{"id":12843,"date":"2022-08-10T19:54:16","date_gmt":"2022-08-10T19:54:16","guid":{"rendered":"http:\/\/legalblog.ie\/?p=12843"},"modified":"2024-02-17T09:32:30","modified_gmt":"2024-02-17T09:32:30","slug":"special-non-ucit-funds","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/special-non-ucit-funds\/","title":{"rendered":"Special Non-UCIT (pre-2013) Funds"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Money_Market_Funds\" title=\"Money Market Funds\">Money Market Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Short-Term_Money_Market_Fund\" title=\"Short-Term Money Market Fund\">Short-Term Money Market Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Money_Market_Funds_Investments\" title=\"Money Market Funds Investments\">Money Market Funds Investments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Property_Schemes\" title=\"Property Schemes\">Property Schemes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Property_Fund_Requirements\" title=\"Property Fund Requirements\">Property Fund Requirements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Non-UCIT_Collective_Investment_Schemes\" title=\"Non-UCIT Collective Investment Schemes\">Non-UCIT Collective Investment Schemes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/special-non-ucit-funds\/#Futures_Options\" title=\"Futures &amp; Options\">Futures &amp; Options<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Money_Market_Funds\"><\/span>Money Market Funds<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Non-UCITS collective investment schemes, money market schemes, and schemes that label or market itself as a money market must comply with the following requirements.\u00a0 It must classify itself as a \u201cShort-Term Money Market Fund\u201d or a \u201cMoney Market Fund\u201d.<\/p>\n<p>The scheme must indicate in its prospectus whether it is a Short-Term Money Market Fund or a Money Market Fund.\u00a0 It must also include risk warnings drawing attention to the differences between the nature of a deposit and the nature of an investment in the scheme.<\/p>\n<p>The scheme must provide appropriate information to investors on the risk and reward profile of the fund so as to enable investors to identify any specific risks linked to the investment strategy.\u00a0 In the case of Money Market Funds, this must take account of the longer weighted average life and weighted average maturity of the fund.\u00a0 In the case of all money market funds, it must take account, where relevant, of investment in new classes of asset and financial instruments and remove [ph] investment strategies with unusual risk or reward profiles.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Short-Term_Money_Market_Fund\"><\/span>Short-Term Money Market Fund<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A Short-Term Money Market Fund must have a primary investment objective of maintaining the principal of the fund and aim to provide a return in line with money market rates. \u00a0Investments are limited to high quality money market investments as determined by the scheme and deposits with credit institutions.<\/p>\n<p>In order to determine high quality, factors must include<\/p>\n<ul>\n<li>the credit quality of the instrument which must be awarded one of the two highest available short-term credit ratings by recognised credit rating agencies or equivalent.<\/li>\n<li>The nature of a class asset is represented by the instrument.<\/li>\n<li>The operational and counterparty risks in the case of structured financial instruments, liquidity profile.<\/li>\n<\/ul>\n<p>Investments are limited to securities and instruments with a residual maturity of less than 397 days.<\/p>\n<p>A Short-Term Money Market Fund must provide daily asset value and price calculations or have daily subscriptions and redemption of units. \u00a0A weighted average maturity must not exceed 60 days.\u00a0 The weighted average life must not exceed 120 days.\u00a0 The impact of financial derivative instruments, deposits and efficient portfolio management techniques must be taken into account.<\/p>\n<p>Direct or indirect exposure to equities or commodities through financial derivative instruments is not permitted.<\/p>\n<p>Financial derivative instruments may only be used where they are in-line with the money market investment strategy of the scheme.\u00a0 Financial derivatives, which give exposure to foreign exchange, may only be used for hedging purposes.\u00a0 Investment in non-base currencies is not permitted unless the exposure is fully hedged.<\/p>\n<p>Exposure in other collective investment schemes is not permitted unless the schemes are also Short-Term Money Market Funds.\u00a0 A Short-Term Money Market Fund may have either a constant or fluctuating net asset value.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Money_Market_Funds_Investments\"><\/span>Money Market Funds Investments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Money Market Funds must have a primary investment objective of maintaining the principal of the fund and aim to provide a return in line with Money Market Funds.\u00a0 Investments are limited to high-quality money market instruments as determined by the scheme and deposits with credit institutions.\u00a0 The criteria for high quality are similar to those above.<\/p>\n<p>Investments are limited to securities or investments with a residual maturity on the legal redemption date of less than two years, provided that the time remaining until the next interest reset date is less than 397 days.\u00a0 Floating rate securities must reset to a money market rate or index.<\/p>\n<p>A Money Market Fund must provide daily net asset value and price calculations and have daily subscriptions or redemption of units.\u00a0 The weighted average maturity must not exceed six months.<\/p>\n<p>The weighted average life of the portfolio must not exceed 12 months when calculating the life for securities, including structured financial instruments.\u00a0 The maturity calculation must be based on the residual maturity of the legal redemption of the instruments.<\/p>\n<p>Direct or indirect exposures to equities, including through financial derivatives, are not permitted.\u00a0 Financial derivative instruments which give an exposure to foreign-exchange may only be used for hedging purposes.\u00a0 Investment in non-base currencies is not allowed unless the exposure is fully hedged.