The Central Bank has published a notice of intention (4-page / 225KB PDF), in which it clarifies that it will not automatically consider UK resident designated persons to be from a 'third country' with effect from 30 March 2019 for the purposes of its fund management effective supervision rules. It will review the UK position after this date should there be no Brexit deal, but will allow firms to continue as they are until it makes a final decision.
"The Central Bank recognises that there may be considerable disruption in the event that the United Kingdom withdraws from the European Union without ratifying a withdrawal agreement," the Central Bank said in its notice.
"Should such an eventuality arise, the Central Bank will consider whether the UK is a country to be determined as meeting the effective supervision requirement. For the period while this is under consideration, the Central Bank does not propose adopting a default position which would treat the UK as not satisfying the effective supervision requirement. After consideration of the above, the Central Bank will determine whether the UK, as a country, continues to satisfy the effective supervision requirement and the Central Bank will confirm same by publishing a notice on its website," it said.
The CBI has reserved the right to change its assessment of the UK as a third country "if circumstances change".
The effective supervision requirement came into force for newly-authorised funds on 1 July 2017, and for all other funds on 1 January 2019. It imposes Irish or EEA residency requirements on a certain proportion of a fund's directors and 'designated persons' performing the firm's managerial functions, depending on the complexity of the business.
Investment funds expert Gayle Bowen of Pinsent Masons, the law firm behind Out-Law.com, said: "This statement by the Central Bank provides much needed relief and clarity to asset managers operating in Ireland, who were unsure as to the status of UK based designated persons in the event of a hard Brexit."