Schedule 5: Functions included in the activity of collective portfolio management under the headings - Investment management, Administration and Marketing

Schedule 6: Requirements and obligations for authorisation of management companies

Schedule 7: Requirements for holding of client money and investment instruments

Schedule 8: Code of conduct

European Communities (Undertakings for Collective Investment in Transferable Securities) (Amendment No. 2) Regulations 2003

I, Mary Harney, Minister for Enterprise, Trade and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving further effect to Council Directive No. 85/611/EEC of 20 December 1985¹ , as amended by Council Directive No. 88/220/EEC of 22 March 1988² , Directive No. 95/26/EC of 29 June 1995 of the European Parliament and of the Council³ , Directive No. 2001/108/EC of 21 January 2002 of the European Parliament and of the Council⁴ and Directive No. 2001/107/EC of 21 January 2002 of the European Parliament and of the Council⁵ , hereby make the following regulations:

Citation.

1. These Regulations may be cited as the European Communities (Undertakings for Collective Investment in Transferable Securities) (Amendment No.2) Regulations 2003.

Interpretation.

2. In these Regulations—

‘Principal Regulations’ means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003 ( S.I. No. 211 of 2003 ) as amended by the European Communities (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2003 ( S.I. No. 212 of 2003 ).

Amendment of Regulation 2(1) of the Principal Regulations.

3. Regulation 2(1) of the Principal Regulations is amended by:

(a) inserting the following definitions:

“ ‘authorised management company’ means any company which has been authorised by the Bank under Regulation 15 A; in these Regulations except where the context otherwise requires, a reference to a management company means an authorised management company;

‘branch’ means a place of business which is a part of the management company, which has no legal personality and which provides the services for which the management company has been authorised; all the places of business set up in the same Member State by a management company with headquarters in another Member State shall be regarded as a single branch;

‘Collective Portfolio Management’ means the management of UCITS and other collective investment undertakings. Collective portfolio management includes the functions specified in Schedule 5;

‘enactment’ means a statute or an instrument made under a power conferred by a statute;

‘Individual Portfolio Management Services’ means the services referred to in Regulation 16 (3) and includes discretionary portfolio management services referred to in subparagraph (a) of that Regulation and the non-core services referred to in subparagraph (b) of that Regulation;

‘initial capital’ means capital as defined in the Bank's Notice “Implementation of EC Own Funds and Solvency Ratio Directives for Credit Institutions Incorporated in Ireland” or any replacement Notice as might be issued by the Bank from time to time;

‘investment company’ includes both an investment company with fixed capital and an investment company with variable capital, unless the context otherwise requires;

‘Investment Services Directive’ means Council Directive 93/22/EEC of 10 May 1993¹ ;

‘management company’ means any company whose regular business is the management of UCITS in the form of either unit trusts, common contractual funds or investment companies or any combination thereof;

‘management company's home Member State’ means the Member State in which the management company's registered office is situated;

‘management company's host Member State’ means the Member State other than the home Member State, within the territory of which a management company has a branch or provides services;

‘own funds’ means own funds as defined in Title V, Chapter 2, Section 1 of Directive 2000/12/EC of 20 March 2000 of the European Parliament and of the Council⁷ ;

‘parent undertaking’ means a parent undertaking as defined in Articles 1 and 2 of Council Directive 83/349/EEC of 13 June 1983⁸ ;

‘proposed management company’ means a person who is seeking authorisation from the Bank to be an authorised management company;

‘qualifying holding’ means any direct or indirect holding of shares or other interest in a proposed management company or an authorised management company which represents 10% or more of the capital or of the voting rights, or any direct or indirect holding of less than 10% which, in the opinion of the Bank, makes it possible to exercise a significant influence over the management of the proposed management company or authorised management company in which a holding subsists. For the purpose of this definition, the voting rights referred to in Article 7 of Directive 88/627/EEC⁹ shall be taken into account;

‘qualifying shareholder’ means a person who has or controls a qualifying holding;

‘subsidiary’ means a subsidiary undertaking within the meaning of Regulation 4 of the European Communities (Companies Group Accounts Regulations 1992 ( S.I. No. 201 of 1992 );

‘UCITS' home Member State’ means:

(a) with regard to a UCITS constituted as a unit trust or common contractual fund, the Member State in which the management company's registered office is situated,

(b) with regard to a UCITS constituted as an investment company the Member State in which the investment company's registered office is situated;

‘UCITS' host Member State’ means the Member State, other than the UCITS' home Member State, in which the UCITS is marketed;”,

(b) substituting the following definition for the definition of ‘Directive’:

“ ‘Directive’ means Council Directive No. 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), as amended by Council Directive No. 88/220/EEC of 22 March 1988, Directive No. 95/26/EC of 29 June 1995 of the European Parliament and of the Council, Directive No. 2001/108/EC of 21 January 2002 of the European Parliament and of the Council and Directive No. 2001/107/EC of 21 January 2002 of the European Parliament and of the Council;”,

“ ‘directors’ means those persons who, under the Companies Acts or the trust deed or the deed of constitution or the memorandum and articles of association, represent the management company, the investment company or the trustee, or who effectively determine the policy of the management company, the investment company or the trustee and includes shadow directors within the meaning of the Companies Act 1990 ;”,

and

(d) substituting the following definitions for the definitions of ‘investment company with fixed capital’ and ‘investment company with variable capital’ respectively:

“ ‘investment company with fixed capital’ means a company so referred to in Regulation 3(3)(b);

‘investment company with variable capital’ means a company so referred to in Regulation 3(3)(c);”.

Amendment of Regulation 3 (2) of the Principal Regulations.

4. Regulation 3 (2) of the Principal Regulations is amended by substituting:

“UCITS are undertakings—”

for

“UCITS shall be undertakings—”.

Amendment of Regulation 7 of the Principal Regulations.

5. The Principal Regulations are amended by substituting the following for Regulation 7:

“Liability of Bank and State.

7. (1) (a) The authorisation of a UCITS by the Bank shall not constitute a warranty as to the performance of a UCITS and neither the Bank nor the State shall be liable for the performance or default of a UCITS.

(b) Neither the Bank nor any of its employees or officers or any member of its Board shall be liable in damages for anything done or omitted in the discharge or purported discharge of any of its functions under these Regulations unless it is shown that the act or omission was in bad faith.

(2) The authorisation, supervision, regulation or revocation of authorisation of a management company under these Regulations shall not constitute a warranty as to the solvency or performance of such management company and neither the Bank nor the State shall be liable in respect of any loss or losses incurred through the insolvency, default or performance of the management company.”.

Amendment of Regulation 8 of the Principal Regulations.

6. The Principal Regulations are amended by substituting the following for Regulation 8:

“Register of names of authorised UCITS and management companies; availability to the public.

