On-going Supervision of Funds
Fund Rules and Guidance
Listed below are all the principal rules and guidance for funds.
Guidance in respect of Qualifying Investor Funds
Guidance in respect of Registered Collective Investment Schemes
Approach to supervision
The Investment Business Division supervises its Designated Managers and Designated Custodians ("Designated Persons") by conducting regular desk based monitoring (off site monitoring) supplemented by periodic inspections (onsite monitoring).
Desk Based Monitoring
Designated Persons are required to comply with the Licensees (Conduct of Business) Rules, 2009 and the notifications stipulated therein. In addition Designated Persons are required to comply with the Licensees (Capital Adequacy) Rules 2010. The Designated Persons are also required to comply with the relevant fund rules.
In addition to immediate and annual notification requirements under the rules the designated managers of all authorised and registered schemes are required to submit quarterly statistical returns regarding the schemes managed and any unresolved complaints against the designated persons must be notified to the Commission.
The Investment Business Division performs regular compliance visits to its Designated Persons to enhance the Division's understanding of the licensee's business and to review the risk management systems and internal controls in operation to ensure compliance with the Licensees (Conduct of Business) Rules, 2009 and the relevant fund rules.
Changes to Information Particulars
The following note is intended to clarify the Commission’s expectations in circumstances where amendments are to be made to the Information Particulars in relation to an Authorised Closed-Ended Collective Investment Scheme or a Registered Collective Investment Scheme. For the avoidance of doubt the term “Information Particulars” in the following note refers to the Information Particulars by whatever name they are known, including: Prospectus, Scheme Particulars, Offering Memorandum, Explanatory Memorandum, Term Sheet, Admission Document, Subscription Agreement, Listing Particulars, Application Form or any other equivalent documents.
Authorised Closed–Ended Collective Investment Schemes:
Rule 5.01(1)(ii) of the Authorised Closed-Ended Investment Schemes Rules 2008 (“the Authorised CEIS Rules”) requires a Designated Manager to make an immediate notification by means of a written notice to the Commission of a proposed material change to the Information Particulars of an Authorised Closed-Ended Collective Investment Scheme.
The Commission’s expectation is for the covering letter accompanying such notification to briefly, but concisely, set out the material changes that have been made in the amended document from the current version (i.e. the version most recently submitted to the Commission). For the avoidance of doubt, this expectation remains, even if a “black-lined” version tracking the changes is provided, as it will be appreciated that such tracked copies are not always of help in this respect where documents have been subject to significant changes.
Within the covering letter, the Designated Manager should also provide its confirmation that the contents of the amended document contain all of the relevant disclosures required by Rule 4.03 of the Authorised CEIS Rules. In this respect, Designated Managers might find that the document disclosure checklist contained within the Commission’s Form APC is of help in checking that the appropriate disclosures are included in any amended documents, although it is not expected that such a form should actually be completed and submitted in these circumstances.
Details of the communications with existing shareholders in respect of the matters which are the subject of the changes (in accordance with 4.01 of the Authorised CEIS Rules) should also be copied to the Commission.
A clean copy of the final version of the amended document, which has been certified as a true copy of the original, should be provided to the Commission as soon as it is available.
It should be noted that under the Authorised CEIS Rules, the Commission is not required to issue any form of “approval” in respect of such amendments, and no such “approvals” will be issued.
Registered Collective Investment Schemes:
Rule 5.01(1) of the the Registered Collective Investment Scheme Rules 2008 (“the Registered CIS Rules”) requires Information Particulars in respect of a Registered Collective Investment Scheme to be prepared, which shall at least contain the matters set out in the Prospectus Rules 2008 (“the Prospectus Rules”). For the avoidance of doubt, the Information Particulars only require the disclosures specified in Parts 3 and 4 of the Prospectus Rules.
Rule 5.01(3) of the Registered CIS Rules requires that a copy of any revised Information Particulars be sent to the Commission with the annual notification.
By way of clarification, it is expected that where the Information Particulars (or equivalent document) are to be updated in respect of either a Registered Open-Ended or Registered Closed-Ended Collective Investment Scheme the amended particulars and associated documents should be submitted to the Commission as follows:
Where there is a proposal to add additional classes, sub-funds or cells to a Registered Open-Ended Collective Investment Scheme, Rule 7.03 of the Registered CIS Rules applies. As set out in this Rule, along with other requirements, certified copies of any amended or additional Information Particulars should be submitted to the Commission at the time of the proposal and the Commission’s approval to the proposal is required before it may take effect. It is the Commission’s expectation that amended or additional Information Particulars submitted pursuant to this Rule should be accompanied by a letter from the scheme’s Designated Manager, confirming that it is content that the disclosures in the document(s) meet the disclosures specified in Parts 3 and 4 of the Prospectus Rules and that the statements required by 5.02 of the Registered CIS Rules are also included.
Where other, more general updates are being made to Information Particulars for Registered Open-Ended Collective Investment Schemes, these should be prepared and submitted to the Commission along with the annual notification required by Rule 13.1.1 of the Licensees (Conduct of Business) Rules 2009 (“the Licensees Rules”).
In any event, such amended documents should, when submitted, be certified as true copies of the original documents and should (in a similar fashion to that already described above for Authorised Closed-Ended Schemes) be accompanied by a covering letter clearly setting out the material changes that have been made. Within that covering letter, the Designated Manager should also confirm that it is content that the disclosures in the amended document meet the requirements of the Prospectus Rules and that the statements required by 5.02 of the Registered CIS Rules are also included.
Copies of the notifications to existing investors in respect of the changes (as required by 5.01(4) of the Registered CIS Rules) should also be included with the covering letter.
5.01(2) of the Registered CIS Rules requires the revision of the Information Particulars of a Registered Open-Ended Investment Scheme to reflect any significant change which occurs in the matters stated therein. Whilst the Registered CIS Rules make no formal requirement for the revision of Information Particulars in respect of Registered Closed-Ended Schemes, the Commission’s expectation in this respect is as follows. Where there is only one initial opportunity for investors to enter the scheme, for example on initial offering, then there is no specific expectation for the Information Particulars to be subsequently updated after that initial offer. However, where subsequent offers or further placements (for existing or new classes) of a Registered Closed-Ended Scheme are to be made, it is expected that prior to such events, where necessary, the Information Particulars should be suitably updated in the same manner as that required by Rule 5.01(2) for Registered Open-Ended Schemes.
Any such revised Information Particulars in respect of Registered Closed-Ended Schemes should be submitted at the time of a Designated Manager’s annual notification under the Licensees Rules. Such amended documents should be certified as true copies of the original documents and should be accompanied by a covering letter clearly setting out the material changes that have been made. Within that covering letter, the Designated Manager should also confirm that it is content that the disclosures in the amended document meets the disclosures specified in Parts 3 and 4 of the Prospectus Rules and that the statements required by 5.02 of the Registered CIS Rules are also included.
Copies of the notifications to existing investors in respect of the matters which are the subject of the changes (as required by 5.01(4) of the Registered CIS Rules) should also be included with the covering letter.