Latest Lincoln Accountancy market insights April 2013

Lincoln Search & Selection has completed in-depth analysis and research of the accountancy market for year to date 2013 and results highlight a number of heightened demands for niche and specific skillsets in the Accountancy market. Key requirements include:

• strong systems skills
• tax structuring ability
• an advisory focus to non-finance divisions and
• Previous exposure to MNC or plc firms (relevant only for those interested in pursuing a career in such sectors).

Whilst sector specific experience is still of interest to companies, we are seeing really strong demand for professional accountants with previous experience implementing and testing new systems, particularly ERP systems as firms further enhance and develop their accounting systems. Candidates are now expected to demonstrate strong IT and excel skills.

Additional nuances surrounding structuring of new entities in a tax effective manner is coming to the fore also as a number of companies are organically expanding their international operations. Such skills are very niche and really only developed through practical, hands-on accounting roles in the market.

Business partnering has become a strong focal point over the past couple of years with an ever increasing demand for qualified accountants to provide financial support to various divisions of an organisation in addition to completing traditional accounting responsibilities. Companies tend to analyse a candidate’s ability for this by assessing their communication skills and commercial acumen throughout an interview process. Strong analytical skills, coupled with excellent excel skills have been highlighted as two additional prerequisite requirements for effective business partnering.

Additionally, multinationals and plc firms have maintained their preference for sourcing candidates with previous experience in this market. For those who don’t have this previous in-house experience, typical profiles of such candidates successfully leveraging into this sector include Practice-trained Accountants who built their knowledge auditing such MNC / plc clients. They have highlighted their strong technical accounting experience (exposure to US GAAP / IFRS / SOx compliance etc) and ability to work in a deadline driven, results focused environment.  

It is a given that companies want to hire top talent and retain such talent within their organisation. A company’s culture varies from organisation to organisation but our research demonstrates common consensus in terms of specific “soft skills” in strong demand. Such traits include initiative, ability to work to your own autonomy, ambition and a desire to become an integral part of a business. Such traits are often hampered in an interview process as nerves take over but it is important to keep in mind that companies have a really strong focus on fit when sourcing suitable candidates for their organisations.

Lincoln Search & Selection 2012 Review and Forecasts for 2013

Lincoln Search & Selection 2012 Review and Forecasts for 2013

We found market sentiment to be quite cautious throughout 2012. Despite this there was, and continues to be strong demand for both qualified and part qualified accountants. The strongest demand was for recently qualified accountant with up to 3 – 4 years’ PQE. This translates to salary level of €40 – 80,000 per annum. Over 70% of our clients’ hiring requirements in 2012 came from Technology, Ecommerce, Manufacturing and Financial Services sectors. We recorded minimal hiring activity across the SME sector with most hiring coming from multinationals, plc and blue chip firms. That said, approximately 10% of our client’s hiring requirements came from Irish indigenous firms seeking Finance Directors, Financial Analysts and Project Accountants.

Key skillsets in strong demand within the Accountancy sector included management information reporting, internal audit, strong system skills and international financial reporting standards. We record constant demand for recently qualified accountants combining “Big 4” training with 1 – 3 years’ industry experience. This is a profile that is difficult to source as there has been a continuous trend over the past +3 years for newly qualified accountants to move or travel overseas upon completion of their training contracts.

We believe this demand will continue in 2013 but also anticipate stronger demand for more senior hires at Finance Manager and Financial Controller level c€80k level. 2013 has already gotten off to a buoyant start which is encouraging. There are early indications that we may have turned a corner with expectations that domestic activity will return to growth in 2013 and from our perspective, we are witnessing strong demand from clients to recruit top tier talent. According to our research, business outlook has increased with a significant number of our clients looking for financial professionals to assist them achieve process efficiencies, identify new revenue streams, cost savings and stronger control environment.

Summary of Lincoln Insights Q2 Breakfast Briefing with Conor O’Shea

What can Business learn from Sports Management? Insights from Conor O’Shea, Lincoln Breakfast Briefing, June 2012

Conor O’Shea attracts a crowd – even for a breakfast briefing at 7.30 in the morning. The ex-Leinster and London-Irish full back, now Director of Rugby at Harlequins RFC, was our keynote speaker at the booked-out Lincoln Insights Quarterly Breakfast Briefing in Chartered Accountants’ House last Friday, discussing what Businesses can learn from Sports Management – and vice versa.