8. (1) The Bank shall, within twenty-one days after the date of the authorisation of a UCITS or management company, publish a notice to that effect in Iris Oifigiúil.

(2) The Bank shall maintain a register or registers of all UCITS and management companies which it has authorised under these Regulations and whose authorisation has not been revoked.

(3) The Bank shall also maintain a register or registers of management companies providing services or which have a branch in the State of which the Bank has been informed by a competent authority in another member State in accordance with the Directive.

(4) The Bank shall revise these registers at such intervals as the Bank deems appropriate but not less frequently than once a year. The Bank shall publish these registers which may be held in electronic form.

(5) The registers of management companies shall include the names addresses and contact details of all management companies and such other particulars as the Bank may decide from time to time.

(6) In the case of a management company these registers shall include details of the services which the management company has been authorised to provide.

(7) The Bank shall arrange that registers of all UCITS and management companies, or a copy or copies thereof, shall be open for inspection in a single location by any member of the public at all reasonable times.”.

Amendment of Regulation 11 of the Principal Regulations.

7. The Principal Regulations are amended by substituting the following for Regulation 11:

“Authorisation of UCITS.

11. (1) (a) A unit trust shall be authorised only if the Bank has approved the trust deed, the name of the unit trust, the trustee, and has authorised the management company pursuant to Regulation 15A.

(b) An investment company shall be authorised only if the Bank has approved its memorandum and articles, the name of the investment company and its choice of trustee.

(c) A common contractual fund shall be authorised only if the Bank has approved the deed of constitution, the name of the common contractual fund and the choice of trustee and has authorised the management company pursuant to Regulation 15A.

(2) The Bank shall not authorise a UCITS if the management company or the investment company does not comply with the preconditions laid down in these Regulations.

(3) The Bank shall not authorise a UCITS if it is legally prevented from marketing its units or shares in the State, including through a provision in the fund rules or instruments of incorporation.”.

Insertion of new Part IV A in the Principal Regulations, insertion of new Regulations after Regulation 15 of the Principal Regulations and deletion of the Heading to Part V.

8. The Principal Regulations are amended by:

(a) the insertion of the following after Regulation 15:

“PART IV A

AUTHORISATION OF MANAGEMENT COMPANIES

Chapter 1

Conditions for taking up business and appeal of decisions by the Bank

Authorisation by the Bank

15 A. Subject to the provisions of these Regulations, the Bank may grant or refuse to grant to any management company applying to it under this Regulation an authorisation to operate as a management company. The grant of authorisation is subject to the conditions and requirements set out in Regulation 17 and Schedule 6.

Decision by the Bank and right of appeal.

15 B. (1) A proposed management company shall be informed within six months of the date of receipt of a complete application whether or not authorisation has been granted. Reasons shall be given whenever an authorisation is refused.

(2) A proposed management company which has been refused authorisation may apply to the court in accordance with Regulation 105.

(3) A proposed management company shall have the same right to apply to the court as in paragraph (2) if the Bank fails to take a decision on authorisation within the time prescribed in paragraph (1).

Right of appeal of a management company authorised in another Member State.

15 C. The right of application to the court under Regulation 105 shall apply to a management company authorised in another Member State in respect of a decision by the Bank acting as the competent authority of the host Member State.

Offence.

15 D. It is an offence for a proposed management company or any other person to apply for authorisation under these Regulations knowingly or recklessly using false or misleading information, or knowingly or recklessly making false or misleading statements, in relation to an application for an authorisation under these Regulations.”,

and

(b) the deletion of the heading:

“PART V

UNIT TRUSTS AND COMMON CONTRACTUAL FUNDS”.

Amendment of Regulation 16 of the Principal Regulations.

9. The Principal Regulations are amended by substituting the following for Regulation 16:

“Activities of a management company.

16. (1) Save as otherwise provided for in this Regulation, a management company may not engage in activities other than the management of UCITS authorised according to these Regulations and other collective investment undertakings which are not covered by these Regulations and for which the management company is subject to prudential supervision but which cannot be marketed in another Member State under the Directive.

(2) The activity of management of unit trusts, investment companies and common contractual funds includes, but is not limited to, the activities set out in Schedule 5.

(3) A management company may provide, as well as the management of collective investment undertakings, the following additional services:

(a) the management of portfolios of investments, including those owned by pension funds, in accordance with mandates given by investors on a discretionary, client-by-client basis, where such portfolios include one or more of the investment instruments listed in Section B of the Annex to the Investment Services Directive,

(b) as non-core services:

(i) investment advice concerning one or more of the investment instruments listed in Section B of the Annex to the Investment Services Directive;

(ii) safekeeping and administration in relation to units of collective investment undertakings.

(4) A management company may not be authorised solely to provide the services referred to in paragraph (3)(a).

(5) A management company may only provide the non-core services, listed in subparagraph 3(b), where it is authorised to provide the services in subparagraph (3)(a).

Provisions applicable to a management company authorised to provide Individual Portfolio Management Services.

16 A. (1) The Bank shall require that a management company which provides the services specified in Regulation 16 (3) shall comply with the conditions or requirements, as imposed by the Bank from time to time, in respect of the level of capital to be maintained by a management company. In imposing these conditions or requirements the Bank shall have regard to Council Directive 93/6/EEC of 15 March 1993¹⁰ and Council Directive 93/22/EEC of 10 May 1993.

(2) The Bank shall, from time to time, draw up and issue prudential rules and a code of conduct as provided for in Schedule 8, which a management company which provides the services specified in Regulation 16 (3) shall observe at all times.

Client's money and investment instruments.

16 B. The Bank may, from time to time, where it considers it necessary to do so, impose requirements, as provided for in Schedule 7, on management companies authorised to provide the services specified in Regulation 16 (3) with respect to clients' money and clients' investment instruments.”.

Amendment of Regulation 17 of the Principal Regulations.

10. The Principal Regulations are amended by substituting the following for Regulation 17:

“Authorisation of Management Companies.

17. (1) Without prejudice to any other legislative provision, a management company may not be authorised by the Bank unless—

(a) it is a body corporate with its registered office and its head office in the State;

(b) it has an initial capital of at least € 125,000; and

(c) the persons who effectively conduct the business of the management company are of sufficiently good repute and are sufficiently experienced in relation to the type of UCITS to be managed by the management company.

(2) (a) Where close links exist between a management company and other natural or legal persons, the Bank shall grant authorisation only if those links do not prevent the effective exercise of its supervisory functions.

(b) The Bank shall refuse authorisation if the laws, regulations or administrative provisions of a non-Member State governing one or more natural or legal persons with which the management company has close links or difficulties involved in their enforcement prevent the effective exercise of its supervisory functions.

(3) The conduct of a management company's business must be decided by at least two persons meeting the conditions specified in paragraph 1(c).

