall hold its expenditure requirement as specified in Regulation 17(6) of the UCITS Regulations in the form of eligible assets as defined in paragraph 4 of Schedule 9,

(ii) For the purpose of clause (i) a reference to a depositary in paragraph 4 of Schedule 9 means a UCITS management company.

(b) For the purpose of subparagraph (a) the expenditure requirement is calculated as one quarter of a management company’s total expenditure taken from the most recent annual accounts.

(c) For the purpose of subparagraph (b) total expenditure includes all expenditure incurred by a management company less the following items which may be deducted

(i) profit shares;

(ii) bonuses;

(iii) net losses arising in the translation of foreign currency balances;

(iv) shared commissions and fees payable which are directly related to commission;

(v) fees, brokerages and other charges which are paid to clearing houses, exchanges and brokers;

(vi) fees to tied agents;

(vii) interest paid on client money;

(viii) any other non-recurring expenses from non-ordinary activity.

(2) (a) A management company must be in a position to demonstrate its ongoing compliance with the capital requirements of these Regulations and of the UCITS Regulations.

(b) Where the financial position of a management company changes materially at any time between reporting dates, which would impact on its compliance with its regulatory capital requirements, that management company must -

(i) notify the Bank immediately, and

(ii) take any necessary steps to rectify its position.

Organisational requirements: general

101. (1) The board of a management company shall -

(a) be responsible for the managerial functions of the management company specified in Schedule 10,

(b) be responsible for making all material decisions that affect the operation and conduct of the business of the management company,

(c) have the competence to make all material decisions that affect the operation and conduct of the business of the management company.

(2) The board of a management company shall put in place, and ensure adherence to, the following

(a) procedures that are designed to ensure compliance by the management company with every legal and regulatory requirement to which the management company and every investment fund that is under its management are subject;

(b) procedures that are designed to ensure that every relevant risk pertaining to the management company and to every investment fund that is under its management can and is being identified, monitored and managed;

(c) procedures to -

(i) ensure and verify that the investment policy and strategies of every investment fund that is under the management of the management company are complied with, and

(ii) ensure the availability to the board of the management company of up-to-date information on portfolio performance;

(d) procedures to ensure that every relevant accounting record (including the annual and half-yearly financial statements) of the management company and of every investment fund that is under the management of the UCITS management fund is maintained properly and is readily available;

(e) procedures to ensure compliance with regulatory capital requirements of the management company;

(f) procedures for the effective internal audit of the management company and of every investment fund that is under its management;

(g) proper accounting policies and procedures in respect of the management company and every investment fund that is under its management;

(h) procedures to ensure that clear structures are in place for the ongoing monitoring of any work that is delegated to a third party;

(i) procedures to ensure that any complaint from a unit-holder is addressed promptly and effectively.

Organisational requirements: delegation

102. (1) Where a management company delegates activities, it shall designate a specific director of the management company or other individual (in this Regulation referred to as the “designated person”), who shall -

(a) be identified in the business plan of the management company, and

(b) on a day-to-day basis, monitor and control each of the individual activities of the management company identified in Regulation 101(2) and Schedule 10.

(2) (a) A management company shall put in place a procedure, which must be set out in its business plan, that specifies how the designated person shall monitor and control the managerial function(s) for which he or she has been designated.

(b) A procedure for the purposes of paragraph (a) shall include a provision for the receipt of reports from delegates for the purpose of monitoring and controlling the managerial function(s) for which he or she has been designated.

(3) The board of a management company shall, by resolution, adopt a statement of responsibility in relation to the managerial functions and the procedures that will apply in respect of each managerial function.