O’Shea’s career wasn’t designed to be a professional rugby player – according to his parents; he was to get a real job. At 18, he was put in his parent’s front room with a solicitor and an accountant, and he was asked to speak to them to decide which one he’d like to become (coming from a family of high-achievers, his brothers are both doctors and his dad part of the Kerry Football team which won the All-Ireland championship in 1953, ‘55 and ‘59). In a way, O’Shea decided he’d be both, and went on to complete a B.COMM in UCD and Diploma in Legal Studies in Smurfit. In 1996, O’Shea graduated from the United States Sports Academy Alabama with a Masters in Sports Science & Sports Management – one of the most respected institutions for sports science in the world.

During this time, rugby was only in its infancy as a professional sport, but he began his representative career in Rugby as a fullback for Ireland (he was capped 35 times). The importance and relevance of his academics background came into play when, aged 29, an ankle injury severed his promising professional playing career during a match against Gloucester RFC as a London-Irish full-back.

Although he had little to no experience as a manager, London-Irish offered him the Director of Rugby position, “probably because I had my B.COMM” he says, and he was given a crash course in managing a team – not just the players, but the peripheral support teams that surround the players who are vital to the success of the team. O’Shea went on to become Managing Director of London Irish, before moving on to take up a “pensionable, comfortable government job with the English Institute of Sport” as the National Director. “Many people were astounded that I was offered the job – and more so when I left – because it’s a million miles away from Rugby“, said O’Shea. Encompassing all sports from tennis to horse-riding, football to all Olympic sports, the Institute was a role like no other. But, said O’Shea, it was an Institute that needed a culture change. It was a government institution heading towards the London 2012 Olympics and there was great development happening within the sports science fields, influencing how players trained and played. O’Shea set up the building blocks which would shift the culture of the Institute, before being headhunted by Harlequins to become their Director of Rugby.

So what can Sports Management teach businesses? 

Much the same as business can influence sport, once Conor joined Harlequins as Director of Rugby he introduced performance reviews, KPI’s, visions & goals. He had to turn around a team that was nearing bottom of the league, and had just suffered the infamous “Bloodgate” scandal over which his predecessor Dean Richards was handed a three year ban.

Businesses often focus on end-results, and can distract themselves by seeking out those who make mistakes. O’Shea took a different tack with his team, whose egos were already on egg-shells. They needed to gel better, they needed to define who they were, what their style would be, how they would become a better team and achieve their dreams of reaching the top of the League. “Every company has a history, and each club, particularly Harlequins as one of England’s oldest Rugby Clubs, has a history too. We had a bad season and needed to put it down to experience and move away.”

The team spent the summer devising a plan of action, and decided that their guiding principles would be Tempo, Respect, Excellence and Unpredictable – summarised in the acronym TRUE.

This motto kept the whole team focussed on their end goals – deciding upon realistic goals and KPI’s: it wasn’t to become the top team in the league overnight, winning accolades left, right and centre. It was to become the best at what they’re good at. Best tackles. Lowest in tries conceded. Highest in plays completed. These elements were within their control. They focussed on the “controllable factors” and ignored the “uncontrollable factors” (for example, referees!) The elements of their game – their highly strategic and thought-out tackles, formulaic in approach – are what, when they succeed at mastering them, will win them more games. Setting achievable goals, and making each member of the team accountable for their goals, turned the team around.

Getting the team to really gel was a challenge, and one tactic that O’Shea reluctantly implemented was fining the players to achieve a more unified team. If a player left a water bottle on the pitch, the team got fined. This taught the players that everyone needs to pull their weight – if the dressing room wasn’t cleared by all members of the team after a training session, the entire team took a financial hit. Eventually it managed to irritate the team to the extent where they turned on the lacking team-members to bring them into line and take accountability for their own effort and role in the team.

Conor O’Shea’s Management Style

Assigning accountability was the key to the team’s resurgence as a club to be reckoned with. “I don’t care about mistakes,” says O’Shea. “I care about effort. If they give everything they’ve got, then I can’t fault them for that.” In one match where the effort level just wasn’t there, O’Shea felt his temper reach boiling point, and his one and only “blow-up” at the team ensued. He was livid in the dressing room at half time and it left a sour taste in the mouths of the players. The following Monday, he pulled the team together to get them to talk to him. One player spoke up – his blow-up decimated their morale for the 2^nd half of the match. “Thank God they said it to me,” he said. O’Shea had, however, all of the reasons behind his frustrations at his arsenal. He produced film clips displaying this lack of effort – real life evidence of where the team really went wrong. Seeing this fact-based evidence highlighted the rationale behind this “blow-up” and the team conceded that their performance on the pitch was far from full effort. They’d let themselves down as a team and paid for it with a heavy defeat. O’Shea assured them that should his temper ever spill over again, it would be for a real reason.

