The Central Bank of Ireland (CBI) published its feedback report on 23 July 2026 in respect of its review of delegation in the Irish funds sector.
This review was conducted with a representative sample of fund management companies (FMCs) and involved detailed quantitative and qualitative surveys and onsite inspections to assess delegation arrangements across the sector.
FMCs retain ultimate responsibility for all delegated activities and must maintain sufficient substance, resources and oversight to ensure that delegated functions are performed in accordance with regulatory requirements and in the best interests of investors. Firms are required to demonstrate that they exercise sound management and decision making and exercise sound and effective control over any function they delegate. This has been an area of continuing focus by the CBI in its supervisory work where it has set out its expectations through thematic reviews and communications to industry.
In general, the CBI found that FMCs operating a delegation model have good governance frameworks, controls, oversight processes and data capabilities in place. Areas for improvement were identified by the CBI, including board independence, over-reliance on group level committees, resourcing concerns, lack of contingency planning and limitations with data access. The Central Bank’s findings underscore that while delegation delivers important benefits for investors and supports the optimal functioning of European capital markets, it must be accompanied by robust governance and oversight within the authorised FMC.
The CBI will engage in a review of the governance arrangements for FMCs in 2026, including enhancements to the current framework regarding delegation. This may include simplifying the FMC Guidance (also known as “CP86”), reinforcing the PCF framework for FMCs, enhancing governance requirements and considering how the CBI might proportionately apply the IAF/SEAR framework to the funds sector.
Delegation models
While models vary by particular FMC, the CBI observed that the main operating models observed were:
- FMCs delegating portfolio management activities to Group entities, while retaining risk management activities;
- a hybrid model, where the FMC utilises both group and third-party delegates to perform portfolio management, while retaining risk management activities;
- a third-party model, where the FMC delegates portfolio management activities and certain risk management tasks to multiple third-party delegates.
FMC action required: Gap analysis and plan
FMCs must conduct a gap-analysis of the CBI delegation feedback report and, by end of 2026, put in place a time-bound plan to address any issues identified.
CBI expectations and findings
The report sets out under 5 core themes of Governance, Portfolio Management, Risk Management, Delegate Oversight, and Data Capabilities what the CBI expects to see in a delegation model from a supervisory perspective. It then states observations during its review of FMCs. This is summarized below:
| Area | Action | Timing |
|---|---|---|
| Adviser team | Appoint experienced advisers. Engage corporate finance advisers early to benefit from their market insight and buyer networks, giving your business the strongest possible valuation and the widest field of credible bidders. Experienced legal and tax advisers will play a key role in pre-deal planning and structuring, and will provide input into the term sheet to maximise value and deal proceeds. In addition, engaging legal and tax advisers at the start means issues can be identified and fixed before a buyer's due diligence uncovers them, allowing time to remedy same, protecting your negotiating position and helping you secure the best price and terms. | 12 months before, or as soon as you start considering a sale |
| Strategy | Decide the objective (full sale, partial sale, family succession, management buyout). | 12 months before, or as soon as you start considering a sale |
| Governance | Bring statutory registers, minutes, CRO and beneficial ownership filings up to date. Review the constitution and shareholders' agreement for consent and veto rights, drag-and-tag rights, pre-emption rights, and transfer restrictions. | Six to nine months |
| Shareholding structure | Consider minority holders, share classes and option holders. Consider inserting a holding company and separating property or non-core assets. | Six to nine months |
| Financial records | Ensure that audited accounts are up to date. Prepare management accounts and projections. Identify one-off and owner-related costs to normalise EBITDA. Consider a vendor financial due diligence report. | Six to nine months |
| Key contracts | Identify change-of-control and assignment clauses in customer, supplier, lease, finance and licence agreements. Renew or extend key contracts on favourable terms where possible. | Six months |
| Intellectual property | Confirm the company owns its IP (including assignments from founders, employees and contractors). Register trademarks. Audit open-source use and AI use. | Three to six months |
| Employment | Put written contracts in place for all staff. Review key-person dependency, restrictive covenants, incentive arrangements, IP, pensions and any contractor misclassification risk. | Three to six months |
| Data protection and cyber | Update GDPR records, privacy notices and data processing agreements. Test cyber-resilience and check DORA and AI Act exposure where relevant. | Three to six months |
| Regulatory consents | Identify licences that need approval on a change of control (Central Bank, ComReg, CRU, HPRA). Assess whether likely buyers would trigger investment screening or CCPC notification. | Three months |
| Disputes and compliance | Settle or provide for litigation, resolve tax enquiries and regulatory investigations. Refresh anti-bribery, sanctions and AML policies. | Three months |
| Data room | Build a well-organised and populated virtual data room. | Two to three months |
Please contact any of our Asset Management & Investment Funds Partners or your usual contact at William Fry for support to undertake a gap-analysis, put in place a compliance plan, prepare board communication and any necessary approvals by year-end.
Contributed by: Ann Shiels