(4) Where a management company delegates activities, the management company shall ensure that its business plan provides for the following requirements in relation to the reports that the designated person is to receive and the required action that the designated person is to take in response

(a) a list of the types of report that the designated person is to receive from parties who have an involvement, by delegation or otherwise, in the performance of activities relevant to that managerial function and the identity of those parties;

(b) details concerning the frequency of the reports. These provisions must include procedures for immediate reporting to the designated person of all material issues that arise;

(c) a policy regarding the circumstances in which action by a designated person is required;

(d) procedures that the designated person is to follow in the event that he or she is required, by the policy that is referred to in subparagraph (c), to take action, including escalation to the board of the management company.

(5) A management company shall not designate the same person to perform the investment management managerial function and either the fund risk management managerial function or the operational risk management managerial function.

(6) A responsibility that is set out in paragraph 40 of Schedule 5 to the UCITS Regulations -

(a) may not be delegated by the relevant management company, and

(b) shall be carried out by senior management of the management company.

Code of conduct in relation to collective portfolio management

103. (1) A management company shall have in place, and ensure adherence to, procedures -

(a) to prevent late trading,

(b) to take into account the risks associated with market timing, and

(c) for the effective consideration and proper handling of complaints.

(2) A management company shall ensure that any complainant is notified of his, her or its right to refer the relevant complaint to the Financial Services and Pensions Ombudsman.

Directors

104. (1) A management company shall upon the resignation or removal of a director of the management company from the office of director, or other termination of such a director’s service as such, notify the Bank of that resignation, removal or other termination of service and, to the fullest extent known to the management company, the reason for it.

(2) For the purpose of paragraph (1), a management company shall notify the Bank immediately in writing of the resignation, removal or other termination of the service of a director of that management company.

(3) No person may, simultaneously, be a director of a management company and of the depositary of any investment fund that the relevant management company manages.

(4) Subject to paragraph (6), a management company shall have a minimum of 2 directors resident in the State.

(5) A management company shall conduct a preponderance of its management in the EEA or such other country as the Bank may, taking into account criteria regarding effective supervision, determine and advise by notice published on the website of the Bank. Such determination may be changed, including if circumstances change.

(6) Where a management company has a PRISM impact rating of—

(a) Medium Low or above, the management company shall have at least—

(i) 3 directors resident in the State or, at least, 2 directors resident in the State and one designated person resident in State,

(ii) half of its directors resident in the EEA or such other country as determined in accordance with paragraph (5), and

(iii) half of its managerial functions performed by at least 2 designated persons resident in the EEA or such other country as determined in accordance paragraph (5), or

(b) Low, the management company shall have at least—

(i) 2 directors resident in the State,

(ii) half of its directors resident in the EEA or such other country as determined in accordance with paragraph (5), and

(iii) half of its managerial functions performed by at least 2 designated persons resident in the EEA or such other country as determined in accordance with paragraph (5).

(7) A management company shall obtain from every proposed appointee to the board of directors details of all concurrent directorships that are held by those persons.

(8) The board of a management company shall appoint a chairperson on a permanent basis.

(9) A management company shall ensure that an organisation effectiveness role

(a) shall be performed by an independent Chairman or an independent board member, and

(b) shall not be performed by a person with responsibility in relation to any of the managerial functions specified in Schedule 10.

(10) In the case of investment companies that have designated a management company, the following shall apply to the investment company and the management company

(a) paragraphs (1) to (3) and (7); and

(b) the requirement to have a minimum of 2 directors resident in the State.

Record-keeping

105. (1) A management company shall retain, in a readily accessible form and for a period of at least six years, a written record of each of the following types of records, including, so far as possible, relevant original documentation

(a) a complete record of every transaction into which the management company enters (whether on its own behalf or on behalf of any investment fund that is under its management);

(b) records that are sufficient to demonstrate compliance with the provisions of the UCITS Regulations, including any conditions that the Bank may, from time to time, impose on the management company or on any investment fund that is under its management and these Regulations.

(2) Where any record of a management company is not retained by the management company in legible form, the management company shall ensure that such record is capable of being reproduced in a legible form.

(3) If the Bank terminates the authorisation of a management company, that management company shall retain each of the records of the types referred to in paragraph (1) for the outstanding term of the six year period referred to in that paragraph.