How do they continue to learn and grow?

Rugby is just one sport, but the team at Harlequins, from players to coaches and physiotherapists, spread themselves far and wide outside the rugby season to learn from great coaches in other sports. O’Shea himself is heavily influenced by tennis and the strategies the players enact to win their game – similar in style to how Harlequins are now playing, in a formulaic, structured and tight fashion. Other sports coaches, from football to Olympic Games, are set to receive visits from the Harlequins coaches this summer, as they seek to broaden their knowledge base and bring back a wealth of experience and new techniques that will further enhance the team’s performance.

How do Harlequins retain their talent, without the high salaries of competing clubs?

O’Shea is conscious that retaining top players is a tough job when you have scouts on the horizon. This is similarly experienced by many businesses whose budgets can’t accommodate competing salaries to keep their top talent. What do Harlequins’ do? They actively encourage their players to pursue other interests and further their education. From O’Shea’s own experience at having to retire prematurely aged 29, one injury can end your career. Each of the ‘Quins players are encouraged to pursue their interests, through professional internships, academic qualifications, college courses and more, and are supported with time off and opportunities through the Harlequins’ network to pursue such interests. Having that freedom and support has been a great motivation and reward for the players, which they wouldn’t get at another club.

O’Shea knows that it’s a tough challenge being a manager of a rugby club (“You can be fired within 6 games”), but he’s with the team for the long haul. He believes in what the team has challenged themselves to achieve, and at the moment the team is riding high after their Aviva Premiership victory over Leicester Tigers two weeks ago. True to form, the coaching team has split up to cover all four corners of the Earth to develop their skills over the summer. O’Shea runs his club like a business, and business can take great leaves from his management play book.

2012 Irish Salary Survey (Accountancy & Finance)

At Lincoln Search & Selection, we have compiled our comprehensive Salary Survey for Ireland 2012. The Survey compiles average salaries for the Accountancy & Finance industry, where Lincoln Search & Selection are experts in Talent Acquisition and recruitment.

To view this Salary Survey, click here.

So, are you being paid enough in your role? If you have any queries about our Salary Survey, please feel free to contact our Recruitment Team at Lincoln Search & Selection for more information, or to discuss your next career move and ensure you’re receiving the salary you deserve.

Email us at info@lincoln.ie or phone us in Dublin on 01 661 0444.

4 Things You Didn’t Know About Irish Accountants

1. What Companies and Which Sectors Employ the most Irish-Trained Accountants?

The top 5 sectors for employing Irish-trained qualified Accountants are:

• Audit firms (PWC, KPMG, Deloitte, Ernst & Young, Grant Thornton and BDO on top) employ 49% of Irish Accountants in the top 5 sectors.
• Financial Services firms (Bank of Ireland, AIB, Ulster Bank, State Street, BNY Mellon and Northern Trust) employ 27% of Irish Accountants in the top 5 sectors.
• Technology firms (like Microsoft, Google, Dell and EMC) employ a huge 13% of Irish Accountants in the top 5 sectors.
• Pharmaceutical firms (Pfizer is the top employer) retains 6% of Irish accountants in the top 5 sectors.
• Consulting firms (Accenture) retains 5% of Irish accountants in the top 5 sectors.

As well as being employed full time by large firms, over 10% of Irish-trained Qualified Accountants have worked in temporary, contract or interim roles.

2. What Universities produce the most irish-trained qualified accountants?

Irish-qualified Accountants are produced amongst the top Universities and 3rd level institutions in the country, including University College Dublin and Trinity College Dublin.

The level of education received through University plays a major role in teaching would-be accountants the principles of business administration and the necessity of prudent accounting. That’s why Irish-trained accountants are highly valued talent, and why we at Lincoln Search & Selection actively source Irish-trained Accountants for our clients.

3. Top employers of Irish-trained Accountants Overseas?

4. How many Irish-trained accountants have emigrated?

Over a quarter of Irish trained qualified accountants have emigrated overseas, to the UK (9% of the total pool), the US (6%), Australia (3%) and Canada (1%).

It’s with this in mind that we focus on retaining top Irish-trained talent in Finance in Ireland, where nearly 72% of Irish-trained qualified accountants still remain working today.

Previous Articles

Ireland: UCITS Evolution: Plain Vanilla to Alternatives

Derbhil O’Riordan of Dillon Eustace looks at the history of the Ucits regime, and its expanding reach as an EU investment product.

