Banner

Funds Update - Ireland
Quarterly Update | January - March 2016

1 Legal & Regulatory

1.1 UCITS Update

1.2 AIFMD Update

1.3 EMIR Update

1.4 ICAV Update

1.5 Capital Requirements Regulation

1.6 Securities Financing Transactions Regulation

1.7 MiFID II/MiFIR Update

1.8 PRIIPs KID Regulation

1.9 European Venture Capital Funds and Social Entrepreneurship Funds

1.10 Market Abuse Regulation

1.11 Benchmark Regulation on Indices

1.12 Solvency II Directive

1.13 EU Capital Markets Union

1.14 Closet Index Tracking

1.15 Investor Money Regulations and Umbrella Cash Accounts

1.16 AIMA Due Diligence Questionnaires and Operation Risk Management Guide

1.17 Central Bank Themed Inspection: Conflicts of Interest

1.18 Investment Funds Statistics: Q4 2015

1.19 Anti-Money Laundering Update

Go to Legal & Regulatory section

2 Tax

2.1 BEPS Action 6 - Consultation on Treaty Benefits for Alternative Investment Funds

Go to Tax section

3 Listings

3.1 GEM Listing for Investment Funds

3.2 ISE FundHub

Go to Listings section

1 Legal & Regulatory

1.1 UCITS Update

There have been a number of developments over the quarter:

UCITS V Legislation

The UCITS V Directive 2014/91/EU ("UCITS V") entered into force on 18 March 2016. The European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2016 became effective on 21 March 2016 thereby implementing UCITS V into law in Ireland.

On 24 March 2016, European Commission Delegated Regulation ((EU) 2016/438 supplementing the UCITS V Directive with regard to obligations of depositaries (the "UCITS V Level 2 Regulation") was published in the Official Journal of the EU. It will come into force on 12 April 2016 and will apply from 13 October 2016.

ESMA and Central Bank Q&As

On 1 February 2016, the European Securities and Markets Authority ("ESMA") published a consolidated Q&A on the application of the UCITS Directive as amended by UCITS V. As well as bringing together various existing ESMA Q&As on UCITS, it includes new questions on additional documents funds need to provide for UCITS V. 

On 5 April 2016, it issued an updated Q&A which includes a new question and answer on master-feeder structures which confirms that as UCITS feeder funds have to invest at least 85% of their net assets in their UCITS master fund, another UCITS cannot invest in a UCITS feeder fund.

On 24 March 2016, the Central Bank of Ireland ("Central Bank") published a twelfth edition of the UCITS Q&A. ID 1057 has been amended to make reference to the publication of guidance entitled "Umbrella funds cash accounts holding subscription, redemption and dividend monies". New questions/answers ID 1060 and ID 1061 have also been added dealing with the Central Bank's updated guidance on this topic (see 1.15 below). A new question/answer ID 1062 has also been added dealing with the Securities Financing Transactions Regulation.

UCITS remuneration guidelines

On 31 March 2016, ESMA published its final Guidelines on sound remuneration policies under the UCITS Directive and AIFMD. ESMA has also written to the European Commission, European Council and European Parliament on the proportionality principle and remuneration rules in the financial sector.

The UCITS Remuneration Guidelines provide clarity on the requirements under the UCITS Directive for management companies when establishing and applying a remuneration policy for key staff. The Guidelines will ensure a convergent application of these provisions and provide guidance on the governance of remuneration, requirements on risk alignment and disclosure. The Guidelines will apply to UCITS management companies and national competent authorities from 1 January 2017.

The Guidelines will be translated into the official languages of the EU and the final texts published on the ESMA website. The deadline for compliance notifications will be two months after the publication of the translations. In an Irish context, in previous cases, the Central Bank has stated that it "conforms to all ESMA guidelines unless there is specific reason, identified prior to the effective date, not to do so."

