Significant changes to Ireland’s fund governance regime are being introduced further to consultation paper 86 (“CP86”) which was issued by the Central Bank of Ireland. Key developments include:
- A requirement that boards document the rationale for their composition
- Increased likelihood of inspection for fund or management companies where directors hold more than twenty board positions and in excess of two thousand hours of time commitment in aggregate
- Streamlining the managerial functions (currently ten for UCITS and sixteen for AIFMD compliant funds) to a uniform six functions
- Distinguishing clearly between the role of directors and the roles of those responsible for performing managerial functions
- Requiring an independent director to assume responsibility for a new “organisational effectiveness” role
- The issuance of guidance as to how oversight of delegates may be performed.
Process and Results
KB Associates obtained the views of 101 key stakeholders with a view to determining whether or not respondents perceived CP86 as enhancing the attractiveness of Ireland as a fund domicile.
The survey participants were as follows:
- 55% from Ireland, 45% from outside Ireland
- 47% were independent non-executive directors (“INED’s”), 36% were asset managers and 17% were professional advisors
The key results of the survey were as follows:
- Almost half of non-Irish residents (44%) including 42% of asset managers viewed CP86 as irrelevant to the attractiveness of Ireland as a domicile
- Of those asset managers viewing CP86 as impacting the attractiveness of Ireland as a domicile, 72% did not believe it increased the attractiveness of the domicile
- Both the INED and professional advisor community were almost evenly split as to the impact of CP86 on Ireland as a domicile
- Overwhelming support (85%) existed for the documentation of the reasoning behind board appointments and for the view that 2,000 hours represented a sensible capacity guideline (79%) Almost half (48%) of respondents outside Ireland viewed the requirement for two Irish resident directors as inappropriate. However 89% or respondents resident in Ireland viewed it as appropriate
- The creation of a uniform set of managerial functions for both UCITS and AIF’s was welcomed by 90% of respondents. Over 80% approved of the clear distinction between directors and those responsible for managerial functions
- The creation of an organisational effectiveness role while deemed appropriate by a majority was seen as inappropriate by 41%
- The guidance issued on delegate oversight was welcomed by 82% of participants
- A majority (64%) believed directors should not be required to hold a professional qualification while a significant minority (37%) believed that a continuing professional development requirement was not appropriate.
Download the full results of the KB Associates Fund Governance Survey 2016 here
KB Associates is pleased to share its insights with managers and fund boards as they address the implications of the new fund governance regime. For further information, please contact Mike Kirby (+353 1 667 1980), Paul Carrigg (+353 1 667 1982) or Peter Northcott (+44 203 170 8813).