Undertakings for Collective Investment in Transferable Securities, commonly referred to as Ucits, are collective investment schemes, established and authorised under a harmonised European Union (EU) legal framework; under which a Ucits fund established and authorised in one EU member state can be sold cross-border into other EU member states without a requirement for additional authorisation.

Originally introduced over twenty years ago, Ucits have become the gold standard EU investment fund product, recognised not only by the European financial services community but also internationally, with many jurisdictions from Asia to the Americas accepting Ucits as suitable for retail sale into their domestic markets. While they are sold across the full spectrum of investor types, Ucits have been designed principally for the retail market as open-ended diversified, liquid products with their parameters, permitted asset classes and investment and borrowing restrictions enshrined in EU law.

Evolution

The original 1985 Ucits Directive set down the legal forms which Ucits could take, their permitted investment and borrowing rules, liquidity requirements, prospectus disclosure rules, rules relating to reporting and to the role and duties of Ucits custodians/ depositaries and their management companies.

Importantly, however, Ucits is not a product which has stood still, rather it continues to evolve, with a significant broadening of permitted asset classes and more robust governance requirements being introduced in 2002 and clarified in 2007 (referred to generally as ‘Ucits III’). More recently, a series of additional changes have been implemented under the Ucits IV Directive in order to further simplify the European passport process, introduce master/feeder type structures, create a framework for cross-border fund mergers, replace the Simplified Prospectus and introduce further measures in relation to the Management Company Passport.

Given the increased investment opportunities granted under Ucits III and the subsequent clarification of the terms ‘transferable securities’ and ‘money market instruments’, Ucits provide for a very broad spectrum of fund types and exposures, from relatively plain vanilla equity and bond products through to Ucits taking exposures to hedge fund and commodities indices, with fund of funds, money market and cash funds and index replicators also provided for. We have focused in this paper on Ucits investment in financial derivative instruments (FDI), index-tracking Ucits, and Ucits investing in FDI on financial indices to demonstrate the broad spectrum of fund types that fit within the Ucits structure.

Ucits investment in FDI

Prior to the introduction of Ucits III, Ucits could only employ FDI for efficient portfolio management purposes. Now, however, Ucits may invest in FDI for investment purposes subject to a variety of conditions relating to the nature of the exposures taken, the leverage generated through such positions, the process employed by the Ucits to manage the risks arising from derivatives investment as well as rules relating to OTC counterparty exposure and to the valuation of FDI.

Ucits investment in FDI must comply with the following conditions:

• the underlying asset relates to Ucits eligible assets, financial instruments having one or several characteristics of these assets, financial indices, interest rates, FX rates or currencies;
• the counterparties to OTC FDI are institutions subject to prudential supervision and belong to categories approved by the regulator (in Ireland, the Central Bank of Ireland, with a minimum (or an implied) credit rating (in the case of counterparties which are not credit institutions)) of A2 or equivalent, or guaranteed by an entity with a rating of A2;
• OTC FDI are subject to reliable and verifiable daily valuation and must be capable of being sold, liquidated or closed by an offsetting transaction at any time at fair value at the initiative of the Ucits;
• counterparty exposure is limited to 5% of net asset value or 10% for certain credit institutions; and
• netting may be applied before counterparty exposure is calculated. Also, risk will be reduced where a counterparty provides acceptable collateral to the Ucits.

FDI positions may create long or synthetically short exposure to the underlying asset and may result in leverage to the Ucits portfolio. The rules for measuring global exposure and leverage differ depending on whether a Ucits is characterised as ‘sophisticated’ or ‘non-sophisticated’. The Central Bank has not provided a formal definition of what constitutes ‘sophisticated’ or ‘non-sophisticated’, but the use of OTC derivatives might indicate the Ucits is more sophisticated and the complexity of the transaction should also be considered.

The Central Bank requires that the global exposure and leverage of a non-sophisticated Ucits should be measured using the commitment approach. A Ucits fund’s global exposure may not exceed its net asset value, thus a leverage limit of 100% applies. A sophisticated Ucits is required to use an advanced risk measurement methodology to measure global exposure and the Central Bank recommends the use of the Value-at-Risk (VaR) method, meeting certain quantitative and qualitative criteria and calculated using an acceptable proprietary or commercially available model.

Index-tracking Ucits

One of the cornerstones of Ucits since the introduction of the original Directive in 1985, has been the imposition of strict risk spreading requirements. This has been enshrined in what is commonly known as the 5/10/40 rule which is that a Ucits may invest no more than 10% of its net assets in transferable securities or money market instruments issued by the same body, provided that the total value of transferable securities or money market instruments held in issuing bodies in each of which it can invest more than 5% is less than 40%.

