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Funds And Investment Management Update Ireland And Luxembourg Q2 2022 – Fund Management/ REITs


1 Legal & Regulatory

1.1 UCITS and AIFMD Update


On 16 May 2022, the Central Bank of Ireland (”Central
Bank”) published a
Notice of Intention
on its approval process for Irish UCITS
side-pocketing arrangements in relation to Russian, Belarusian and
Ukrainian assets that have been impacted by Russia’s invasion
of Ukraine and / or by sanctions imposed as a result of the

For more information, please see our update,
Central Bank of Ireland Approval Process for UCITS Side-Pocketing

On 1 July 2022, the Central Bank published new guidance
regarding its pre-submission requirements for certain types of
Qualifying Investor AIF (“QIAIF”) products, and
confirming the 24-hour approval process for all other QIAIFs,
including loan-originating QIAIFs.

For more information, please see our update,
Welcome Enhancements to the QIAIF Pre-Submission Process


On 20 May 2022, the European Authorities and Securities Markets
Authority (“ESMA”) published an updated version of its
on the application of the UCITS Directive 2009/65/EC.
The Q&A on the performance reference period for the benchmark
model has been updated and there is a new Q&A on the
performance reference period for the hurdle rate model.

On 20 May 2022, ESMA published an updated version of its
on the application of AIFMD. ESMA has updated
Q&As, and added a new Q&A, relating to ESMA’s
guidelines on performance fees in UCITS and certain types of

Proposed Amending Directive

On 17 June 2022, the Council of the EU
that it had agreed its general approach on the
proposed directive amending AIFMD and the UCITS Directive relating
to delegation arrangements, liquidity risk management, supervisory
reporting, provision of depositary and custody services, and loan
origination by alternative investment funds (“AIFs”). The
general approach:

  • Emphasises the importance of consistent harmonisation in
    liquidity risk management. In particular, the need to improve the
    availability of liquidity management tools, with new requirements
    on fund managers to provide for the activation of these
    instruments. This is to ensure fund managers are well-equipped to
    deal with significant outflows in the event of financial

  • Supports the European Commission’s proposed EU framework
    for loan-originating funds supplemented with requirements to
    alleviate risks for financial stability and ensure an appropriate
    level of investor protection.

  • Further clarifies the rules on outsourcing and the delegation
    of certain functions by fund managers to third parties. It also
    increases the supervisory co-operation in this area and introduces
    new reporting requirements on delegation arrangements.

  • Considers other key issues on the framework for the provision
    of cross-border services by depositaries, new reporting obligations
    for UCITS for risk monitoring and new transparency rules to enhance
    investor protection.

On 21 June 2022, the Council published a
containing the final Presidency compromise text of the
proposed directive.

The Council will now enter into trilogue negotiations with the
European Parliament to agree on the final text of the proposed

1.2 Cross-Border Distribution of Investment Funds

The EU’s regulatory framework for facilitating the
cross-border distribution of UCITS and AIFs came into effect on 2
August 2021. It comprises Regulation
(EU) 2019/1156
(“CBD Regulation”) and Directive
(EU) 2019/1160
(“CBD Directive”). The
European Union (Undertakings for Collective Investment in
Transferable Securities) (Amendment) Regulations 2021
and the

European Union (Alternative Investment Fund Managers) (Amendment)
Regulations 2021
give effect to the CBD Directive in Ireland.
law of 21 July 2021
gives effect to the CBD Directive in

On 17 May 2022, ESMA issued a
on the information and templates to be provided,
and used by firms, when they inform regulators of their
cross-border marketing and management activities under the UCITS
Directive and AIFMD.

The purpose of the draft implementing technical standards
(“ITS”) and regulatory technical standards
(“RTS”) is to facilitate the process for notifying
cross-border marketing and management activities in relation to
UCITS and AIFs. This will be achieved by defining harmonised
information to be notified to competent authorities, and developing
common templates to be used by management companies, UCITS and

The closing date for responses is 9 September 2022. ESMA expects
to publish a final report by the beginning of 2023. Once the RTS
and ITS drafts are finalised, ESMA will submit them to the European

For more information, please see our update,
ESMA Consultation on Notifications for Cross-Border Marketing and
Management of Funds


On 12 May 2022, the Commission de Surveillance du Secteur
Financier (“CSSF”) published circular 22/810 informing
Luxembourg undertakings for collective investment (“UCI”)
and investment fund managers (“IFMs”) that a number of
pre-marketing and cross-border marketing procedures will now only
be available on the
CSSF’s electronic portal (“eDesk”). Additional
procedures will be made available on the eDesk over time and the
CSSF will notify UCIs and IFMs when these become available.

On 20 June 2022, the CSSF issued a press release noting the
various marketing notification and denotification procedures that
will be exclusively available on the eDesk from 1 July 2022. The
list of procedures available will be updated on the eDesk home page
and should be regularly checked. In addition, a user guide with
detailed information on the procedures and the required
documentation to be submitted via the eDesk was also published.
Russian Invasion of Ukraine and Investment Funds From 13 April
2022, EU sanctions prohibit EU investment funds (that invest in
Euro-denominated transferable securities) from accepting new
investments from Russian or Belarusian persons (unless they are EU
nationals or have EU residency).