(4) (a) A management company shall put in place and ensure adherence to procedures for the maintenance, security, privacy and preservation of records and working papers of the management company and of every investment fund that is under its management.

(b) A management company shall ensure that all records and working papers to which paragraph (a) applies are, to the greatest extent reasonably possible, safeguarded against loss, unauthorised access, alteration and destruction.

Management resources

106. A management company shall ensure that, at all times, it has adequate management resources to conduct its activities effectively and ensure compliance with the UCITS Regulations and these Regulations.

Relationship with the Bank

107. (1) Without prejudice to its obligation to comply with the UCITS Regulations, a management company shall consult with the Bank prior to -

(a) engaging in any significant new activity,

(b) establishing any branch, office or subsidiary, or

(c) introducing material changes to the management company’s operating model.

(2) A management company shall notify the Bank in writing immediately that the management company becomes aware of any of the following

(a) any breach of the UCITS Regulations or of the Bank’s requirements that are applicable to the relevant UCITS or to the management company (including these Regulations);

(b) any breach of other Irish legislation which breach may be of prudential concern to the Bank or which may be likely to impact on the reputation or good standing of the relevant UCITS or of the management company;

(c) the bringing of any legal proceedings by or against the relevant UCITS or the management company;

(d) the initiation of any criminal prosecution against the relevant UCITS or the management company or against any officer or employee of the management company;

(e) any situation or event that impacts, or potentially impacts, to a significant extent on the relevant UCITS or on the management company;

(f) the imposition of any fine, administrative sanction or other penalty on the relevant UCITS or on the management company by any other entity, in the State or in any other jurisdiction, that performs a prudential or regulatory function in respect of financial services entities;

(g) a visit to the relevant UCITS or to the management company by any entity other than the Bank, in the State or in any other jurisdiction, that performs a prudential or regulatory function in respect of financial services entities.

(3) A management company shall obtain the prior approval of the Bank to any proposed change to the name of the relevant management company.

(4) A management company shall inform the Bank in writing promptly of any change to the registered office, postal address, telephone number or email address of the management company.

(5) (a) A management company shall, on its headed paper, state that it is regulated by the Bank.

(b) A management company shall not include in any material or documents issued by it or on its behalf or by any delegate, any reference to the role of the Bank in relation to the supervision of the management company’s activities that is misleading or inaccurate.

(6) Where a management company provides management services to an investment fund that is not authorised by the Bank, the management company shall ensure that the prospectus issued by the relevant investment fund does not, in any way, imply that the investment fund is regulated by the Bank.

(7) Without prejudice to Regulations 51 and 52, where a management company provides fund administration services to an investment fund that is not authorised by the Bank, the management company shall submit to the Bank a quarterly return containing the following aggregate information for each such investment fund that the management company manages, within each base currency category

(a) the domicile of each relevant investment fund;

(b) the number of investment funds;

(c) the number of unit-holders in each investment fund;

(d) the total net asset value of all investment funds that the management company manages.

Financial control and management information

108. (1) A management company shall ensure that its records contain at least each of the types of material set out in Schedule 11 and, where applicable, with the level and nature of content that is described for that type of material in the said Schedule.

(2) A management company shall notify the Bank in advance of any proposed or anticipated change of auditor of the management company and of the reasons for the proposed change.

Internally-managed investment companies

109. An internally-managed investment company shall comply with the following provisions

(a) Regulation 98(6) and (7);

(b) Regulation 101;

(c) Regulation 102;

(d) Regulation 103;

(e) Regulation 104 (1) — (9);

(f) Regulation 105;

(g) Regulations 107 (3) and (4);

(h) Regulations 108;

(i) Schedule 4 of the UCITS Regulations;

(j) paragraphs 30-32, 34-40 (excluding 40(c)), 41-43, 54-61 and 64 of Schedule 5 to the UCITS Regulations.

