IRELAND Law and Practice Contributed by: Nicholas Blake-Knox, Jonathan Sheehan, Damien Barnaville and Joe Mitchell, Walkers
Face-to-face meetings are not typically required in respect of the authorisation of UCITS, unless there is a particularly significant aspect of the project. 3.4 Operational Requirements Retail investment funds in Ireland are limited in terms of not only the types of assets that can be invested in but also the exposure to particular securities and issuers. UCITS are permitted to invest in transferable securities and other liquid financial assets but are not permitted to invest directly in real estate or commodities, nor to engage in physical short selling. Investments by UCITS in other open-ended col - lective investment schemes that are not estab - lished as UCITS are subject to additional require - ments, including requirements relating to those underlying funds being subject to equivalent supervision and investor protection measures. Investment in closed-ended funds by UCITS is limited to circumstances where the underly - ing closed-ended funds meet the definition of a transferable security and fulfil certain corporate governance and regulatory requirements. As detailed in 3.3.1 Regulatory Regime , UCITS are subject to a more stringent regulatory regime than AIFs in terms of permitted investments and investment restrictions. Whether established as AIFs or UCITS, Irish investment funds are required to appoint an Irish-based depositary that is responsible for the safekeeping of the fund’s assets, which must be authorised by the Central Bank to provide such services. There are also rules relating to the holding of investors’ money in collection accounts and umbrella cash accounts.
Details of how an investment fund’s assets are valued need to be set out in the fund’s consti - tutional document and should comply with the valuation rules set out in the UCITS Regulations or the AIF Rulebook, as relevant. Details of the potential risks relevant to the investment fund must be disclosed in the fund’s prospectus. Rules relating to insider trading, market abuse and transparency are generally only applicable to Irish listed funds. As Irish regulated entities, Irish investment funds (whether AIFs or UCITS) are subject to AML/CFT legislation. Because Irish investment funds gen - erally delegate investor services activities to an administrator, such funds need to be aware of the administrator’s policy in relation to AML/CFT, in addition to having their own policy in place. 3.5 Fund Finance Retail investment funds in Ireland have limited borrowing powers. UCITS are only permitted to borrow up to 10% of the fund’s NAV on a tem - porary basis. Typically, UCITS may use tempo - rary borrowing facilities for short-term liquidity purposes – eg, to ensure the timely payment of redemptions, particularly where less liquid investments are being disposed of. As noted in 2.5 Fund Finance , RIAIFs may borrow an amount equal to up to 25% of the fund’s NAV; ELTIFs that can be marketed to retail investors can borrow an amount equal to up to 50% of the
NAV of the ELTIF. 3.6 Tax Regime
The tax regime for retail investment funds in Ire - land does not differ from that applicable to AIFs – see 2.6 Tax Regime , although the IREF regime referred to therein does not apply to Irish retail investment funds regulated as UCITS funds.
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