This fundamental Ucits principle created problems for Ucits wishing to track an index where the weighting of a constituent element of the index exceeded the 5% limit or where the relationship between two or more constituent elements of the index meant they were considered to constitute a single issuer resulting in an aggregation of the exposure. However, since the introduction of Ucits III, Ucits, whose policy is to replicate an index, are permitted to invest up to 20% of net assets in shares and/ or debt securities issued by the same body, with the 20% limit being raised up to 35% in the case of a single issuer where justified by exceptional market conditions. This flexibility is permitted where the relevant index is recognised by the regulator on the basis that it is sufficiently diversified, represents an adequate benchmark for the market to which it refers and is published in an appropriate manner.

Ucits investing in derivatives on financial indices

FDI are increasingly being used to access financial indices comprising assets that are not traditional target investments of Ucits, including hedge funds, and there are specific rules relating to what is acceptable as a permitted financial index underlying an FDI. The requirements are that the index must: be sufficiently diversified; represent an adequate benchmark for the market to which it refers; be published in an appropriate manner; and be managed independently from the management of the Ucits. It is necessary to submit the relevant index to the Central Bank for prior approval if (a) the index is comprised of ineligible assets or (b) the index is comprised of eligible assets but it would not be possible for the Ucits to invest directly in such underlying assets without breaching the Ucits risk spreading limits (assuming the Ucits does not wish to apply a look-through approach).

Hedge fund indices may qualify as financial indices to which exposure can be taken through FDI provided that they meet the index criteria indicated above and where:

• the index methodology has a set of predetermined rules and objective criteria for the selection and rebalancing of index components;
• the index provider does not accept payments from potential index components for the purpose of being included in the index; and
• back-filling is not permitted.

Ucits continue to evolve to meet the requirements of markets, both commercial and practical, and while at times the pace of change may be too fast for some and too slow for others, to date, Ucits has generally achieved the right balance. The changes introduced by Ucits IV demonstrate the continued endeavours of European regulators to further evolve the Ucits brand, and maintain its position as the gold standard EU investment fund product. As new concerns arise surrounding global financial markets, and ‘shadow banking’, Ucits, a fully regulated structure with an independent depository and custodian function, provides a proven track record and an answer to the question of regulation in the alternative space.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Article by Derbhil O’Riordan 

Source: Mondaq.com

Ireland: Funds Quarterly Legal And Regulatory Update

Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

The Third Anti-Money Laundering Directive was transposed into Irish law on 5 May, 2010 by the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 (the “CJA 2010″) and has been effective as of 15 July, 2010.

The period of consultation in respect of the final draft of the industry Money Laundering Guidance Notes has now closed. Once the core guidance notes have been published, it is expected that the process of finalising the sectoral guidance notes will commence.

On the 25 March, 2011 Council Regulation (EU) No 296/2011 amending Regulation EU No 204/2011 came into effect. This concerns restrictive measures to be applied in view of the situation in Libya. Designated persons are required to have appropriate procedures in place to meet with the requirements of this Regulation.

If you would like further information on anti-money laundering requirements or any changes arising out of the CJA 2010, Dillon Eustace regularly advises on all aspects thereof and provides training sessions on this topic. Training can be held either at Dillon Eustace’s office at 33 Sir John Rogerson’s Quay, Dublin 2 or in house training can be provided at a venue of your choosing.

UCITS, Non-UCITS & Hedge Funds

EC’s Draft Directive on Alternative Investment Fund Managers

The consultation period for the European Securities and Markets Authority’s (“ESMA”) call for evidence on the Alternative Investment Fund Managers Directive Level 2 implementing measures ended in January. ESMA is to provide further details in due course in relation to any public consultation it will carry out in light of responses to the call for evidence.

The European Commission wrote to ESMA on the 21 February, extending the deadline for ESMA’s Level 2 technical advice for a further month (to 16November, 2011).

For detailed information on the Directive including how it may impact your business, please refer to your usual contact in the Asset Management and Investment Funds Unit of Dillon Eustace.

ISE Approves Additional Requirements for Listing Actively Managed ETFs

Further to an application by Dillon Eustace to list the first actively managed ETF on the Irish Stock Exchange (the “ISE”), the ISE has issued a policy note addressing a number of rule changes facilitating such listings going forward. A review of these changes is available on our website:http://www.dilloneustace.ie/download/1/Active%20ETF%20ISE%20Policy%20-%20Article%20short%20FD%20Feb2011.pdf

European Systemic Risk Board Holds First Meeting

The European Systemic Risk Board (“ESRB”) held its first meeting on 20 January, 2011.