Chapter 2

Management Company Passport

Notifications

110. (1) Without prejudice to the UCITS Regulations, where a management company proposes to -

(a) establish a branch in another Member State in accordance with Regulation 27 of the UCITS Regulations, or

(b) under the freedom to provide services, engage in an activity in another Member State in accordance with Regulation 28 of the UCITS Regulations,

the management company shall include, in the programme of operations that is submitted to the Bank, the information that is set out in paragraph (2).

(2) The information to which paragraph (1) refers is -

(a) a description of the activities that it is proposed will be undertaken,

(b) a description of the risk management process which the management company has put in place,

(c) a description of the procedures and arrangements for the handling of complaints from, and making information available to, investors, and

(d) in the case of a proposal to establish a branch in accordance with Regulation 27 of the UCITS Regulations, details of the address of the proposed branch and the names of those who will be responsible for the branch.

Assessment: general requirements

111. (1) Where a management company proposes to-

(a) establish a branch in another Member State in accordance with Regulations 27 of the UCITS Regulations, or

(b) under the freedom to provide services, engage in an activity in another Member State in accordance with Regulations 28 of the UCITS Regulations,

the management company shall review its assessment of -

(i) the nature, scale and complexity of its business, and

(ii) the nature and range of services and activities that are undertaken in the course of that business,

in order to determine the impact that establishing a branch or pursuing an activity under the freedom to provide services in accordance with the UCITS Regulations would have on the nature, scale and complexity of its business, and in particular on its organisational structure and resources.

(2) For the purposes of the assessment required by paragraph(1), a management company shall consider the impact which the establishment of a branch or the provision of activities under the freedom of services in another Member State would have on -

(a) the corporate governance of the management company,

(b) the administration function of the management company, and

(c) the interaction of the management company with the relevant trustee or depositary in the other state or states.

(3) Where a management company proposes to establish a branch or, under the freedom to provide services, engage in an activity in another Member State, the management company shall specify in the programme of operations that it submits to the Bank -

(a) how the management company will address any increased strain on its corporate governance due to the increase in the workload and responsibilities of its board of directors, and

(b) where relevant, the steps that the management company will take to ensure that the delegation of its administration activities to an entity that is not authorised or supervised by the Bank will not interfere with the effective supervision of the management company by the Bank.

Assessment: governance issues

112. (1) A management company that is managing a UCITS that is authorised in another Member State shall have in place, and utilise, resources to develop awareness by the management company of the manner in which the competent authority of the home state of the relevant UCITS operates, both in terms of the UCITS authorisation process and ongoing supervision.

(2) A management company that is managing a UCITS that is authorised in another Member State shall include in the programme of operations that it submits to the Bank -

(a) the identity of the employee of the management company, or designated persons, who has expertise concerning the regulatory requirements applicable in the home state of the relevant UCITS,

(b) a description of how the management company will monitor compliance with regulatory requirements that are applicable in the home state of the relevant UCITS on a day-to-day basis,

(c) where a UCITS is an investment company, the resources that the management company is putting in place to address the need to have a representative available to travel to the home state of the relevant UCITS to attend and report at board meetings of the relevant UCITS, and

(d) an analysis of the impact that managing a UCITS that is authorised in another Member State is likely to have on the management company’s minimum capital requirement and how this impact will be addressed.

(3) A management company shall ensure that it has in place, and utilises, sufficient resources to supervise the services that are provided to every UCITS that is under its management.

Assessment: administrator issues

113. (1) Where a management company engages an administrator that is established under the laws of and located in a state other than the State, the management company shall include in the delegation agreement with that administrator provisions that have the following effects

(a) ensuring that the Bank has effective access to data related to the delegated functions of the management company;

(b) ensuring that the Bank has effective access to the business premises of the administrator, where not prohibited by the laws of the jurisdiction in which the administrator is established;

(c) requiring that the administrator co-operates with the Bank in respect of the functions that the management company delegates to the administrator from time-to-time.