Back to the top

1.2 AIFMD Update

The European Union (Alternative Investment Fund Managers) Regulations 2013 (No. 257 of 2013) gave effect to Alternative Investment Fund Managers Directive ("AIFMD") in Ireland in July 2013. There have been a number of developments over this quarter:

(a) Central Bank and ESMA Q&A

On 24 March 2016, the Central Bank published an eighteenth edition of its AIFMD Q&A. ID 1100 has been amended to make reference to the publication its updated guidance entitled "Umbrella funds cash accounts holding subscription, redemption and dividend monies" (see 1.15 below).  New questions/answers ID 1101 and ID 1102 have also been added dealing with the Central Bank's updated guidance on this topic. A new question/answer ID 1103 was added dealing with the Securities Financing Transactions Regulation.

(b) AIFMD passport

On 19 January 2016, ESMA published a letter it received from the European Commission in respect of its advice on the application of the AIFMD passport to non-EU AIFMs and AIFs and ESMA's opinion on the functioning of the passport for EU AIFMs and on the national private placement regimes ("NPPRs"). The Commission has asked ESMA to complete its assessment of the regimes of the US, Hong Kong, Singapore, Japan, Canada, Isle of Man, Cayman Islands, Bermuda and Australia by 30 June 2016 and agrees that ESMA should produce another opinion on the functioning of the EU passport and NPPRs once AIFMD has been fully transposed in all Member States.

(c) AIFMD remuneration guidelines

On 31 March 2016, ESMA published its final Guidelines on sound remuneration policies under the UCITS Directive and AIFMD. ESMA has also written to the European Commission, European Council and European Parliament on the proportionality principle and remuneration rules in the financial sector. The amended AIFMD guidelines come into force on 1 January 2017. The amendment to the AIFMD guidelines relates to the section of these guidelines dealing with the application of the remuneration rules in a group context and is intended to acknowledge the potential outreach of the CRD rules in a banking group.

Back to the top

1.3 EMIR Update

The European Market Infrastructure Regulation (Regulation on OTC derivative transactions, central counterparties ("CCPs") and trade repositories (Regulation 648/2012)) ("EMIR") is relevant to all Irish funds trading in financial derivative instruments ("FDI") whether on an exchange or otherwise. There have been important developments in the last quarter concerning OTC clearing and margin requirements.

On 4 February 2016, ESMA published the fifteenth update of its Q&A on the implementation of EMIR on Article 48 of EMIR, concerning the management of clearing member default by CCPs; Article 81 of EMIR, concerning access to data by the competent authorities and the reporting of notional in position reports. On 17 February 2016, ESMA published its sixteenth Q&A update which includes a table of questions detailing which questions and answers have been added or updated. The new Q&As relate to Article 4(1)(b)(ii) of EMIR, concerning the frontloading requirement for the clearing obligation and Article 4 relating to the types of novation that would trigger the clearing obligation and whether the clearing obligation applies to a swap that results from the exercise of a swaption.

On 1 March 2016, the European Commission adopted a Delegated Regulation supplementing EMIR with regard to regulatory technical standards ("RTS") on the clearing obligation for certain credit derivative contracts. It sets out the classes of the credit default swaps ("CDS") OTC derivative contracts that are subject to the clearing obligation and four different categories of counterparties for which different phase-in periods apply. It also states the minimum remaining maturities for the frontloading requirement and the dates when frontloading should start. It also sets out the credit default OTC derivatives classes subject to the clearing obligation. If the Council of the EU and the European Parliament do not object to it, it will enter into force 20 days after publication in the Official Journal of the EU and be phased in over three years to give smaller market participants time to comply. This follows the adoption of a delegated regulation on OTC interest rate clearing on 6 August 2016, with first OTC clearing obligations for certain OTC interest rate swaps taking effect from 21 June 2016 (in respect of UCITS and AIFs that are already clearing members of a CCP authorised or recognised under the legislation).

On 8 March 2016, the Joint Committee of the European Supervisory Authorities ("ESAs") published final draft RTS on risk mitigation techniques for OTC derivative contracts not cleared by a CCP under Article 11(15) of EMIR for the Commission to consider. This regulates margin requirements for OTC derivatives, including haircuts applied, and specifies criteria concerning intragroup exemptions.

The European Commission Implementing Decision on equivalence of US Commodity Futures and Trading Commission ("CFTC") regime for purposes of EMIR comes into force on 5 April 2016. It states that US CCPs registered with the CFTC have an equivalent regulatory regime as the EU but does not apply to those falling under the remit of the US Securities and Exchange Commission.

