Investment Funds: Central Bank consults on Amendments to UCITS and AIF Regulation and Guidance - CP 161 and CP 162

On 9 September, the Central Bank of Ireland issued two substantive consultation papers: 

• Consultation Paper, CP 161, proposing amendments to the UCITS Regulations and Guidance on performance fees for UCTIS and certain retail investor AIFs; and 
• Consultation Paper, CP 162, setting out proposed amendments to the AIF Rulebook, as a corollary of the AIFMD II Directive and in response to engagement with industry over recent years.

In our briefing below, we summarise the key proposed amendments being proposed in both consultation papers.

1. Central Bank Consultation on Proposed Amendments to the UCITS Regulations and Guidance on Performance Fees (CP 161)

Under Directive 2024/927 (the "Amending Directive"), certain provision of the UCITS Directive 2009/65 will be amended and the Central Bank now proposes changes to align its regulatory requirements to those of the revised UCITS Directive by the way of repeal and replacement of the Central Bank's 2019 UCITS Regulations (SI 230/2019)(the "Central Bank UCITS Regulations").

In addition, the following changes are proposed:

• Performance fees for UCITS (and certain kinds of retail investor AIFs): by aligning with ESMA guidelines allowing shorter reference periods (subject to a minimum of five years), adoption of symmerical fee structure adjustable depending on benchmark performance and crystallisation more than once a year in certain conditions. The consultation also seeks views on whether an entity other than a depositary can verify the calculation of a performance fee;
• Liquidity management: removal of the 10% units/NAV requirement for operation of a redemption gate to enable a UCITS' responsible person sufficient discretion to apply a redemption gate where they feel this is appropriate subject to compliance with the UCITS framework; 
• Residency requirements for directors and designated person: the current residency requirements for 'low' rated firms will be kept as a minimum requirement for all management companies, with discretion for the Central Bank to provide additional residency requirements at authorisation; 
• Liquidity management tools (LMTs): to align with the LMTs set out in the Amending Directive to enable fund managers to deal with liquidity stress, a minimum of two which must be selected by and incorporated into the rules of a UCITS;
• Money Market Funds (MMF) provisions: removed as Money Market Funds are now regulated under the MMF Regulation (Regulation 2017/1131.
• Inclusion of updates from previous consultations, clarifications, incorporation of Q&As and guidance papers previously issued by the Central Bank for UCITS; and
• Enhanced prospectus fee disclosures and technical amendments on reporting and PRIIPs KID requirements.

A mark-up of the Central Bank UCITS Regulations is included in the proposal along with targeted questions to allow additional suggested amendments to be put forward for consideration by stakeholders.

2. Central Bank Consultation on Potential Amendments to the AIF Rulebook (CP 162) 

The proposed amendments include:

• Implementation of AIFMD II: amendments required to implement the revised Alternative Investment Fund Managers Directive 2011/61 (AIFMD II), which is to be transposed by April 2026, including: 
  • Removal of loan origination rules which are now housed in AIFMD II, including removal of the restriction on QIAIFs acting as guarantor; 
  • Liquidity Management Tools (LMTs): requirements for the selection and use of LMTs with various tools set out in AIFMD II;
• Amendments to enhance regulatory effectiveness including
  • Investment through intermediary vehicles,
  • Removal of requirement for AIFs to seek authorisation as an AIF management company, 
  • Incorporation of capital commitments into QIAIF subscription mechanism and expansion of exempted parties from the QIAIF minimum subscription, 
  • Incorporation of rules on depositaries of assets other than financial instruments, 
  • Extension of requirements to non-EU AIFMs; 
• Savings and Investments Union initiative at EU level: to improve accessibility to financial products by retail investors and reducing regulatory burdens; 
• Department of Finance's Funds Sector 2030 Report: changes to support the establishment and operation of private asset funds in Ireland;
• Amendments to take account of market developments; and 
• Amendments to provide further clarity on the Central Bank's expectations for regulated investment funds. 

A mark-up of the AIF Rulebook is included in the proposal along with targeted questions to allow additional suggested amendments to be put forward for consideration by stakeholders.

Stakeholder feedback is invited on both Consultation Papers, CP 161 and CP 162, until the close of the consultation process on 5 November 2025. The Central Bank will then share a statement on all feedback.

For further information, contact David Naughton and Narita Woods from the Byrne Wallace Shields LLP Investment Funds and Financial Services Regulation Team.