(2) Where an administrator is located in another Member State, a management company shall, in the programme of operations that it submits to the Bank specify, and adhere to, any additional record-keeping procedures that the management company establishes to address the fact that the records of the administrator are not located in the State.

(3) A management company shall ensure that the programme of operations that it submits to the Bank addresses how the management company will ensure that, at all times, a person with the requisite detailed knowledge of the day-to-day operation of the UCITS will be available to the Bank.

(4) A management company shall undertake an annual due diligence assessment of any administrator that the management company engages and which is located in another Member State to ensure a high standard of oversight by the management company over such administrators.

Assessment: depositary issues

114. (1) A management company shall ensure that no agreement between it and a depositary that is located outside the State impairs the ability of the Bank to gain access to relevant documents and information of the management company, evidencing any and all matters which are potentially relevant to the arrangements and organisational decisions described in Regulation 29(1) of the UCITS Regulations.

(2) A management company shall, in the programme of operations that it submits to the Bank, specify the steps that it will take to ensure compliance with this Regulation.

PART 12

UCITS DEPOSITARIES

Organisational requirements

115. (1) A depositary shall have and maintain -

(a) sound and effective administrative and internal control mechanisms,

(b) complete and accurate records,

(c) adequate arrangements for ensuring that the employees of the depositary are trained and supervised suitably, adequately and properly, and

(d) defined procedures to ensure compliance with all applicable laws.

(2) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall—

(a) hold its minimum capital requirement in the form of eligible assets pursuant to Schedule 9, and

(b) be in a position to demonstrate its compliance with the minimum capital requirement throughout the relevant reporting period.

(3) For the purpose of paragraph (2), “minimum capital requirement” means the capital requirement set out in Regulation 35(4) of the UCITS Regulations.

Governance

116. (1) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall notify the Bank immediately if, for any reason, a person that is performing a pre-approval controlled function ceases to do so.

(2) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall have at least two directors that are resident in the State.

Operating conditions

117. (1) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall, in accordance with paragraphs (2) and (3), prepare and submit to the Bank financial accounts of the depositary.

(2) A depositary shall –

(a) submit to the Bank -

(i) annual audited accounts of the depositary prepared in accordance with any applicable legislative requirements, and

(ii) such further information as the Bank may prescribe from time to time, and

(b) submit the information required in paragraph (a) to the Bank within four months of the year-end.

(c) ensure that, when submitted to the Bank in accordance with subparagraph (b), the annual accounts of the depositary are accompanied by the annual audited accounts of every corporate shareholder of the depositary.

(3) A depositary shall -

(a) prepare accounts of the depositary twice in every financial year to cover, respectively -

(i) the first six months of the financial year of the relevant depositary,

(ii) the full twelve months of the relevant financial year.

(b) in each case to which paragraph (a) applies

(i) submit the accounts for the first six months of the financial year to the Bank within two months of the end of the relevant period, and

(ii) submit the accounts for the full twelve months of the relevant financial year to the Bank within one month of the end of the relevant period, and

(c) prepare the accounts in subparagraph (a) in the format prescribed by the Bank from time to time.

(3) Every set of financial accounts specified in paragraphs (2) and (3)(a)(i) shall be accompanied by a minimum capital requirement report.

(4) A minimum capital requirement report of a depositary shall be -

(a) prepared in accordance with Schedule 9, and

(b) completed by the relevant depositary.

Depositary obligations and restrictions

118. (1) A depositary shall not delegate to a third party the duties imposed upon a depositary by subparagraphs (a) and (b) and such duties shall be carried out in the State

(a) paragraph (2) (c) and paragraph (3);

(b) Regulation 34 of the UCITS Regulations.