(4) When the net asset value of the portfolios of the management company exceeds €250,000,000 the management company must provide an additional amount of own funds which shall be equal to 0.02 % of the amount by which the value of the portfolios of the management company exceeds €250,000,000.

(5) Notwithstanding paragraph (4), the total of the initial capital and the additional amount required to be held pursuant to paragraph (4) by the company shall not be required to exceed € 10,000,000.

(6) Notwithstanding paragraph (4), the own funds of the management company shall never be less than the amount prescribed by the Bank in accordance with the terms of Annex IV of Council Directive 93/6/EEC of 15 March 1993.

(7) A management company need not provide up to 50 % of the additional amount of own funds referred to in paragraph (4) if it benefits from a guarantee of the same amount given by a credit institution or an insurance undertaking.

(8) The credit institution or insurance undertaking referred to in paragraph (7 must have its registered office in a Member State but may have its registered office in a non-Member State provided that the institution or undertaking is subject to prudential rules considered by the Bank to be equivalent to those laid down in Community law.

(9) For the purpose of paragraph (4), the following portfolios shall be deemed to be the portfolios of the management company—

(a) unit trust and common contractual funds, managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation;

(b) investment companies for which the management company is the designated management company;

(c) other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation.

(10) In pursuance of paragraph (1)(c), the names of the persons who effectively conduct the business of the management company and of every person succeeding them in office must be communicated forthwith to the Bank.

(11) The Bank shall oblige a management company to provide it with the information the Bank requires to monitor compliance on a continuous basis with the conditions specified in these Regulations.

(12) A management company may start business as soon as authorisation has been granted.

Chapter 2

Relations with third countries

Relations with third countries.

17 A. (1) Article 7 of the Investment Services Directive shall apply to the regulation of management companies pursuant to these Regulations save that the expression ‘firm/investment firm’ and ‘investment firms’ contained in Article 7 shall be construed respectively as ‘management company’ and ‘management companies’; the expression ‘providing investment services’ in Article 7(2) shall be construed as ‘providing services’.

(2) The Bank shall inform the Commission of any general difficulties which UCITS encounter in marketing their units in any third country.

Chapter 3

Operating conditions

Ongoing Capital Requirements.

17 B. (1) The Bank shall require that an authorised management company complies at all times with the conditions laid down in Regulation 15 A and Regulation 17.

(2) (a) The own funds of a management company may not fall below the level specified in Regulation 17.

(b) If they do, however, the Bank may, where the circumstances justify it, allow such management company a limited time period in which to rectify the situation or cease its activities.

Qualifying shareholding.

17 C. (1) Qualifying holdings in management companies shall be subject to the same rules as set out in Article 9 of Council Directive 93/22/EEC of 10 May 1993.

(2) For the purpose of this Regulation, the expressions ‘firm/investment firm’ and ‘investment firms’ contained in Article 9 of Council Directive 93/22/EEC of 10 May 1993 shall be construed as ‘management company’ and ‘management companies’ respectively.

Prudential rules.

17 D. (1) The Bank shall draw up prudential rules which management companies with regard to the activity of management of UCITS authorised according to these Regulations, shall observe at all times.

(2) In particular, the Bank having regard also to the nature of the UCITS managed by a management company, shall require that each such company:

(a) has sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing and adequate internal control mechanisms including, in particular, rules for personal transactions by its employees or for the holding or management of investments in financial instruments in order to invest own funds and ensuring, inter alia, that each transaction involving the fund may be reconstructed according to its origin, the parties to it, its nature, and the time and place at which it was effected and that the assets of the unit trusts, common contractual funds or of the investment companies managed by the management company are invested according to the fund rules or the instruments of incorporation and the legal provisions in force;

(b) is structured and organised in such a way as to minimise the risk of UCITS' or clients' interests being prejudiced by conflicts of interest between the company and its clients, between one of its clients and another, between one of its clients and a UCITS or between two UCITS. Nevertheless, where a branch is set up, the organisational arrangements may not conflict with the rules of conduct laid down by the host Member State to cover conflicts of interest.

Client approval.

17 E. A management company which is authorised to provide the service specified in Regulation 16 (3) (a) shall not invest all or a part of an investor's portfolio in units of unit trusts, common contractual funds or of investment companies it manages, unless it receives prior general approval from the client.

Delegation.

17 F. (1) A management company may delegate activities to third parties for the purpose of the more efficient conduct of the company's business provided that:

(a) the Bank is informed in an appropriate manner;

(b) the delegation mandate does not prevent the effectiveness of supervision over the management company, and in particular it must not prevent the management company from acting, or the UCITS from being managed, in the best interests of its investors;

(c) when the delegation concerns investment management, the mandate is only given to undertakings which are authorised or registered for the purpose of asset management and subject to prudential supervision; the delegation must be in accordance with investment-allocation criteria periodically laid down by a management company;

(d) where the mandate concerns investment management and is given to a non-Member State undertaking, cooperation between the Bank and the supervisory authorities of the non-Member State concerned is ensured;

(e) a mandate with regard to the core function of investment management is not given to the trustee or to any other undertaking whose interests may conflict with those of the management company or the unit-holders;

(f) measures are put in place which enable the persons who conduct the business of the management company to monitor effectively at any time the activity of the undertaking to which the mandate is given;

(g) the mandate does not prevent the persons who conduct the business of the management company either from giving at any time further instructions to the undertaking to which functions are delegated or from withdrawing the mandate or both with immediate effect when this is in the interest of investors;

(h) having regard to the nature of the functions to be delegated, the undertaking to which functions will be delegated is qualified and capable of undertaking the functions in question;

and

(i) the prospectuses issued by a UCITS list the functions which a management company has been permitted to delegate.

(2) Neither the management company's nor the trustee's liability shall be affected by the fact that the management company delegated any functions to third parties, nor shall the management company delegate its functions to the extent that it becomes a letterbox entity.

Chapter 4

The right of establishment and the freedom to provide services.

Establishment of a branch and provision of services.

17 G. (1) A management company, authorised by the competent authorities of another Member State in accordance with the Directive, may carry on within the State the activity for which it has been authorised, either by the establishment of a branch or under the freedom to provide services.

(2) The establishment of a branch or the provision of services may not be made subject to any authorisation requirement, to any requirement to provide endowment capital or to any other measure having equivalent effect.

Establishment of a branch in another Member State.

17 H. (1) Every management company wishing to establish a branch within the territory of another Member State shall be required to notify the Bank and to provide the following information and documents when effecting the notification:

(a) the Member State within the territory of which the management company plans to establish a branch;

(b) a programme of operations setting out the activities and services envisaged and the proposed organisational structure of the branch;

(d) the names of those responsible for the management of the branch.