<\/p>\n<p>Investment in other collective schemes is not permitted unless those schemes are Short-Term Money Market Funds or Money Market Funds.\u00a0 A Money Market Fund may have a fluctuating and NAV.<\/p>\n<p>Money market schemes may follow an amortised cost valuation methodology.\u00a0 This is subject to conditionss. The scheme must be satisfied that the persons responsible for the operation of the fund, including delegation arrangements, have the necessary expertise.\u00a0 The scheme must undertake a weekly review of discrepancies between market value and the amortised cost value of the money market instruments.<\/p>\n<p>Procedures must be operated to ensure that material discrepancies between the market value and an amortised cost value are reviewed.\u00a0 Discrepancies above a certain level must be notified to the Bank and action must be taken to remedy the dilution.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Property_Schemes\"><\/span>Property Schemes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In this context, problem refers to real property comprising freehold or leasehold property with a minimum unexpired term of 70 years.\u00a0 Property-related assets refer to securities issued by a body corporate whose main activity is investing in, dealing in or developing or redeveloping property.<\/p>\n<p>Before authorising the scheme, the Central Bank must be satisfied that the management company, investment advisory company, etc., have specific experience in the area of investing in real property.\u00a0 The scheme may provide for the issue of partly paid units.\u00a0 The prospectus must fully disclose the nature of the commitment which investors enter into.\u00a0 When the scheme provides for partly paid units, investment restrictions apply in relation to the uncalled capital and net asset value combined.<\/p>\n<p>A management company of the scheme must appoint a qualified independent valuer, selected on a basis approved by the Central Bank.\u00a0 The appointment particulars must be included in the prospectus and in periodic reports issued by the scheme.\u00a0 The Central Bank must be notified in advance of the appointment and resignation.<\/p>\n<p>The scheme must be valued on an open market value of at least twice yearly with provision being made for more frequent valuations to be undertaken if market conditions warranted.\u00a0 Issue and redemption prices must be made available after the evaluation of the portfolio has taken place.<\/p>\n<p>Before a property is acquired by the scheme, it must be valued.\u00a0 That valuation report must confirm that if the property was acquired, it could be disposed of without valuation within a reasonable period.\u00a0 Property must be acquired within six months of the date of the report and within 5% of the valuation price.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Property_Fund_Requirements\"><\/span>Property Fund Requirements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Property-related assets must be traded in or dealt with in a market, which is provided for in the constitutional documents.\u00a0 Up to 15% of the scheme\u2019s assets may consist of property-related assets which are not traded in or dealt with in such a market, provided they are acquired under the same conditions as the properties above.<\/p>\n<p>Not more than 20% of the scheme&#8217;s net assets may be invested in any single property.\u00a0 This applies on the date of restriction.\u00a0 If a property whose economic viability is linked to another property is not considered a separate asset of property for this purpose. The scheme may derogate from restrictions within two years from launch.<\/p>\n<p>There is no restriction on the amount of cash or short-term securities which must be held by the scheme. When the purpose of the holding is to meet redemption requirements or where this is otherwise reasonably necessary.<\/p>\n<p>Not more than 25% of the scheme\u2019s net assets may be invested in properties which are vacant in the process of development or requiring development.<\/p>\n<p>Not more than 25% of the scheme&#8217;s net assets may be invested in properties which are subject to a mortgage.\u00a0 This is separate from the obligation and ability of the scheme to secure its borrowing generally on the properties of the scheme.\u00a0 The amount of the outstanding mortgage in any property must not represent more than 50% of the value of that property.<\/p>\n<p>The scheme may not grant any person an option to acquire any property included in the scheme.\u00a0The scheme may borrow up to an amount equal to 25% of the value of its net assets, which borrowing may be generally secured on the properties of the scheme.<\/p>\n<p>The redemption procedure is as set out in the constitutional documents and must be fully disclosed in a prominent position in the prospectus.<\/p>\n<p>The prospectus must contain a description of the risks involved in the type of scheme and a prominent risk warning, which will make reference to circumstances in which property markets can cause difficulties in meeting redemption.<\/p>\n<p>The scheme must have reached a minimum viable size within a specified period after launch.\u00a0\u00a0 The minimum viable size must be as defined in the prospectus.\u00a0 No property may be purchased or contracted until the minimum amount has been received.<\/p>\n<p>In the event that the minimum viable amount is not reached within the specified period, the scheme must return any subscriptions received to the unit holders and apply to the Central Bank for revocation of its authorisation.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Non-UCIT_Collective_Investment_Schemes\"><\/span>Non-UCIT Collective Investment Schemes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Collective investment schemes which propose to market their units in Ireland which are not UCITS may be authorised by a supervisory authority set up to ensure the protection of unitholders, which, in the opinion of the Central Bank, provides a similar level of investor protection to that provided under Irish laws regulations and conditions in relation to collective investment schemes.<\/p>\n<p>Alternatively, the Central Bank must be satisfied that the arrangement and trustee custodian arrangements constitution and investment objectives which it is proposed to market in Ireland provide a similar level of investor protection to that provided under Irish law.