(2) A depositary shall establish and implement written procedures for the purpose of dealing with any breach by the relevant UCITS or by the depositary of any of the following

(a) the UCITS Regulations;

(b) any requirement that the Bank imposes on the relevant UCITS or on the depositary, including these Regulations;

(c) any provision of the prospectus of the relevant UCITS.

(3) A depositary shall notify the Bank promptly of any material breach by the UCITS or by the depositary of any requirement, obligation or document to which paragraph (2) relates.

(4) A depositary shall notify the Bank promptly of any non-material breach by the UCITS or by the depositary of any requirement, obligation or document to which paragraph (2) relates, if the relevant breach is not resolved within four weeks of the depositary becoming aware of that breach.

(5) (a) A depositary shall maintain a written record of every breach by the UCITS or by the depositary to which paragraph (2) relates and of the steps taken to resolve such breaches.

(b) A depositary shall retain for at least six years every record that it creates or maintains in accordance with subparagraph (a).

(6) Where a UCITS proposes to invest in another investment fund, the depositary shall -

(a) ensure that the UCITS has, and implements, adequate procedures for the purpose of ensuring that every underlying investment fund meets the requirements of the UCITS Regulations and of the Bank, including these Regulations, and

(b) ensure that it reviews the decisions of the management company regularly for the purpose of ensuring that the procedures to which subparagraph (a) refers to have been adopted by the UCITS and are being adhered to.

Depositary subsidiary

119. (1) Where a UCITS establishes a subsidiary, the depositary shall hold the assets of that subsidiary in accordance with the following

(a) in compliance with the depositaries safe-keeping duties as specified in -

(i) Regulation 34(4)(a) and (b) of the UCITS Regulations, and

(ii) Articles 13 and 14 of Commission Delegated Regulation No 438/2016 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries;

(b) in compliance with its cash monitoring obligations as specified in –

(i) Regulation 34(3) of the UCITS Regulations, and

(ii) Articles 9 and 10 of Commission Delegated Regulation No 438/2016 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries to those assets.

Operating conditions

120. (1) A depositary shall not have a director who is also simultaneously a director of -

(a) the relevant management company,

(b) the relevant administration company, or

(c) the relevant UCITS investment company.

(2) The termination of the appointment of a depositary shall only be permitted-

(a) upon the revocation of the authorisation of a UCITS, or

(b) upon the appointment of a replacement depositary.

Depositary agreement

121. A UCITS and a depositary shall enter into a depositary agreement.

Permitted markets

122. (1) (a) A depositary shall review the list of stock exchanges and markets that are mentioned in the UCITS prospectus to ascertain if the depositary can provide, at the date of the prospectus, for the safe-keeping of the assets of a UCITS which may be traded on these exchanges or markets, by or under the UCITS Regulations.

(b) If a depositary cannot provide custody in accordance with paragraph (a), the depositary must consult with the UCITS to ensure that the relevant exchanges or markets are removed from the list in the UCITS prospectus.

(2) A depositary shall ensure that a UCITS for which the depositary acts as depositary keeps the list of permitted stock exchanges and markets in the prospectus under review to ensure that the markets meet with all applicable regulatory criteria on an ongoing basis.

Valuation of a UCITS

123. Where a UCITS values a security that is listed or traded on a regulated market taking into account the level of premium or discount at the date of the valuation, the depositary shall ensure that valuing a security on this basis is justifiable in the context of establishing the probable realisation value of that security.

Dealing in specie

124. (1) A responsible person shall only accept subscriptions for units of a UCITS on an in specie basis where the depositary is satisfied that the terms of any exchange are not such as are likely to result in any material prejudice to the existing unit-holders of the relevant UCITS.

(2) A responsible person shall only accept redemption for units of a UCITS on an in specie basis where the depositary approves the asset allocation.

Relationship with the Bank

125. (1) A depositary may provide services to an investment fund that is not authorised by the Bank only if the depositary is satisfied that the prospectus issued by the investment fund does not imply, in any way, that the investment fund is regulated by the Bank.