(2) (a) Unless the Bank has reason to doubt the adequacy of the administrative structure or the financial situation of a management company, taking into account the activities envisaged, it shall within three months of receiving all the information referred to in paragraph (1), communicate that information to the competent authorities of the host Member State and shall inform the management company accordingly.

(b) The Bank shall also communicate to the competent authorities of the host Member State details of any compensation scheme intended to protect investors.

(c) Where the Bank refuses to communicate the information referred to in paragraph (1) to the competent authorities of the host Member State, the Bank shall give reasons for its refusal to the management company concerned within two months of receiving all the information. The Bank's refusal or their failure to reply shall be subject to the right to apply to the court as provided for in Regulation 105.

(3) Before the branch of a management company authorised in another Member State starts business within the State, the Bank, acting as the competent authority of the management company's host Member State shall within two months of receiving the information referred to in paragraph (1), prepare for the supervision of the management company and, if necessary, indicate the conditions, including the legislative provisions and rules mentioned in Regulations 90, 91 and 92 and the rules of conduct to be respected in the case of provision of the services specified in Regulation 16 (3).

(4) (a) On receipt of a communication from the Bank or on the expiry of the two month period provided for in paragraph (3) without receipt of any communication from the Bank, the branch may be established and start business.

(b) From that moment the management company may also begin distributing the units of the unit trusts, common contractual funds or investment companies subject to the Directive which it manages, unless the Bank establishes, in a reasoned decision taken before the expiry of that period of two months and communicated to the competent authorities of the home Member State, that the arrangements made for the marketing of the units do not comply with the provisions referred to in Regulations 90 and 92.

(5) In the event of a change in any particulars communicated in accordance with paragraphs (1) (b), (c) or (d), a management company shall give written notice of that change to the Bank and the competent authorities of the host Member State at least one month before implementing the change so that the Bank, acting as either the competent authority of the home or host Member State, may take a decision on the change under paragraph (2 or under paragraph (3), as the case may be.

(6) In the event of a change in the particulars communicated in accordance with paragraph (2) (a), the Bank shall inform the authorities of the host Member State accordingly.

Provision of information.

17 I. (1) When a management company wishes to carry on business within the territory of another Member State for the first time under the freedom to provide services, it shall notify the Bank and provide it with the following information:

(a) the Member State within the territory of which the management company intends to operate; and

(b) a programme of operations stating the activities and services it will undertake.

(2) (a) The Bank shall, within one month of receiving the information referred to in paragraph (1), forward it to the competent authorities of the host Member State.

(b) The Bank shall also communicate to the competent authorities of the host Member State details of any applicable compensation scheme intended to protect investors.

(3) (a) The management company may then start business in the host Member State in accordance with the Directive.

(b) When appropriate, the Bank acting as the competent authority of the host Member State shall, on receipt of the information referred to in paragraph (1), indicate to the management company the conditions, including the rules of conduct to be respected in the case of provision of the services specified in Regulation 16 (3) with which, in the interest of the general good, the management company must comply.

(4) Should the content of the information communicated in accordance with paragraph (1) (b) be amended, the management company shall give notice of the amendment in writing to the Bank and the competent authorities of the host Member State before implementing the change, so that the Bank acting as either the competent authority of the home or host member State, may take any steps they deem appropriate in the circumstances.

(5) A management company shall also be subject to the notification procedure laid down herein in cases where it entrusts a third party with the marketing of the units in a host Member State.

Provisions applicable to a management company authorised in another Member State.

17 J. (1) The Bank may, for statistical purposes, require a management company authorised in another Member State, which has a branch in the State, to report periodically on its activities in the State.

(2) The Bank may require a management company, authorised in another Member State, which carries on business within the State, to provide information necessary to monitor its compliance with these Regulations.

(3) Where the Bank ascertains that a management company that has a branch or provides services within the State, is in breach of the legal or regulatory provisions adopted in the State pursuant to these Regulations the Bank shall require that the management company concerned put an end to its irregular situation.

(4) If the management company concerned fails to take the necessary steps the Bank, acting as the competent authority of the host Member State shall inform the competent authority of the home Member State accordingly.

(5) If the management company persists in breaching the legal or regulatory provisions referred to in paragraph (2) in force in the State, the Bank may after informing the competent authorities of the home Member State, take appropriate measures to prevent or to penalise further irregularities and, in so far as is necessary, to prevent that management company from initiating any further transaction within the State. The Bank shall ensure that within the State, it is possible to serve the necessary legal documents on the management company.

(6) The foregoing provisions shall not affect the powers of the Bank to take appropriate measures to prevent or to penalise irregularities committed within the State, which are contrary to legal or regulatory provisions adopted in the interest of the general good. This shall include the possibility of preventing offending management companies from initiating any further transactions within the State.

(7) Any measure adopted pursuant to paragraphs (4), (5) or (6) involving penalties or restrictions on the activities of a management company must be properly justified and communicated to the management company concerned. Every such measure shall be subject to the right to apply to the court as provided for in Regulation 105.

(8) Before following the procedure laid down in paragraphs (3), (4) or (5), the Bank may, in emergencies, take any precautionary measures necessary to protect the interests of investors and others for whom services are provided. The Commission and the competent authorities of the other Member State concerned must be informed of such measures at the earliest opportunity.

(9) In the event of the Bank being informed by the competent authorities of a home Member State of the withdrawal of an authorisation, the Bank shall take the appropriate measures to prevent the management company concerned from initiating any further transactions within the State and to safeguard investors' interests.

(10) The Bank shall inform the Commission of the number and type of cases in which there have been refusals pursuant to Regulation 17 H or measures have been taken in accordance with paragraph (5).”.

Amendment of Section 2 of the Investor Compensation Act 1998 .

11. Section 2 of the Investor Compensation Act 1998 (Number 37 of 1998) is amended—

(a) by substituting for “ “authorised investment firm” means—”, the following definition:

“ “authorised investment firm” means—

(a) an authorised investment business firm,

(b) an authorised member firm,

(c) a credit institution the authorisation of which by the Bank under Directive No. 77/780/EEC of 12 December 1977 O.J. No. L 322 17.12.1977 and Directive No. 89/646/EEC of 15 December 1989 O.J. No. L 386, 30.12.1989 extends to one or more of the investment services listed in section A of the Annex to the Investment Services Directive,

(d) an insurance intermediary, or

(e) a management company authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003 ( S.I. No. 211 of 2003 ) as amended, to undertake the services referred to in Regulation 16(3) of those Regulations;”,

and

(b) by substituting for “ “investment firm” means—”, the following definition:

“ “investment firm” means—

(a) an authorised investment business firm or a person (being a person who was an authorised investment business firm) whose authorisation has been revoked,

(b) an authorised member firm or a person (being a person who was an authorised member firm) whose authorisation has been revoked,

(c) a credit institution licensed in the State or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time extends to one or more of the investment services listed in the Annex to the Investment Services Directive or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time has been revoked or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time no longer extends to one or more of the investment services listed in the Annex to the Investment Services Directive,

(d) an insurance intermediary or a person who was formerly an insurance intermediary, or

Insertion of new Heading before Regulation 18 of the Principal Regulations.

