Following the publication of the draft UCITS V Directive the Central Bank announced that it would revisit its requirements for compliance by self-managed investment companies (SMICs) with the organisational rules in Level 2 of the UCITS IV Directive.

This re-think was prompted by the fact that the draft UCITS V Directive does not clarify which organisational rules should apply to both SMICs and UCITS management companies. The IFIA has engaged in lengthy consultation with the Central Bank so as to ensure proportionality in the application of the organisational rules to SMICs.

The Central Bank has informed the IFIA by letter dated 10 August 2012 that UCITS management companies and SMICs shall be subject to the same basic regime. However, the organisational rules can be considered in light of the less complex nature of a SMIC. Therefore the steps to be taken to ensure compliance will differ for SMICs. Importantly, SMICs will be exempt from the requirement to have a permanent compliance function and a permanent internal audit function.

The Central Bank is considering the finer details involved in the update of SMIC Business Plans. The Central Bank will arrange a meeting with the IFIA shortly to discuss the specific amendments required to current Business Plans and the arrangements for the filing of duly amended Business Plans.

It is worth noting that the Commission’s recent UCITS consultation document entitled ‘UCITS – Product Rules, Liquidity Management, Depositary, Money Market Funds, Long-term Investments’ raises the possibility that the application of the organisational rules to SMICs could be addressed as part of the UCITS VI Directive.

For further information, please contact one of the key contacts listed above or your usual contact in our Asset Management and Investment Funds Team.