Over the quarter, ESMA also announced it had signed MoUs with South Korean, South African Swiss, Canadian and Mexican authorities on CCPs under EMIR and published practical guidance on its recognition of third country CCPs.

Back to the top

1.4 ICAV Update

The Irish Collective Asset-management Vehicles Act 2015 (Section 145(2)) (Relevant Jurisdictions) Regulations 2016 and the Irish Collective Asset management Vehicles Act 2015 (Section 149(2)) (Relevant Jurisdictions) Regulations 2016 were signed on 1 February 2016 and designate Jersey as a relevant jurisdiction under those sections. Accordingly, a collective investment scheme domiciled in Jersey may migrate to Ireland as an ICAV and an ICAV may migrate to Jersey.

16 March 2016 marked the first anniversary of the registration of the first ICAV with the Central Bank.  In the ensuing 12 months, 146 ICAVs, comprising 265 sub-funds, have been authorised which establishes the ICAV as the most popular vehicle for global institutions and private fund managers forming Irish funds as either UCITS or AIFs over this period.

For more information see our client update, The ICAV - Maples and Calder Checks the Box

Back to the top

1.5 Capital Requirements Regulation

On 26 January 2016, the European Commission published a report (COM(2016) 21) on the appropriateness of the definition of eligible capital required by Article 517 of the Capital Requirements Regulation (Regulation 575/2013) ("CRR").

The Commission Delegated Regulation ((EU) 2016/101) supplementing the CRR with regard to RTS for prudent valuation  and the European Commission Implementing Regulation ((EU) 2016/100) laying down  implementing technical standards ("ITS") specifying the joint decision process with regard to the application for certain prudential permissions came into force on 16 February 2016.

The European Commission Implementing Regulation (EU) 2016/200 laying down ITS on disclosure of the leverage ratio for institutions, according to the CRR entered into force on 17 February 2016.

The European Commission Implementing Decision (EU) 2016/230 on the lists of third countries considered equivalent for the purposes of the treatment of exposures under the CRR entered into force on 9 March 2016.

On 23 March 2016, the Council of the EU approved the final compromise text of a proposed Regulation extending the CRR to extend certain exemptions for commodity dealers.

The European Commission Implementing Regulation ((EU) 2016/313) amending Implementing Regulation 680/2014 with regard to additional monitoring metrics for liquidity reporting under the CRR entered into force on 25 March 2016.

The European Commission Implementing Regulation ((EU) 2016/322) laying down ITS with regard to supervisory reporting of institutions of the liquidity coverage requirement under CRR entered into force on 30 March 2016 and will apply from 10 September 2016.

On 31 March 2016, European Commission Implementing Regulation (EU) 2016/428 laying down ITS on supervisory reporting as regards the reporting of the leverage ratio under the CRR was published in the Official Journal of the EU. It enters into force on 20 April 2016 and applies from the first reporting reference date six months from the date of its publication in the OJ.

Back to the top

1.6 Securities Financing Transactions Regulation

The Securities Financing Transactions Regulation ("SFTR") came into force on 12 January 2016 with the exception of certain transitional provisions. It covers all forms of lending, borrowing and re-use of securities in the EU and in all the branches of counterparties to securities financing transactions ("SFTs") no matter where they are located. It requires SFTs to be reported to trade repositories, places additional binding reporting requirements on investment managers and introduces prior risk disclosures and written consent before assets are rehypothecated.

On 11 March 2016, ESMA issued a discussion paper on rules under the SFT Regulation. It sets out proposals for implementing the reporting framework under the Regulation, including tables of the fields with the proposed data to be reported, and the registration requirements for those trade repositories which want to accept reports on SFTs. The consultation closes on 22 April 2016 and ESMA will use the responses to draw up detailed rules on which it will publish a follow-up consultation in Q2 2016.