(2) Where a depositary provides depositary services to an investment fund that is not authorised by the Bank, the depositary shall submit to the Bank, every three months, a return that sets out the following aggregate information for every investment fund that is not authorised by the Bank and to which the depositary provides services, within each base currency category

(a) the domicile of each relevant investment fund;

(b) the number of investment funds;

(c) the number of unit-holders in each investment fund;

(d) the total net asset value of each investment fund / of all investment funds to which the depositary provides services.

PART 13

MISCELLANEOUS PROVISIONS

Reporting requirements

126. Accounts, reports and returns required by these Regulations to be sub mitted or otherwise provided to the Bank shall be made using the Bank’s Online Reporting System and in accordance with these Regulations.

Service of notice or other document by the Bank

127. The Bank may, in addition to the methods specified in section 61G of the

Central Bank Act 1942

, give or serve a notice or other document under these Regulations to a natural person, a partnership or body corporate, electronically, that is to say by electronic mail to an email address, or by facsimile number, furnished for that purpose by the person, partnership or body corporate as the case may be, to the Bank.

Records and Compliance

128. (1) A responsible person shall maintain up-to-date records containing all information and documents prepared in compliance with these Regulations.

(2) A responsible person shall, upon being required by the Bank to do so, provide, to the Bank, records evidencing compliance with these Regulations for a period specified by the Bank (up to a maximum period of six years).

(3) A management company shall keep all of its records in a way that makes them immediately retrievable in or from the State.

Transitional arrangements

129. (1) Where, at the commencement of these Regulations, the responsible person is not in compliance with the requirement in Regulation 56(2) in relation to a prospectus approved by the Bank before the commencement of these Regulations, that person shall ensure that any subsequent amendments to the prospectus ensure compliance with Regulation 56(2).

(2) A responsible person shall ensure that a UCITS, which is authorised by the Bank prior to the commencement of this Regulation, complies with Regulation 40(4) 18 months from the date these regulations enter into force, or such later date that the Bank may specify in writing in Iris Oifigiúil.

Disapplication of certain provisions

130. (1) This Regulation shall apply to the following Regulations

(a) in Regulation 2, the definition of WAM and WAL;

(b) Regulation 6(3)(a);

(c) Regulations 23 to 25;

(d) Regulation 84;

(e) Regulations 88 to 91.

(2) The Regulations specified in subparagraph (1) shall apply to a UCITS that is a money market fund as defined in Regulation 84 which was authorised by the Bank prior to 20 July 2018 until

(a) that UCITS is authorised pursuant to Money Market Funds Regulation, or

(b) until 21 March 2019.”

(3) The Regulations specified in subparagraph (1) do not apply to a UCITS that is a short term MMF or a standard MMF, as defined in Article 2(14) and 2(15) of the Money Market Funds Regulation, and which is authorised by the Bank on or after 20 July 2018.

PART 14

REVOCATIONS AND SAVER

Revocations

131. The following Regulations are revoked

(a) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 [S.I. 420 of 2015];

(b) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2016 [S.I. 307 of 2016];

(c) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2017 [S.I. 344 of 2017].

Saver

132. The revocation of any enactment, or part of enactment, by these Regulations -

(a) does not affect any direction given by the Bank, or any investigation undertaken, or disciplinary or enforcement action undertaken by the Bank or any other person, in respect of any matter in existence at, or before, the time of the revocation, and

(b) does not preclude the taking of any legal proceedings, or the undertaking of any investigation, or disciplinary or enforcement action by the Bank or any other person, in respect of any contravention of an enactment (including anything repealed or revoked by these Regulations) or any misconduct which may have been committed before the time of repeal or revocation.

SCHEDULE 1

Regulation 2(1)

Regulatory Criteria

In respect of a relevant market, the regulatory criteria to which the responsible person shall have regard include the following

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of

31

th May,

2019.

CONTENTS

Regulation

PART 1

PRELIMINARY AND GENERAL