The ESRB is aimed at contributing to the prevention or reduction of systemic risks to financial stability in the EU that arise from developments within the financial system.

The European Central Bank has commented that the ESRB will also contribute to the smooth functioning of the internal market and is aimed to ensure a sustainable contribution of the financial sector to economic growth.

However, the European Commission has stated that the ESRB will not have any binding power to impose measures on Member States or national authorities. It has been conceived as a “reputational” body with a high level composition that should influence the actions of policy makers and supervisors by means of its moral authority.

The seat of the ESRB will be in Frankfurt, Germany. The Chair of the ESRB is the President of the European Central Bank, Jean-Claude Trichet, while Mervyn King, Governor of the Bank of England, was elected as first Vice-Chair of the ESRB by the members of the General Council of the European Central Bank.

ESMA’s Definition of European Money Market Funds

ESMA has published its guidelines on a common definition of “European money market funds” (the “Guidelines”).

The Guidelines aim to improve investor protection by setting out criteria to be applied by any fund that wishes to market itself as a money market fund. The criteria reflect the fact that investors in money market funds expect the capital value of their investment to be maintained while retaining the ability to withdraw their capital on a daily basis. A common definition will also help provide a more detailed understanding of the distinction between funds which operate in a very restricted fashion and those which follow a more ‘enhanced’ approach.

The Guidelines set out two categories of money market fund: Short-Term Money Market Funds and Money Market Funds. This approach recognises the distinction between shortterm money market funds, which operate a very short weighted average maturity and weighted average life; and money market funds which operate with a longer weighted average maturity and weighted average life. For both categories of fund, ESMA expects that there should be specific disclosure to explain clearly the implications of investing in the type of money market fund involved. For Money Market Funds, for example, this means taking account of the longer weighted average maturity and weighted average life of such funds. For both types of money market fund, this should reflect any investment in new asset classes, financial instruments or investment strategies with unusual risk and reward profiles.

The Guidelines will enter into force in line with the transposition deadline for the revised UCITS Directive (1 July, 2011).

However ESMA has provided that money market funds existing prior to 1 July 2011 will have until 31 December 2011 to comply with certain provisions of the Guidelines. Please contact your usual contact at Dillon Eustace for further information.

Re-domiciliation of Collective Investment Schemes to Ireland

The Companies (Miscellaneous Provisions) Act 2009 amended the Companies Act 1990 and the European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations 2003, to provide an efficient legislative mechanism for corporate investment funds to re-domicile into Ireland. The Companies Act 1990 (Relevant Jurisdictions under Section 256F) Regulations 2010, identified the following as relevant jurisdictions from which corporate CIS could re-domicile into Ireland: Bermuda, BVI, Cayman Islands, Guernsey, Isle of Man and Jersey.

Since the introduction of this legislation a number of funds have re-domiciled and more are in the process of re-domiciling. The first such re-domiciliation in respect of a Guernsey investment fund company to Ireland took place in this quarter. While the legislation provided an efficient legal mechanism for funds to re-domicile to Ireland, the Central Bank has now provided further guidance regarding the regulatory process and procedure for re-domiciling funds into Ireland e.g. the documentation that must be submitted to the Central Bank, confirmations required, etc.

In addition, although there are no legislative provisions which specifically address the redomiciliation of unit trusts to Ireland, the Central Bank has determined that a re-domiciliation process similar to that in place for corporate CIS should apply in respect of unit trusts.

Please contact a member of the Regulatory and Compliance Department in Dillon Eustace should you need further information on the regulatory process and procedure for redomiciling investment funds into Ireland.

Consultation on Revised UCITS Notices, NU Notices and Guidance Notes

In February 2011, the Central Bank issued a consultation paper on amendments to UCITS Notices, NU Notices and Guidance Notes to reflect the changes necessary under the UCITS IV Directive and other changes. Submissions by interested parties were to be made no later than 15 March 2011.

Corporate Governance Code for Irish Domiciled CIS

In late September, 2010, the IFIA published the voluntary Corporate Governance Code for Irish Domiciled Collective Investment Schemes (the “SI 450 Code”).

The SI 450 Code may be adopted by Irish domiciled collective investment schemes on a voluntary basis but the SI 450 Code does reflect existing practices imposed under the Companies Acts 1963 to 2009 and the Central Bank’s UCITS & Non-UCITS Notices along with Guidance Notes.