For more information see our client update, SFTR A Briefing on the Impact for Funds

Back to the top

1.7 MiFID II/MiFIR Update

The Markets in Financial Instruments Directive (2014/65/EU) ("MiFID II") and the Markets in Financial Instruments Regulation (Regulation 600/2014) ("MiFIR") will repeal and recast the Markets in Financial Instruments Directive (2004/39/EC) ("MiFID"). They were to be transposed into national law by 3 July 2016 and to apply from 3 January 2017 (subject to a small number of excepted sections). However on 10 February 2016 agreement was reached to delay the application date of both by one year to 3 January 2018 and draft legislative proposals to extend this date were published.  

On 22 March 2016, ESMA published three letters that it has written to DG FISMA relating to its draft RTS under MiFID II and MiFIR on position limits for commodity derivatives, ancillary activity and non-equity transparency in which it explains how it will proceed on the basis of the responses given by DG FISMA to its draft RTS. (On 17 March 2016, the European Commission sent back to ESMA their RTS for further revision to take the Parliament's position more thoroughly into account especially in relation to the position limits regime.)

Back to the top

1.8 PRIIPs KID Regulation

The Regulation on key information documents ("KIDs") for packaged retail and insurance-based investment products ("PRIIPs") ("PRIIPs KID Regulation") introduces a new pan-European pre-contractual product disclosure document for PRIIPS in EU Member States from 31 December 2016. 

In January 2016, Insurance Europe called for an extension of one year to give product manufacturers time to test and launch the KID successfully. In February 2016, the European Fund and Asset Management Association also issued a statement calling for the application of the PRIIPs Regulation to be delayed by one year.

The Joint Committee of the ESAs (the EBA, EIOPA and ESMA) consultation on KIDs for PRIIPs closed on 29 January 2016 and responses were published on 10 February 2016. The ESAs are required to produce certain delegated acts and technical standards under the PRIIPs Regulation. On 3 February 2016, ESMA's Securities and Markets Stakeholder Group or SMSG published an opinion paper on performance measures, which set out its concern that the KIDs subject to the PRIIPs Regulation will not include historical past performance data.

Back to the top

1.9 European Venture Capital Funds and Social Entrepreneurship Funds

The European Venture Capital Funds Regulation (Regulation 345/2013) ("EuVECA regulation") sets out a marketing passport to allow fund managers to market qualifying venture capital funds to EU investors using the EuVECA designation. The European Social Entrepreneurship Funds Regulation (Regulation 346/2013) ("EuSEF regulation") sets out a marketing passport to allow fund managers to market qualifying social entrepreneurship funds to EU investors using the EuSEF designation.

On 6 January 2016, the European Commission's consultation on the review of the EuVECA regulation and the EuSEF regulation with a view to improve the take-up of these funds closed. It requested more details as to where and how the regulations could be changed without reducing the existing levels of investor protection. Issues the consultation covered include the restrictions on who is able to manage the funds, the level of minimum investment of 100,000 for investors and whether non-EU managers should be able to offer EuVECA or EuSEF. On 9 March 2016, the Commission published the list of responses it received. It is to publish a summary of the responses "at a later stage".

Back to the top

1.10 Market Abuse Regulation

The Market Abuse Regulation (Regulation 596/2014) ("MAR") will apply from 3 July 2016 and the Directive on criminal sanctions for insider dealing and market manipulation (2014/57/EU) ("CSMAD") has to be transposed into Irish law on the same date (together, MAD II). MAR updates and strengthens the existing framework by extending its scope to new markets and trading strategies and by introducing new requirements.

The implementing Directive EU/2015/2392 relating to reporting to competent authorities of actual or potential infringements of MAR entered into force on 7 January 2016 and sets out rules relating to reporting actual or potential breaches. On 28 January 2016, ESMA published a consultation paper on draft guidelines under MAR.

ESMA is required under MAR to issue guidelines:

  • Addressed to persons receiving market soundings.
  • On the legitimate interests of issuers to delay inside information and situations in which the delay of disclosure is likely to mislead the public.

The consultation set out draft versions of both sets of guidelines and closed on 31 March 2016.

On 12 March 2016, Commission Implementing Regulation (EU) 2016/347 of 10 March 2016 laying down implementing technical standards on the precise format of insider lists and for updating insider lists in accordance with MAR came into force and will apply from July 2016.