12. The Principal Regulations are amended by the insertion of the following before Regulation 18:

“PART V

UNIT TRUSTS AND COMMON CONTRACTUAL FUNDS

Trustee obligations”.

Insertion of new Regulations and Chapter after Regulation 36.

13. The Principal Regulations are amended by the insertion of the following after Regulation 36:

“Conditions for taking up business applicable to all investment companies.

36 A. (1) (a) The Bank shall not authorise an investment company if the directors are not of sufficiently good repute or sufficiently experienced in relation to the type of business carried out by the investment company.

(b) The names of the directors of the investment company and of every person succeeding them in office must be communicated to the Bank.

(2) An investment company may start business as soon as authorisation has been granted.

(3) An investment company may only manage assets of their own portfolio and may not, under any circumstances, receive any mandate to manage assets on behalf of a third party.

Chapter 4

Provisions applicable to an investment company which has not appointed a management company

Application of Chapter 4.

36 B. This chapter applies to an investment company which has not appointed a management company.

Conditions for taking up business.

36 C. (1) The Bank shall not authorise an investment company unless:

(a) the investment company has an initial capital of at least €300,000;

(b) the investment company has submitted a programme of activity to the Bank setting out its organisational structure in the application for authorisation; and

(c) the conduct of the investment company's business is decided by at least two persons who meet the conditions laid down by the Bank in accordance with Regulation 36A (1).

(2) Where close links exist between the investment company and other natural or legal persons, the Bank shall grant authorisation only if those do not prevent the effective exercise of its supervisory functions.

(3) The Bank shall also refuse authorisation if the laws, regulations or administrative provisions of a non-Member State governing one or more natural or legal persons with which the investment company has close links, or difficulties involved in their enforcement, prevent the effective exercise of their supervisory functions.

(4) A proposed investment company shall be informed within six months of the date of receipt of a complete application whether or not authorisation has been granted. Reasons shall be given whenever an authorisation is refused.

(5) For the purpose of this Regulation ‘close links’ has the same meaning as defined in Regulation 85 (3) (b).

Delegation of activities.

36 D. (1) (a) An investment company may delegate activities to third parties, for the purpose of the more efficient conduct of the investment company's business, provided that:

(i) the Bank is informed in an appropriate manner;

(ii) the delegation mandate does not prevent the effectiveness of supervision over the investment company and in particular it must not prevent the investment company from acting, or the investment company from being managed, in the best interests of its investors;

(iii) when the delegation concerns investment management, the mandate is given to undertakings which are authorised or registered for the purpose of asset management and subject to prudential supervision; the delegation must be in accordance with investment criteria periodically laid down by the investment companies;

(iv) where the mandate concerns investment management and is given to a non-Member State undertaking, cooperation between the Bank and the supervisory authorities of the non-Member State concerned is ensured;

(v) a mandate with regard to the core function of investment management is not given to the trustee or to any other undertaking whose interests may conflict with those of the investment company or the unit-holders;

(vi) measures are put in place which enable the persons who conduct the business of the investment company to monitor effectively at any time the activity of the undertaking to which the mandate is given;

(vii) the mandate does not prevent the persons who conduct the business of the investment company either from giving at any time further instructions to the undertaking to which functions are delegated or from withdrawing the mandate with immediate effect or both when this is in the interest of investors;

(viii) having regard to the nature of the functions to be delegated the undertaking to which functions will be delegated is qualified and capable of undertaking the functions in question; and

(ix) the prospectuses issued by an investment company list the functions which a management company has been permitted to delegate.

(2) Neither the investment company's nor the trustee's liability shall be affected by the fact that the investment company delegated any functions to third parties, nor shall the investment company delegate its functions to the extent that it becomes a letter box entity.

Prudential rules.

36 E. (1) The Bank shall draw up prudential rules which shall be observed at all times by investment companies that have not designated a management company authorised pursuant to these provisions.

(2) In particular, the Bank, having regard also to the nature of the investment company, shall require that the company has sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing and adequate internal control mechanisms including, in particular, rules for personal transactions by its employees or for the holding or management of investments in financial instruments in order to invest its initial capital and ensuring, inter alia, that each transaction involving the company may be reconstructed according to its origin, the parties to it, its nature, and the time and place at which it was effected and that the assets of the investment company are invested according to the instruments of incorporation and the legal provisions in force.”.

Substitution of Chapter heading in Part VI:

14. The Principal Regulations are amended by the substitution of the following heading for that before Regulation 37:

“Chapter 5

Assets of investment companies and responsibilities of trustee”.

Amendment of Regulation 74 of the Principal Regulations.

15. The Principal Regulations are amended by:

(a) the substitution of the following for Regulations 74 (1) and 74 (2):

“74. (1) An investment company and, for each of the unit trusts and common contractual funds it manages, a management company must publish:

(i) a simplified prospectus and

(ii) a full prospectus,

both of which must be dated and their essential elements kept up to date.

(2) Both the simplified and the full prospectuses must include the information necessary for investors to be able to make an informed judgement of the investment proposed to them, and in particular of the risks attached thereto. The latter shall include, independent of the instruments invested in, a clear and easily understandable explanation of the fund's risk profile.

(3) The simplified prospectus shall contain in summary form the key information provided for in Schedule 4. It shall be structured and written in such a way that it can be easily understood by the average investor.

(4) The Bank may permit that the simplified prospectus be attached to the full prospectus as a removable part of it.

(5) The simplified prospectus can be used as a marketing tool designed to be used in all Member States without alterations except translation. The Bank may therefore not require any further documents or additional information to be added.

(6) Both the full and the simplified prospectus may be incorporated in a written document, or in any durable medium having an equivalent legal status approved by the Bank.

(7) The full prospectus issued by a management company or investment company shall contain at least the information provided for in Schedule 1, insofar as that information does not already appear in the documents annexed to the full prospectus in accordance with Regulation 75.”,

and

(b) the renumbering of Regulations 74 (3) and 74 (4) of the Principal Regulations as Regulations 74 (8) and 74 (9) respectively.

Amendment of Regulation 75 of the Principal Regulations.

16. The Principal Regulations are amended by the substitution of the following for Regulation 75:

“Annexation of trust deed, deed of constitution or articles of incorporation to prospectus.

75. (1) The fund rules, trust deed, deed of constitution or an investment company's articles of incorporation shall form an integral part of the full prospectus and must be annexed thereto.