Adoption of the SI 450 Code should enable Irish domiciled collective investment schemes with shares admitted to trading on a regulated market to refer to the SI 450 Code in a specific section in the Directors’ Report of that collective investment scheme’s Annual Report and in doing so comply with the provisions of the S.I. No. 450 of 2009 (as amended). Back in January 2010, the IFIA had published template corporate governance statement disclosures which might be included in an investment funds financial statement to ensure compliance with the provisions of S.I. No. 450 of 2009 (as amended). As the SI 450 Code is now available, the IFIA has revised the template corporate governance statement disclosures.

The SI 450 Code covers general requirements applicable to a board of directors including its composition, meetings, its role and committees. It further deals with the audit, compliance and risk management functions.

Separate to the SI 450 Code, the IFIA at the request of the Central Bank is working on a revised corporate governance code for the funds industry. It is expect that the revised code will introduce a number of new standards not currently dealt with by existing corporate governance practices e.g. time commitment expected from each director, number of nonfund directorships, number of independent directors and non-executive directors, etc.

Please refer to your usual contact in Dillon Eustace for further details on the SI 450 Code or if you would like a copy thereof.

Consultation on legislative changes to the UCITS depository function and to UCITS managers’ remuneration

The IFIA has filed its response to the European Commission’s legislative proposal to review the current framework applicable to UCITS depositories and to introduce new provisions on UCITS’ managers’ remuneration with a view to improving the level of UCITS investor protection. Of particular note is the response concerning increased depositary liability. The European Commission is expected to respond to submissions during the second quarter of 2011.

UCITS IV

The European Council voted on 22 June, 2009 for the adoption of the UCITS IV Directive (the “Directive”), as already adopted by the European Parliament in plenary session on 13 January, 2009. The Directive was adopted in accordance with the co-decision procedure, thus marking the end of the first step for the implementation of a European text.

The UCITS IV proposal containing amendments to the UCITS Directive 85/611/EC was first proposed by the EC on 16 July, 2008. This proposal did not take into account the management company passport which, after having been debated at ESMA level, was introduced in December 2008.

According to the Lamfalussy process, there are three levels before the transposition of the Directive shall be considered as fully completed among Member States. Similar to MiFID, the Directive provides that the details of certain provisions should be covered by Level 2 implementing measures to be adopted by the EC with a view to harmonising the implementation of the text. On 13 February, 2009 the EC submitted to ESMA a provisional request for technical advices on the new UCITS Directive implementing measures.

The consultation paper that ESMA published on 8 July, 2009 provided technical advice on the level 2 measures related to the UCITS management company passport. ESMA’s draft advice covered the organisational requirements that companies managing UCITS need to fulfil, and inter alia conflicts of interest those companies must avoid. The advice also included details on the companies’ rules of conduct, depositaries and risk management, as well as on supervisory cooperation. The majority of the suggestions made in the ESMA advices were carried through into the Commission Directive 2010/43/EU of 1 July 2010 implementing the UCITS IV Directive as regards organizational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company.

The final two steps of the Lamfalussy process will take place during and after the period of transposition of the Directive. Under Level 3, ESMA will be in charge of issuing interpretation recommendations to national authorities and under Level 4 the EC will control and advise Member States as to a proper interpretation and application of the Directive. Member States have until 1 July, 2011 to implement the text into national legislation. The Department of Finance has prepared the draft of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, which is expected to be brought into effect around Easter 2011.

The following is a summary of the key implications of the UCITS IV Directive:

Management Company Passport

The concept of a management company passport (“MCP”) was first introduced in Directive 2001/107/EC (the “Man Co Directive”). The Man Co Directive introduced an authorisation framework for Man Cos which is similar to that applied to investment firms under MiFID imposing requirements relating to minimum capital, internal management control mechanisms, probity and experience of the directors and management and conduct of business rules.

These measures were intended to harmonise the authorisation process of Man Cos in all EU Member States which in theory would enable the MCP provided for in the Man Co Directive (as explained below) to operate effectively whereby a Man Co established in one Member State could be appointed as Man Co of UCITS schemes domiciled in other Member States.

However, despite the new authorisation process and the provision of a MCP contained in the Man Co Directive, the MCP has not worked under the existing legal framework. This failure was attributed to the fact that the definition of “UCITS Home Member State” in the Man Co Directive meant that it was not possible for a Man Co to passport its services in the context of UCITS funds established as unit trusts.

The Directive enables European funds created under the UCITS regime to be managed by a management company authorised and supervised in a Member State other than the home Member State of the fund.

Fund Mergers

The Directive establishes a unified regime for both cross-border and domestic mergers of funds. Pursuant to the Directive, all funds are entitled to merge regardless of their structure (corporate, unit trust, or contractual type of funds).