For more information, please see our update,
New EU Ban on Selling Investment Funds to Russian or Belarusian

On 16 May 2022, ESMA published a
for fund managers on their obligations to investors
in the light of the conflict in Ukraine. It provides overarching
messages to fund managers, including highlevel guidance on:

  • The appropriate action in case of exposures to Russian,
    Belarusian and Ukrainian assets, given valuation and liquidity

  • The process fund managers should follow when evaluating these

  • Whether fund managers may consider using liquidity management
    tools, such as side pockets or similar arrangements, to segregate
    these assets.

ESMA expects fund managers of investment funds with exposures to
assets facing liquidity issues to assess whether a fair value of
these assets can still be determined and adapt the valuation
without undue delay.

On 20 June 2022, the Central Bank issued a letter to business
and professional representative bodies providing information and
requesting that the information be shared, in order to assist
members in meeting their obligations under the EU Financial
Sanctions. In particular, attention is drawn to the Central
Bank’s dedicated Russian / Ukraine Regulations webpage and a
related FAQs section.

For more information, see
CBI Issues Further Letter on EU Financial Sanctions Regarding
Russian Invasion of Ukraine

1.3 Sustainable Finance Update


On 23 June 2022, the Central Bank updated its guidance on how EU
taxonomy-related precontractual disclosures are to be addressed
following publication of the recent Commission
Q&A response
to ESMA. The guidance sets out three options
for funds in scope of the disclosures as appropriate to their
specific situation. These relate to funds that are not subject to
Article 8 or 9 of
Regulation (EU) 2019/2088
(“SFDR”) where the manager
decides to take into account the EU Taxonomy and where the manager
decides not to take into account the EU Taxonomy. The Central Bank
is not requiring disclosures for existing funds to be immediately
updated but these updates must be carried out no later than 1
January 2023.


A range of new EU legislative measures on sustainable finance
become effective on 1 August 2022. The various delegated directives
and delegated regulations are designed to complement the
obligations in SFDR and the Taxonomy Regulation and form part of
the European Commission’s package of measures to help improve
the flow of money towards sustainable activities across the EU.

For more information, please see our update,
New Mandatory Consideration of ESG Factors for EU Investment Fund

On 6 April 2022, the European Commission adopted
final RTS
to be used by financial market participants when
disclosing sustainability-related information SFDR. They specify
the exact content, methodology and presentation of the information
to be disclosed, thereby improving its quality and comparability.
Under these rules, financial market participants will provide
detailed information about how they tackle any possible negative
impacts that their investments may have on the environment and
society in general. The Council of the EU and the European
Parliament will now scrutinise the Delegated Regulation. It is
scheduled to apply from 1 January 2023.

On 29 April 2022, the European Financial Reporting Advisory
Group published a consultation
on draft EU sustainability reporting standards (“ESRS”)
that it is developing. The consultation closes on 8 August 2022.
The ESRS will support the reporting requirements of the proposed
Corporate Sustainability Reporting Directive (“CSRD”)
(the Council and the European Parliament on 21 June 2022 reached a
on it). The consultation is on the first set of ESRS,
which cover environmental, social and governance (“ESG”)
matters. The proposed CSRD will align with reporting obligations
under SFDR and the EU Taxonomy and is due to apply from 1 January

On 6 May 2022, ESMA published a
from the European Commission to the European Supervisory
Authorities (“ESAs”) (the EBA, EIOPA and ESMA) requesting
that they propose amendments to the adopted Commission Delegated
Regulation supplementing SFDR with regard to RTS on content and
presentation of information (SFDR RTS).

On 25 May 2022, ESMA published a
Commission Decision
with answers about SFDR and the Taxonomy Regulation which
the European Commission adopted on 13 May 2022. The answers focus

  • Principal adverse impact (“PAI”) disclosures and
    whether a financial market participant is able to not consider PAI
    at entity level but still consider PAI under Article 7 of SFDR for
    some of the financial products it manages.

  • Financial advisers and recommendations of financial

  • The transparency of the integration of sustainability risks and
    rules for financial products that are no longer made

  • Good governance practices, including financial products
    investing solely in government bonds.

  • The scope of Articles 5 and 6 of the Taxonomy Regulation.

The answers respond to questions the ESAs forwarded to the
Commission in December 2021, which ESMA published on 13 May

On 31 May 2022, ESMA published a
supervisory briefing
with guidance for NCAs on how they should
approach supervision of sustainability-related disclosures and the
integration of sustainability risks. The guidance is to be applied
on a proportionate basis and covers the review of the mandated
precontractual, periodic and website disclosures as well as
consistency of sustainability-related disclosures across the fund
documentation and marketing material. It also sets out expectations
on the use of ESG-related names for funds, as well as clarity
around investment policies and objectives.

For more information, please see our update,
New ESMA Guidance on Sustainability Risks and Disclosures

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