On 17 March 2016, the European Commission Implementing Regulation ((EU) 2016/378) laying down ITS regarding the timing, format and template of the submission of notifications to competent authorities under MAR was published in the Official Journal of the EU. It enters into force on 18 July 2016 and applies from 3 July 2016.

On 30 March 2016, ESMA published a consultation on draft guidelines relating to information expected, or required, to be disclosed on commodity derivatives markets or related spot markets under MAR.

Back to the top

1.11 Benchmark Regulation on Indices

On 15 February 2016, ESMA published a discussion paper on the technical implementation of the proposed Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds. Its objective is to increase governance and control over the benchmark process by improving the quality of the input data and methodologies used by benchmark administrators; ensuring that benchmark contributors provide adequate data and are subject to proper controls; and ensuring the supervision and viability of critical benchmarks.

The European Parliament is expected to vote on it in April 2016 and following the Council's approval it is expected to be finalised in late May/early June coming into force 12 months later.

Back to the top

1.12 Solvency II Directive

The Solvency II regime came into force on 1 January 2016 ((Directive 2009/138/EC) as amended by the Omnibus II Directive (Directive 2014/51/EC)). It established revised EU-wide capital requirements and risk management standards for insurers and reinsurers and a consistent supervisory system across all EU Member States. Solvency II affects investment decisions taken by insurers and reinsurer and investment funds with insurance company investors have to have systems in place to deal with the new reporting requirements so that the insurance company investor can comply with its Solvency II obligations.

In February 2016 European Commission Implementing Regulation on technical information for calculation of technical provisions and basic own funds under Solvency II came into force.

Back to the top

1.13 EU Capital Markets

On 30 September 2015, the European Commission launched its capital markets union ("CMU") action plan to build a single market for capital. On 18 March 2016, the European Commission published a speech by the European Commissioner for Financial Stability, Financial Services, and Capital Markets Union, on the Commission's work on the CMU highlighting that during 2016 the Commission will:

  1. start its work to strengthen venture capital markets by amending existing legislation governing venture capital funds;
  2. launch a consultation to identify the main barriers to investment funds operating in countries other than their own. 

Back to the top

1.14 Closet Index Tracking

On 2 February 2016, ESMA published a statement on its supervisory work on potential closet index tracking. Closet indexing (or index hugging) is the practice of fund managers claiming to manage portfolios actively when in reality the fund stays close to a benchmark. ESMA believes that the practice may harm investors as they are not receiving the service or risk (or return) profile they expect based on the fund's disclosure documents, while paying higher fees compared to those charged for passive management.

ESMA recommends that: 

  1. UCITS management companies should consider whether the information they provide is an accurate interpretation of the performance objectives of the fund and that the risk taken to generate that return is in line with their obligations under the key information documents for packaged retail and insurance-based investment products ("PRIIPs").
  2. Where UCITS use benchmarks, they should take a more consistent approach to the extent to which they may deviate from that benchmark.
  3. So that investors can make an informed investment decision, management companies should make use of all documentation available to them when selecting a product.

Back to the top

1.15 Investor Money Regulations and Umbrella Cash Accounts

The Central Bank has delayed the start date of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Investor Money Regulations 2015 from 1 April to 1 July 2016. By 1 July 2016, fund service providers must comply with the regulations and must be able to provide the Central Bank with the compliance arrangements they have put in place in this regard. Updated Guidance on Investor Money Regulations for Fund Service Providers was published in March 2016.        

Many investment funds will change their processes so that their subscription / redemption / dividend accounts operate at an umbrella level as fund assets and are therefore not subject to the Investor Money Regulations. On 24 March 2016, the Central Bank published updated guidance which applies to the holding of cash assets of umbrella funds in a single account at the level of an umbrella fund in the name of the investment fund, the fund management company on behalf of the investment fund or the depositary. Cash assets refer to subscription and redemption money received from or due to investors in the sub-funds of the umbrella fund and dividend money due to investors from sub-funds.

Back to the top

1.16 AIMA Due Dilligence Questionnaires and Operation Risk Management Guide

On 9 February 2016, AIMA released a new guide to operational risk management for asset management firms covering all aspects of operational risk. 