Master Feeder Structure

The Directive sets out the first European regulation concerning the setting-up of master feeder funds. A feeder fund is defined in the Directive as a UCITS or a sub-fund thereof which has been approved to invest at least 85% of its assets in units of another fund. It can also set aside 15% of its assets to invest in derivative instruments or liquid assets etc. As far as the master fund is concerned, it cannot itself be a feeder fund, nor hold units of a feeder fund.

Key Investor Information

The key investor information (“KII”) shall replace the simplified prospectus which failed to provide investors with all basic information to enable them to make an informed investment choice. It is intended to be a short pre-contractual document written in a brief manner and in non-technical language which shall provide easily understandable, fair, clear and not misleading information on the fund to contemplated or actual investors.

The European Commission has now published a Regulation 583/2010 implementing the UCITS IV Directive as regards the key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of the website (the “Commission Regulation”).

On 1 July, ESMA issued Level 3 Guidelines on the methodology for the calculation of the synthetic risk and reward indicator in the KII document. Such an indicator should be based on the volatility of the fund using weekly or monthly returns concerning the previous five years.

Simplified Notification Procedure

A fund wishing to market its units in a Member State different from its country of incorporation will notify its supervisory authority of such project, through a notification procedure which will then be transferred by its home regulator to the competent supervisory authorities of the contemplated host country (new “regulator-to-regulator” procedure).

Enhanced Cooperation between Supervisory Authorities

The proposed amendments to the Directive will result in increased cross-border operations necessitating a full and timely cooperation between supervisory authorities. The Directive encourages the exchange of information, harmonises the powers of the supervisory authorities and allows for the possibility of immediate verifications and investigations, consultation and mutual help mechanisms.

The enhanced cooperation between supervisory authorities is expected to result in a more simplified Regulator-to-Regulator notification. This will permit a UCITS to begin marketing its units in another Member State (the “Host Member State”) no later than 10 working days after the date of receipt of the required standard notification letter accompanied by complete documentation required in the application. It also greatly simplifies the documentation required, and significantly the only document which requires translation into the language of the Host Member State is the KII.

The notification procedures in the UCITS IV Directive have been broadly welcomed by the European funds industry as it is believed that they will improve administrative efficiency and facilitate more efficient marketing and reduce translation costs.

UCITS IV introduces significant changes for UCITS management companies which will need to be addressed well in advance of the 1 July 2011 start date. In particular, through the UCITS IV Implementing Directive, new MiFID-like organisational and internal control requirements, conflicts of interest requirements and risk management requirements will be applied to UCITS management companies. In addition, UCITS management companies will need to comply with new rules of conduct. In order to facilitate a smooth transition, the Central Bank requires that each existing UCITS management company submit a revised business plan for review by it on or before 29 April, 2011.

For detailed information on UCITS IV, please refer to your usual contact in the Asset Management and Investment Funds Unit of Dillon Eustace and the following publications which can be read on our website:-

• UCITS IV
• Management Company
• UCITS IV –

Key Investor Information Document – UCITS IV – Cross-Border Notifications

EU Commission publishes feedback on UCITS V consultation

On 17 February, 2011 the EU Commission published a response to the feedback it had received in respect of its consultation on the current framework applicable to UCITS depositaries and the introduction of new provisions on remuneration for UCITS managers. The key policy priority highlighted in the response is the clarification of UCITS depositary duties and liability regimes. In relation to the UCITS managers’ remuneration policy, the majority of respondents stressed that remuneration rules should be adjusted to the UCITS model. An impact assessment study will be published later this year alongside the EU Commission’s proposal for amendments to the UCITS Directive.

The European Commission has delayed publication of the UCITS V legislative proposal to the latter part of 2011 in order to allow time to include a new section on sanctions in the UCITS Directive. This is part of an initiative, the aim of which is to achieve greater convergence and reinforcement of the national sanctioning regimes in the financial sector. It is anticipated that the Commission will launch a public consultation on UCITS sanctioning regimes soon.

Companies now required to disclose auditors’ remuneration

Following the implementation of European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations, 2010, an analysis of auditors’ remuneration is now required to be included in the statutory financial statements of Irish companies. Remuneration must be disclosed in respect of each of the following categories of work carried out by an auditor:

(a) the audit of individual accounts;

(b) other assurance services;

(c) tax advisory services;

(d) other non-audit services.

The requirement applies to financial years ending on or after 20 August, 2010.

Article by Paula Kelleher  and Breeda Cunningham  of Dillon Eustace Solicitors

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq.com