(2) The documents referred to in paragraph (1) need not, however, be annexed to the full prospectus provided that the unit-holder is informed that on request he or she will be sent those documents or be informed of the place where, in each Member State in which the units are placed on the market he or she may consult them.”.

Amendment of Regulation 76 of the Principal Regulations.

17. The Principal Regulations are amended by the substitution of the following for Regulation 76:

“Transmission of prospectus and simplified prospectus to Bank.

76. A UCITS must send its full and simplified prospectuses and any amendments thereto to the Bank.”.

Amendment of Regulation 79 of the Principal Regulations.

18. The Principal Regulations are amended by the substitution of the following for Regulation 79:

“Contents of annual report.

79. The annual report must include a balance-sheet or a statement of assets and liabilities, a detailed income and expenditure account for the financial year, a report on the activities of the financial year and the other information provided for in Schedule 2 to these Regulations, as well as any significant information which will enable investors to make an informed judgement on the development of the activities of the UCITS and its results.”.

Amendment of Regulation 80 of the Principal Regulations.

19. The Principal Regulations are amended by the substitution of the following for Regulation 80:

“Contents of half-yearly report.

80. The half-yearly report must include at least the information provided for in paragraph I to IV of Schedule 2 to these Regulations. Where a UCITS has paid or proposes to pay an interim dividend, the figures must indicate the results after tax for the half-year concerned and the interim dividend paid or proposed.”.

Amendment of Regulation 82 of the Principal Regulations.

20. The Principal Regulations are amended by the substitution of the following for Regulation 82:

“Offering of simplified prospectus to investors before contract is concluded and availability of prospectus and the latest published annual and half-yearly reports.

82. (1) The simplified prospectus must be offered to subscribers free of charge before the conclusion of the contract.

(2) In addition, the full prospectus and the latest published annual and half-yearly reports shall be supplied to subscribers free of charge on request.”.

Amendment of Regulation 83 of the Principal Regulations.

21. The Principal Regulations are amended by the substitution of the following for Regulation 83:

“Availability to public of annual and half-yearly reports as specified in full and simplified prospectus.

83. The annual and half-yearly reports must be available to the public at the places, or through other means approved by the Bank, specified in the full and simplified prospectus.”.

Amendment of Regulation 87 of the Principal Regulations.

22. The Principal Regulations are amended by the substitution of the following for Regulation 87:

“Publicity

87. All publicity comprising an invitation to purchase the units of UCITS must indicate that prospectuses exist and the places where they may be obtained by the public or how the public may have access to them.”.

Amendment of Regulation 88 (2) (c) of the Principal Regulations.

23. The Principal Regulations are amended by the substitution of the following for Regulation 88 (2) (c):

“(c) its full and simplified prospectuses including any amendments thereto,”.

Amendment of Regulation 93 of the Principal Regulations.

24. The Principal Regulations are amended by the substitution of the following for Regulation 93:

“Marketing of units.

93. (1) A UCITS which markets its units in the State must distribute within the State, in at least one of the State's official languages, the documents and information required to be published under these Regulations and in accordance with the same procedure as provided for under these Regulations.

(2) If a UCITS markets its units in another Member State, it must distribute in that other Member State, in accordance with the same procedures as those provided for by the Bank, the full and simplified prospectuses, the annual and half-yearly reports and the other information provided for in Regulations 74 and 75.

(3) These documents shall be provided in the, or one of the, official languages of the host Member State or in a language approved by the competent authorities of the host Member State.”.

Amendment of Regulation 96 of the Principal Regulations.

25. The Principal Regulations are amended by:

(a) substituting the following for the heading to Part XI:

“PART XI

COLLABORATION WITH COMPETENT AUTHORITIES IN OTHER MEMBER STATES”

and

(b) substituting the following for Regulation 96:

“Collaboration with competent authorities in other Member States.

96. (1) The Bank shall collaborate closely with the competent authorities in other Member States in order to carry out its authorisation and supervision duties under these Regulations and shall for those purposes alone communicate to the competent authorities in other Member States all information required by them so that the responsibilities of each supervisory and competent authority may be more effectively discharged.

(2) The Bank may verify, at the request of a competent authority in another Member State, that any management company authorised by that competent authority is complying with the relevant regulatory requirements imposed by that competent authority or by the home Member State of such a management company.

(3) Insofar as it is necessary for the purpose of exercising their powers of supervision, the Bank shall exchange information with the other competent authorities regarding any measures taken pursuant to Regulation 17 J (6), which involves penalties imposed on a management company or restrictions on a management company's activities.

(4) (a) A competent authority in another Member State authorised in that Member State to supervise a management company may, having notified the Bank, inspect or investigate the business of a management company authorised by the Bank which has a place of business in the State at that place of business or otherwise for the purpose of verifying any information of the type referred to in Regulations 96 (1), (2) and (3) in any one of the following manners—

(i) by inspection of the management company, at that place of business or otherwise, by the authority concerned,

(ii) by inspection of the management company, at that place of business or otherwise, by a person authorised in that capacity by the authority concerned, or

(iii) by a request from the authority concerned to the Bank to carry out the inspection on its behalf at that place of business or otherwise.

(b) The Bank shall act upon such requests from a competent authority.

(c) This Regulation shall not affect the right of the Bank, in discharging its responsibilities under these provisions, to inspect or investigate the business of a management company's branch established within the State.”.

Amendment of Regulation 97 (3) (c) of the Principal Regulations.

26. The Principal Regulations are amended by the substitution of the following for Regulation 97 (3) (c):

“ (c) such other supervisory and reporting requirements and conditions relating to its business as the Bank considers appropriate and prudent to impose on the UCITS from time to time for the purposes of its or their orderly and proper regulation;

(d) with respect to the collective portfolio management activity of management companies and investment companies that do not designate a management company:

(i) prudential rules

and

(ii) a code of conduct.”.

Amendment of Regulation 102 (4) of the Principal Regulations.

27. The Principal Regulations are amended by the substitution of the following for Regulation 102 (4):

“ (4) The Bank may withdraw the authorisation issued to a management company only where that management company:

(a) does not make use of the authorisation within 12 months, expressly renounces the authorisation or has ceased the activity covered by these Regulations for more than the previous 6 months unless the Bank has provided for authorisation to lapse automatically in such cases;

(b) has obtained the authorisation by making false statements, or by any other irregular means;

(d) no longer complies with Council Directive 93/6/EEC of 15 March 1993 if its authorisation also covers the discretionary portfolio management service specified in Regulation 16 (3) (a);

(e) has either seriously or systematically infringed the rules or requirements of the Bank imposed pursuant to these Regulations.

(5) The Bank shall, within 21 days of the revocation of an authorisation publish notice of the revocation in Iris Oifigiúil and in at least one national daily newspaper.”.

Amendment of Regulation 105 of the Principal Regulations.

