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09 June 2017
Managerial Functions and the Role of the Designated Person in Ireland
Introduction
The below paper outlines the Managerial Functions that Irish authorised fund management companies must adhere to regarding the management of Irish UCITS and AIFs and an overview of the role of the Designated Person (“DP”).
Regulatory Background
On 19th December 2016, the Central Bank of Ireland (“Central Bank”) published its Feedback Statement on the third consultation of CP86. This process commenced in September 2014 and this feedback statement finalises the Central Bank’s position regarding their expectations of the arrangements to be in place. The consultation consolidates the numerous papers issued by the Central Bank examining Governance, Compliance and Effective Supervision for fund boards. The guidance applies to Irish authorised fund management companies (UCITS Management Companies, AIFMs, Self-Managed UCITS and Internally Managed AIFs).
Key Points Regarding the Guidance
Managerial Functions
The Central Bank have outlined six managerial functions to be carried out by DPs. They are as follows:
- Regulatory Compliance
- Operational Risk Management
- Capital and Financial Management
- Fund Risk Management
- Investment Management
- Distribution
- Three Irish resident directors or at least two Irish resident directors and one DP based in Ireland;
- Half of its directors in the EEA; and
- Half of its managerial functions performed by at least two DPs resident in the EEA
- Two Irish resident directors;
- Half of its directors in the EEA; and
- Half of its managerial functions performed by at least two DPs resident in the EEA
- Experience - DPs should have experience and expertise in the managerial function(s) they are managing and be able to satisfy the Central Bank as to their capability.
- Knowledge: DPs should have sufficient knowledge of funds under management and of the area they are managing, to: (a) interrogate the information being provided to them and constructively challenge their employees or delegates; (b) address queries raised by the board of directors or the Central Bank, in a manner which demonstrates reasonable knowledge of the operations of the fund / management company and any issues affecting them; and (c) keep up-to-date on latest developments in order to perform their role effectively. The DP should have a detailed understanding of Irish regulations and be able to engage with the Central Bank where applicable.
- Authority: DPs should be sufficiently senior in their role such that their challenge of delegates carries weight and authority and they are the appropriate individuals to meet with the Central Bank as part of their supervisory process.
- Time: DPs should have enough time available to them to carry out their roles thoroughly and to a high standard.
- Fitness & Probity: DPs should meet the Central Bank’s Fitness and Probity requirements, and be approved by the Central Bank to carry out the role.