On 9 March 2016, AIMA launched a new set of Due Diligence Questionnaires for hedge fund directors. There are three versions - an Illustrative Questionnaire for the Due Diligence of Individual Hedge Fund Directors (Investor Version); an Illustrative Questionnaire for the Due Diligence of Individual Hedge Fund Directors (Manager Version); and an Illustrative Questionnaire for the Due Diligence of Hedge Fund Boards of Directors. 

Back to the top

1.17 Central Bank Themed Inspection: Conflicts of Interest

On 29 February 2016, the Central Bank completed a themed inspection to examine the identification and management processes for conflicts of interest in investment firms. The MiFID, UCITS and AIFMD regulations all have requirements for firms to manage conflicts of interest. The inspection found that firms with a strong culture of client-focus and regulatory compliance managed the risks around conflicts of interest best. These best-in-class firms were aware of the potential for conflicts of interest to occur and ensured that they were mitigated accordingly. 

The issues identified during the inspection were followed up with the relevant institutions directly and the Central Bank also sent a letter to all investment firms providing feedback on the findings and highlighting good and poor practices. This letter outlines that, in order to identify and manage conflicts of interest, a strong culture of compliance is essential to ensure that the best interest of the client is not negatively impacted.

Back to the top

1.18 Investment Funds Statistics: Q4 2015

The main points to note in the Central Bank's March 2016 update for Q4 2015 are:

  1. The net asset value of investment funds resident in Ireland ("IFs") increased by 6% over the fourth quarter of 2015, to 1,431 billion from 1,355 billion in Q3 2015, reflecting strong net inflows of 37 billion. 
  2. Over the quarter, IFs experienced a positive overall revaluation of 3% with equity funds recording the highest revaluations of 7%, as equity markets recovered from declines in Q3 2015. 
  3. The value of debt holdings remained flat over the quarter with transactions inflows of 16 billion, offset by negative revaluations. 
  4. Holdings of government debt stood at 298 billion in Q4 2015, following 13 billion in transaction inflows. There were strong inflows (10 billion) into higher yielding UK government debt, relative to similarly rated other European sovereign debt. 

Back to the top

1.19 Anti-Money Laundering Update

On 25 June 2015, the Fourth Money Laundering Directive ((EU) 2015/849) ("MLD4") and the revised Wire Transfer Regulation ((EU) 2015/847) ("WTR") came into force. The WTR applies from 26 June 2017. EU Member States are to bring into force measures transposing MLD4 into national law by 26 June 2017. In January 2016, the Department of Finance and the Department of Justice and Equality consulted on member state discretions in MLD4 and the WTR. The consultation closed on 4 March 2016. 

The European Commission's February 2016 action plan to strengthen the fight against terrorist financing envisages that the implementation date for MLD4 may be brought forward to Q4 2016. The plan focuses on:

  • Tracing terrorists through financial movements and preventing them from moving funds or other assets.
  • Disrupting the sources of revenue used by terrorist organisations, by targeting their capacity to raise funds.

The plan also proposes a number of specific amendments to MLD4 such as bringing virtual currency exchange platforms within the scope of MLD4 so that they will have to apply customer due diligence controls when exchanging virtual for real currency and setting out the specific enhanced due diligence steps which should be applied on financial transactions from countries with deficiencies in their national anti-money laundering and terrorist financing regimes.

Back to the top

 

2 Tax

2.1 BEPS Action 6 - Consultation on Treaty Benefits for Alternative Investment Funds

In its final report on BEPS Action 6, the OECD noted that further work was required on the tax treaty entitlement of those funds (non-CIVs) such as AIFs which are not classified by the OECD as collective investment vehicles ("CIVs") (broadly UCITS and equivalent widely held funds). The category of non-CIVs is likely to apply to private equity funds, pension funds and REITs.

A consultation was published on 24 March 2016 which seeks further views on the issues raised. The consultation and the responses received will be discussed at the May 2016 meeting of Working Party 1 of the OECD Committee on Fiscal Affairs. The closing date for responses to the consultation is 22 April 2016.

