Tuesday February 2 2021

News Source: Fund Regulation

Focus: AIFMD

Type: General

Country: Ireland

The Central Bank of Ireland (CBI) has published 37th edition of its AIFMD Questions and Answers document. The new Q&A addresses questions relating to authorisation of Depositaries of Assets other than Financial Instruments (DAoFI) (ID 1136, ID 1137, ID 1138, ID 1139] and the scope of the defined term “issuing body” as contained in the AIF Rulebook (ID 1140).

Updated Q&A:

ID 1136

Q: I am a DAoFI, may I be appointed to an unregulated AIF?

A: No. A DAoFI may only be appointed to a Qualifying Investor AIF.

ID 1137

Q: May an existing firm established under the Investment Intermediaries Act 1995 be authorised as a DAoFI?

A. Yes, provided always that the firm is not also a fund administrator, management company or general partner.

ID 1138

Q: Where a DAoFI holds financial instruments in custody and seeks to benefit from a guarantee similar to that required by Regulation 22(3)(a)(iii) of the AIFM Regulations 2013 must the DAoFI be related to, or owned by, the guarantor?

A: No, the ability of a DAoFI to obtain a guarantee of this type is not dependent on the ownership structure of the DAoFI (and is thereby unrelated to the DAoFI’s corporate relationship to the guarantor).

ID 1139

Q: What non-financial instrument assets may a DAoFI safe-keep?

A: The Central Bank expects the AIF in respect of which a DAoFI is appointed to materially invest in illiquid assets. The Central Bank expects these assets to be physical assets which do not qualify as financial instruments under Directive 2011/61/EU or could not be physically delivered to the depositary. It considers that ownership of these assets will generally be represented by documents of title. Currently, the Central Bank considers that a DAoFI can safe-keep asset classes such as

1. Art
2. cisl
3. Commodities (physical)
4. Companies (private)
5. Forestry
6. Infrastructure
7. Intellectual property and income therefrom (includes royalties)
8. Land
9, Life Assurance Policies
10. Loans
11. OTC derivatives
12. Plant and equipment
13. Precious stones
14. Real estate
15. Ships
16. Trade claims
17. Wine


ID 1140

Q: The AIF Rulebook provides, subject to some exceptions, that neither a Retail Investor AIF nor a Qualifying Investor AIF (nor its management company, general partner or AIFM) may acquire any shares carrying voting rights which would enable the Retail Investor AIF or the Qualifying Investor AIF to exercise significant influence over the management of an “issuing body”. In this case, does an “issuing body” include an “issuer” as defined in Regulation 5(1) of the European Union (Alternative Investment Fund Managers) Regulations 2013?

A: Yes.

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