The Central Bank of Ireland has published a Consultation Paper on new performance fee guidance for UCITS and certain types of retail AIFs ("CP134").  The full text of CP134 can be accessed here.

The deadline for responses to CP134 is 15 January 2021.

CP134 follows the publication of the official translations of the European Securities Markets Authority's Guidelines on performance fees in UCITS and certain types of AIFs ("ESMA Guidelines") which apply from 5 January 2021.

The consultation seeks input from industry on how best to incorporate the ESMA Guidelines into the current Central Bank regulatory framework.

The Central Bank has existing requirements in relation to the payment of performance fees for UCITS and certain types of retail AIFs.  For UCITS, this is included in the Central Bank’s UCITS Regulations 2019 (“CBI UCITS Regulations”).  The AIF Rulebook sets out the requirements for certain types of retail AIFs.

For a period of time, the existing Central Bank requirements and the ESMA Guidelines will run in parallel. Helpfully, the Central Bank has confirmed that where there may be an inconsistency between the ESMA Guidelines and the current Central Bank requirements, that the statutory obligations of the CBI UCITS Regulations or the requirements of the AIF Rulebook will take precedence.

The CBI is proposing a phased incorporation of the ESMA Guidelines and as part of this process, the CBI will issue specific Central Bank Performance Fee Guidance also.

We welcome this initiative of the Central Bank to issue clear rules and guidance relating to performance fees.

If you have any questions on CP134, please speak to your usual contact in the Maples Group.  Our team has significant experience in advising on the current performance fee framework and how this new guidance is likely to impact upon funds.

Please also refer to our prior client update on ESMA Final Guidance on Performance Fees.