BEPS Action 6 proposes that treaty benefits are restricted to entities substantially owned by treaty residents (the limitation of benefits or "LOB" test) and that do not have as a principal purpose access to such benefits (the "PPT" test).  The consultation discusses the following issues:

  • Whether a non-CIV fund should be exempted from the LOB test and under what conditions.  For example, what kind of regulation would a non-CIV need to be subject to and how widely held would the non-CIV need to be in order to be entitled to an exemption from the requirement to meet an LOB test.  The consultation also considered whether a substantial connection (in terms of resident of directors, managers, qualified personnel) with a treaty jurisdiction would be sufficient to allow for exemption.  It appears that the OECD are sceptical as to whether such an exemption could work without undermining the overall aims of the BEPS project in terms of reducing treaty abuse.  Industry bodies and interested parties will no doubt submit responses supporting the proposed exceptions for non-CIVs.  The European Commission has recommended that that EU Member States not adopt LOB provisions in this context.
  • Whether it would be better for non-CIV funds to elect to be transparent or elect into a new "Global Streamed Fund" regime whereby treaty benefits would be claimed by investors directly rather than the non-CIV fund itself. Under this regime, investment income would be exempt from tax in the hands of a global streamed fund and the fund would be obliged to distribute its income on a regular basis. Any tax to be levied on this income would be collected on by the jurisdiction of residence of the fund and remitted to the jurisdiction of source of the income. The document notes some of the difficulties with this approach in terms of identifying investors. In addition, the proposed introduction of a "Global Streamed Fund" regime is generally seen as ambitious given it would rely on uniform implementation by various jurisdictions.
  • Whether a non-CIV should be entitled to 100% treaty benefits if at least 80% of the investors would be entitled to such benefits if they held directly. Again, the OECD is concerned about facilitating treaty abuse and deferral and suggestions are invited on how this could be addressed and what conditions should apply.  
  • On the PPT, it is clear that the draft wording of the PPT is not going to change and that the OECD favours an approach whereby the issues relating to non-CIVs would be dealt with by examples in commentary. From the perspective of non-CIVs and their advisors, it would be preferable to have certainty in this regard by including reference to non-CIVs in treaties themselves but, again, this looks unlikely at this juncture.

Maples will be monitoring these developments closely in order to assist fund clients in responding to any potential changes introduced in the future.

For more information see our client update, International and Irish Tax Update - March 2016

Back to the top

 

3 Listings

3.1 GEM Listing for Investment Funds

The Irish Stock Exchange ("ISE") is extending its market offering for investment funds by allowing investment funds to list on the Global Exchange Market ("GEM"). The GEM rulebook and MTF is fully operational as at 4 April 2016. To summarise:

  1. GEM is authorised by the Central Bank as a MTF and therefore EU securities legislation that applies to regulated markets (e.g. Prospectus, Transparency and Statutory Audit Directives) generally will not apply to GEM; 
  2. The GEM rulebook will not be materially different from the Code of Listing Requirements and Procedures for Investment Funds;
  3. The existing sponsor regime will apply to GEM; 
  4. The regime will cater for retail and professional investors; and
  5. A transfer of listing from the MSM to GEM will be permitted by way of announcement which will be subject to pre-approval by the ISE. The ISE have issued a draft announcement which must be used prior to switching to GEM.

Back to the top

3.2 ISE FundHub

Since its launch in November 2014, almost 50 fund managers are now featured on the ISE Fund Hub. The Fund Hub is a portal available for ISE listed funds which allows investment managers display net asset values for its listed shares along with various performance and analytics features. The information available on www.isefundhub.com includes net asset values, fund analytics, peer comparisons, investment manager profiles as well as access to key fund documents. Contact fundhub@ise.ie for further information.

Back to the top

 

 

Contacts

Dublin

Maples and Calder Dublin
Barry McGrath
work +353 1 619 2029
Maples and Calder Dublin
Peter Stapleton
work +353 1 619 2024
Maples and Calder Dublin
Stephen Carty
work +353 1 619 2023
Maples and Calder Dublin
Carol Widger
work +353 1 619 2762
Maples and Calder Dublin
Emma Conaty
work +353 1 619 2708
Maples and Calder Dublin
Adam Donoghue
work +353 1 619 2718
Maples and Calder Dublin
Andrew Quinn
work +353 1 619 2038