28. The Principal Regulations are amended by the substitution of the following for Regulation 105:

“Review by the court.

105. (1) (a) Where the Bank refuses an application for authorisation under Regulation 14(1) or Regulation 15 B(1), fails to take a decision on an application within the time prescribed by Regulation 14(2) or Regulation 15 B(1), refuses to communicate the information referred to in Regulation 17 H (2) (c), revokes or refuses to revoke an authorisation under these Regulations, or proposes to replace a management company or trustee under Regulation 101, the applicant or the proposed management company, the management company, investment company, trustee or any aggrieved party may apply to the court to have the matter reviewed by way of motion on notice grounded upon affidavit.

(b) (i) In accordance with Regulation 15 an authorised UCITS situated in another Member State may appeal a decision by the Bank.

(ii) A management company authorised in another Member State may appeal a decision by the Bank under Regulation 15 C or a measure adopted by the Bank under Regulation 17 J (7).

(2) Whenever an application to review a decision of the Bank is brought to the court pursuant to paragraph (1) the court shall confirm the decision of the Bank unless it is satisfied that the procedures laid down by, or the requirements of, these Regulations or the Directive have not been complied with in any material respect.

(3) In any case where the court is satisfied that the procedures laid down by or the requirements of, these Regulations or the Directive have not been complied with in any material respect, the court may set aside the decision of the Bank or, if the Bank has failed to take a decision within the time prescribed in Regulation 14(2) or 15 B(1), direct it to take a decision within such time as the court directs; and in any such case, remit the matter to the Bank which shall thereupon reconsider the matter and make a decision in accordance with such procedures and requirements.”.

Amendment of Regulation 106(1) of the Principal Regulations.

29. The Principal Regulations are amended by the substitution of the following for Regulation 106(1):

“106. (1) An investment company, proposed management company or management company which, or a trustee or any person who, contravenes any provision of these Regulations is guilty of an offence.”.

Amendment of Regulation 107 (2) of the Principal Regulations.

30. The Principal Regulations are amended by the substitution of the following for Regulation 107 (2):

“(2) A reference in any other enactment to a provision of the Regulations revoked by paragraph (1) shall be construed as a reference to the corresponding provision of these Regulations as shown in Schedule 3.”.

Transitional provisions and time limits.

31. The transitional provisions and time limits applicable are as follows:

(1) Management companies authorised before 13 February 2004 under Council Directive 85/611/EEC shall be deemed to be authorised for the purposes of these provisions provided that to take up such activity they must comply with conditions equivalent to those imposed in Regulation 15A.

(2) Management companies authorised before 13 February 2004 which are not included among those referred to in paragraph (1) may continue such activity provided that, no later than 13 February 2007 and pursuant to the applicable requirements, they obtain the appropriate authorisation to continue such activity in accordance with the provisions adopted herein.

Amendment of Schedules to the Principal Regulations.

32. The Principal Regulations are amended by substituting the following for Schedules 1A, 1B and 2:

“SCHEDULE 1

Information requirements to be contained in full prospectus

2. Information concerning the trustee:

2.1. Name or style, form in law, registered office and head office if different from the registered office;

2.2 Main activity.

3. Information concerning the advisory firms or external investment advisers who give advice under contract which is paid for out of the assets of the UCITS:

3.1. Name or style of the firm or name of the adviser;

3.2. Material provisions of the contract with the management company or the investment company which may be relevant to the unit-holders, excluding those relating to remuneration;

3.3. Other significant activities.

4. Information concerning the arrangements for making payments to unit-holders, purchasing or redeeming units and making available information concerning the UCITS. Such information must in any case be given in the Member State in which the UCITS is situated. In addition, where units are marketed in another Member State, such information shall be given in respect of that Member State in the prospectus published there.

5. Other investment information

5.1. Historical performance of the unit trust, common contractual fund or of the investment company (where applicable) - such information may be either included in or attached to the prospectus;

5.2. Profile of the typical investor for whom the unit trust, common contractual fund or the investment company is designed.

6. Economic information

6.1. Possible expenses or fees, other than the charges mentioned in paragraph 1.17 distinguishing between those to be paid by the unit-holder and those to be paid out of the unit trust's, common contractual fund's or of the investment company's assets.

SCHEDULE 2

Information to be included in the annual and half-yearly reports

I. Statement of assets and liabilities, including the following:

—transferable securities,

—bank balances,

—other assets,

—total assets,

—liabilities,

—net asset value.

II. Number of units in circulation.

III. Net asset value per unit.

IV. Portfolio, distinguishing between:

(a) transferable securities admitted to official stock exchange listing;

(b) transferable securities dealt in on another regulated market;

(d) other transferable securities of the type referred to in Regulation 46(1);

and analysed in accordance with the most appropriate criteria in the light of the investment policy of the UCITS (e.g. in accordance with economic, geographical or currency criteria) as a percentage of net assets; for each of the above investments the proportion it represents of the total assets of the UCITS should be stated.

Statement of changes in the composition of the portfolio during the reference period.

V. Statement of the developments concerning the assets of the UCITS during the reference period including the following:

—income from investments,

—other income,

—management charges,

—trustee's charges,

—other charges and taxes,

—net income,

—distributions and income reinvested,

—changes in capital account,

—appreciation or depreciation of investments,

—any other changes affecting the assets and liabilities of the UCITS.

VI. A comparative table covering the last three financial years and including, for each financial year, at the end of the financial year:

—the total net asset value,

—the net asset value per unit.

VII. Details, by category of transaction within the meaning of Regulation 48A and 48B carried out by the UCITS during the reference period, of the resulting amount of commitments.

SCHEDULE 3

Table of cross references to specific UCITS Regulations in legislation

PART 1

Unit Trusts Act 1990

(No. 37 of 1990)

Item	Section of Act	Subsection or Table of Section	UCITS Regulations references	New UCITS Regulations references
1	15	(1)	63	63
2	15	(1)	75 to 83	77 to 85
3	15	(1)	99 to 105	98 to 105
4	15	(1)	78	80
5	15	(1)	105	105
6	15	(2)	102	102
7	15	Table	14	14
8	15	Table	59	59

PART 2

Companies Act 1990

(No. 33 of 1990)

Item	Section of Act	UCITS Regulations references	New UCITS Regulations references
1	258	14	14
2		30	31
3		63	63
4		72(3)	74(3)
5		83 (2) to (7)	85 (2) to (9)
6		99 to 105	98 to 105

SCHEDULE 4

Contents of the simplified prospectus

Brief presentation of the UCITS

— when the unit trust, common contractual fund or the investment company was created and indication of the Member State where the unit trust, common contractual fund or the investment company has been registered/incorporated,

— in the case of UCITS having different investment compartments, the indication of this circumstance,

— management company (when applicable),

— expected period of existence (when applicable),

— trustee,

— auditors,

— financial group (e.g. a Bank) promoting the UCITS.