<\/p>\n<p>A scheme in another jurisdiction, which proposes to market units in Ireland must make an application to the Central Bank comprising a range of prescribed information.\u00a0 It must set out the name of the establishment in Ireland where facilities will be maintained, where unitholders can be advised how dividend payments will be made, how redemption requests can be made to the scheme and how redemption proceeds will be passed to investors.<\/p>\n<p>Where instruments constituting the schemes can be examined or where complaints can be made for forwarding to the head office.\u00a0 This is a facilities agent.<\/p>\n<p>It must provide a range of documentation, including a statement from the supervisory authority and the home State that it has authorised, a certified copy of the constituent instrument&#8217;s prospectus, the latest annual reports, other documents affecting the rights of unitholders, confirmation that the facilities agent has agreed to act.<\/p>\n<p>Documentation must be in English or Irish or must be accompanied by a translation.<\/p>\n<p>Certain classes of schemes set out in NU notes will receive approval to market units in Ireland on completion of information and documentation requirements.<\/p>\n<p>Marketing of units in Ireland must not take place until the scheme has been approved.\u00a0 A statement must be included in the prominent position on each of the schemes prospectus and on any marketing material distributed in Ireland to promote the scheme to the effect that it is not supervised or authorised in Ireland.\u00a0 It must state where it is established and where it is supervised.<\/p>\n<p>The prospectus provide the following information to Irish investors:<\/p>\n<ul>\n<li>Details of the facility&#8217;s agents.<\/li>\n<li>Provisions of Irish tax law applicable, details of places where the issue and repurchase price can be obtained or are published.<\/li>\n<li>Minimum subscription requirement in the case of schemes which market solely to professional investors.<\/li>\n<\/ul>\n<p>An umbrella scheme must seek approval before marketing units of additional sub-funds in Ireland.<\/p>\n<p>Schemes undertaking marketing their units in Ireland must comply with the provisions of the code of advertising, promotional and direct marketing in Ireland.\u00a0 This is the code published by the Advertising Standards Authority for Ireland.<\/p>\n<p>The annual and half-yearly reports by schemes marketing their units in Ireland must be submitted to the Central Bank.\u00a0 Where a scheme has received approval from the Central Bank to market units in Ireland, the name of the scheme and the name and address of the facility&#8217;s agent are to be placed on a register available for inspection to the public.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Futures_Options\"><\/span>Futures &amp; Options<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Futures and options schemes capital protected.\u00a0 A collective investment schemes which invest in futures options or their derivative instrument on which provides for the protection of capital invested in the scheme over a period of time (up to seven years) is subject to the following rules, in addition to general collective investment scheme rules.<\/p>\n<p>The assets of the scheme may consist of futures and options or other derivative instruments, deposits or short-term securities, which may include securities with a maturity of up to seven years.<\/p>\n<p>Measures undertaken for the protection of capital, particularly in relation to the segregation of assets, must be approved by the Central Bank.\u00a0 The Central Bank may relax investment restrictions in the notice to provide for the protection of capital.<\/p>\n<p>Not more than 5% of the net assets may be invested in debt securities of companies other than banks with a credit rating of less than A-1.<\/p>\n<p>Futures and options must be traded on an organised exchange.\u00a0Options and swap contracts contracted over the counter are permitted subject to the provisions above relating to the same.<\/p>\n<p>The scheme must not hold open positions in any one future or options contract for which the margin represents 5% or more of its net assets.\u00a0 It must not hold an open position in contracts consisting of a single commodity or single financial instrument for which the margin represents 10% or more of its assets.<\/p>\n<p>The Central Bank may permit a derogation from these limits to enable the objectives of a scheme to track the performance of a securities index.\u00a0 Foreign exchange transactions with credit institutions are permitted subject to the below.<\/p>\n<p>The scheme may borrow for temporary purposes up to 10% of the net assets of the scheme.\u00a0 The intention to borrow must not form part of the investment objectives of the scheme.<\/p>\n<p>Before authorising a future and option scheme, the Central Bank must be satisfied that the Directors of the Management Company and other controllers and advisors have specific experience in this area of investment.\u00a0 The prospectus must contain a full description of the risks involved in the type of scheme.\u00a0 It shall disclose what steps the scheme has taken to ensure that the liabilities of the scheme are limited to the net assets of the scheme or, in the case of an umbrella fund, to the net assets of the fund.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-12843\" data-postid=\"12843\" class=\"themify_builder_content themify_builder_content-12843 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Money Market Funds Non-UCITS collective investment schemes, money market schemes, and schemes that label or market itself as a money market must comply with the following requirements.\u00a0 It must classify itself as a \u201cShort-Term Money Market Fund\u201d or a \u201cMoney Market Fund\u201d. The scheme must indicate in its prospectus whether it is a Short-Term Money [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[167],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12843"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12843"}],"version-history":[{"count":7,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12843\/revisions"}],"predecessor-version":[{"id":31898,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12843\/revisions\/31898"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12843"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}