Investment information

— short definition of the UCITS' objectives,

— the unit trust's, common contractual fund's or the investment company's investment policy and a brief assessment of the fund's risk profile (including, if applicable, information according to Regulations 51 and 52 and by investment compartment),

— historical performance of the unit trust, common contractual fund or investment company (where applicable) and a warning that this is not an indicator of future performance - such information may be either included in or attached to the prospectus,

— profile of the typical investor the unit trust, common contractual fund or the investment company is designed for.

Economic information

— tax regime,

— entry and exit commissions,

— other possible expenses or fees, distinguishing between those to be paid by the unit-holder and those to be paid out of the unit trust's, common contractual fund's or the investment company's assets.

Commercial information

— how to buy the units,

— how to sell the units,

— in the case of UCITS having different investment compartments how to pass from one investment compartment into another and the charges applicable in such cases,

— when and how dividends on units or shares of the UCITS (if applicable) are distributed,

— frequency and where/how prices are published or made available.

Additional information

— statement that, on request, the full prospectus, the annual and half-yearly reports may be obtained free of charge before the conclusion of the contract and afterwards,

— competent authority,

— indication of a contact point (person/department, timing, etc.) where additional explanations may be obtained if needed,

— publishing date of the prospectus.

SCHEDULE 5

Functions included in the activity of collective portfolio management

(1) Investment management.

(2) Administration:

(a) legal and fund management accounting services;

(b) customer inquiries;

(d) regulatory compliance monitoring;

(e) maintenance of unit-holder register;

(f) distribution of income;

(g) unit issues and redemptions;

(h) contract settlements (including certificate dispatch);

(i) record keeping.

(3) Marketing.

SCHEDULE 6

Requirements and obligations for authorisation of management companies

(1) An application for authorisation shall be in such form and contain such particulars as the Bank shall specify from time to time and, without prejudice to the generality of the aforesaid, shall include such particulars

information as the Bank may request in relation to:

(a) the type of business to be carried on or likely to be carried on by the proposed management company;

(b) any person or persons having a qualifying shareholding or having ownership of the proposed management company including any natural or legal person whose shareholding or other commercial relationship with the proposed management company might influence the conduct of the proposed management company to a material degree; and

(2) A proposed management company shall not be authorised by the Bank unless it satisfies the Bank —

(a) that it is a company incorporated under the Companies Acts, and the proposed management company has made arrangements to ensure that its activities will be carried out in such a manner that the requirements of these Regulations are complied with;

(b) that, where applicable, the memorandum of association and articles of association of the proposed management company contain sufficient provision so as to enable it to operate in accordance with these Regulations, and in accordance with any condition or requirement, or both, as the Bank may impose;

(d) as to the probity and competence of each of its directors and managers;

(e) as to the suitability of each of its qualifying shareholders;

(f) as to the organisational structure and management skills of the proposed management company and that adequate levels of staff and expertise will be employed to carry out its proposed activities;

(g) that it has and will follow established procedures to enable the Bank to be supplied with all information necessary for the Bank to carry out its supervisory functions and to enable the public to be supplied with any information which the Bank may specify;

(h) that the organisation of its business structure is such that it and any of its associated or related undertakings, where appropriate and practicable, are capable of being supervised adequately by the Bank; and

(i) as to its conduct of business, its financial resources and any other matters as the Bank considers necessary in the interests of the proper and orderly regulation and supervision of authorised management companies or in the interests of the protection of investors.

(3) The Bank may impose conditions or requirements, from time to time in respect of the level of capital to be maintained by an authorised management company and shall have regard to the capital requirements set out in these Regulations and the Investment Intermediaries Acts 1995 to 2000.

(4) The Bank may require that an appointment as a director of an authorised management company or proposed management company or to the post of chief executive or manager or post equivalent thereto, on or after the granting of an authorisation under these Regulations, shall be subject to the prior approval in writing of the Bank which approval shall not be given unless the authorised management company or proposed management company satisfies the Bank as to the probity and competence of the proposed appointee.

(5) The Bank may direct an authorised management company to alter its memorandum or articles of association in the interest of the proper and orderly regulation and supervision of management companies or the protection of investors or both.

(6) An authorisation granted by the Bank under these Regulations shall specify the classes of services which may be provided by an authorised management company.

(7) (a) The Bank may authorise in writing such and so many persons to be authorised officers for the purposes of these Regulations and may revoke such authorisations,

(b) The Bank may at any time prior to the grant or refusal of an authorisation request further information from the proposed management company or may instruct an authorised officer to make such inquiries or carry out such investigations as may be necessary for the purpose of evaluating properly an application under these Regulations and such inquiries or investigations shall be carried out in accordance with these Regulations.

(8) The Bank shall consult the competent authorities of the other Member State involved before authorising a management company which is:

(a) a subsidiary of another management company, an investment firm a credit institution or an insurance undertaking authorised in another Member State,

(b) a subsidiary of the parent undertaking of another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State,

(c) controlled by the same natural or legal persons as control another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State.

(9) (a) In the case of a management company, the Bank shall apply these Regulations, having regard to the division of responsibilities between the home and host Member States of the management company concerned, which are set out in the Directive and the relevant sections of these Regulations shall be construed accordingly.

(b) Subject to the provisions of these Regulations, a management company shall comply with such conditions or requirements or both as may be imposed on it by the Bank in the interests of any or all of the following, namely:

(i) the proper and orderly regulation and supervision of a management company,

(ii) the protection of investors or clients or both.

(10) The Bank may impose requirements on a proposed management company or an authorised management company to organise its business or corporate structure or control of any associated undertaking or related undertaking not supervised by the Bank such that the management company when authorised under these Regulations and where appropriate and practicable, the business of any associated undertaking or related undertaking, either collectively or individually, is capable of being supervised to the satisfaction of the Bank under these Regulations.

¹ O.J. No. L375/3 of 31/12/1985

² O.J. No. L100/31 of 19/4/1988

³ O.J. No. L168/7 of 18/7/1995

⁴ O.J. No. L41/35 of 13/2/2002 (the Product Directive)

⁵ O.J. No. L41/20 of 13/2/2002 (the Management Directive)

⁶ O.J. L 141/27 of 11/6/1993

⁷ O.J. L 126/1 of 26/5/2000

⁸ O.J. L 193/1 of 18/7/1983

⁹ O.J. L 348/62 of 17/12/1988

¹⁰ O.J. L 141/1 of 11/6/1993

(1) Investment companies within the meaning of Regulation 41(1) of these Regulations shall also indicate:

— the method and frequency of calculation of the net asset value of units,

— the means, place and frequency of the publication of the value,

— the stock exchange in the country of marketing the price on which determines the price of transactions effected outside stock exchanges in that country.