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S.I. No. 352/2011 - European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011

Type Statutory Instrument

Publication 2011-07-08

Last updated 2026-06-26

State Partially repealed superseded text

Text As published

Source Irish Statute Book

articles 139

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

25 amending acts · 2026-06-26, S.I. No. 289/2026 - European Union (Undertakings for Collective Investment in Transferabl…

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(d) to report in relation to internal audit matters in accordance with paragraph 42.

Internal control mechanisms — Permanent risk management function

50.

Management companies shall establish and maintain a permanent risk management function.

51.

(1) The permanent risk management function referred to in paragraph 50 shall be hierarchically and functionally independent from operating units.

(2) However, the Bank may allow management companies to derogate from that obligation where the derogation is appropriate and proportionate in view of the nature, scale and complexity of the management company’s business and of the UCITS it manages.

(3) A management company shall be able to demonstrate that appropriate safeguards against conflicts of interest have been adopted so as to allow an independent performance of risk management activities and that its risk management process satisfies the requirements of Regulation 69.

52.

The permanent risk management function shall—

(a) implement the risk management policy and procedures,

(b) ensure compliance with the UCITS risk limit system, including statutory limits concerning global exposure and counterparty risk in accordance with paragraphs 11 to 24 of Schedule 9,

(d) provide regular reports to the board of directors and, where it exists, the supervisory function, on—

(i) the consistency between the current levels of risk incurred by each managed UCITS and the risk profile agreed for that UCITS,

(ii) the compliance of each managed UCITS with relevant risk limit systems,

(iii) the adequacy and effectiveness of the risk management process, indicating in particular whether appropriate remedial measures have been taken in the event of any deficiencies,

(e) provide regular reports to the senior management outlining the current level of risk incurred by each managed UCITS and any actual or foreseeable breaches to their limits, so as to ensure that prompt and appropriate action can be taken, and

(f) review and support, where appropriate, the arrangements and procedures for the valuation of OTC derivatives as referred to in paragraphs 25 to 28 of Schedule 9.

53.

The permanent risk management function shall have the necessary authority and access to all relevant information necessary to fulfil the tasks set out in paragraph 52.

Internal control mechanisms — Personal transactions

54.

Management companies shall establish, implement and maintain adequate arrangements aimed at preventing the following activities in the case of any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information within the meaning of Regulation 2 of the Market Abuse (Directive 2003/6/EC) Regulations 2005 ( S.I. No. 342 of 2005 ) or to other confidential information relating to UCITS or transactions with or for UCITS by virtue of an activity carried out by him on behalf of the management company:

(a) entering into a personal transaction which fulfils at least one of the following criteria:

(i) that person is prohibited from entering into that personal transaction;

(ii) it involves the misuse or improper disclosure of confidential information;

(iii) it conflicts or is likely to conflict with an obligation of the management company under these Regulations or the MIFID Regulations;

(b) advising or procuring, other than in the proper course of his employment or contract for services, any other person to enter into a transaction in financial instruments which, if a personal transaction of the relevant person, would be covered by subparagraph (a) or by points (a) or (b) of Article 25(2) of Commission Directive 2006/73/EC implementing Directive 2004/39/EC¹⁵ of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive, or would otherwise constitute a misuse of information relating to pending orders;

15 OJ No. L 241, 02.09.2006, p. 26

(c) disclosing, other than in the normal course of his employment or contract for services and without prejudice to Article 3(a) of Directive 2003/6/EC of the European Parliament and of the Council of 28

January 2003¹⁶ on insider dealing and market manipulation (market abuse), any information or opinion to any other person if the relevant person knows, or reasonably ought to know, that as a result of that disclosure that other person will or would be likely to take either of the following steps:

16 OJ No. L96, 12.04.2003, p. 16

(i) to enter into a transaction in financial instruments which, where a personal transaction of the relevant person would be covered by subparagraph (a) or by point (a) or (b) of Article 25(2) of Directive 2006/73/EC, or would otherwise constitute a misuse of information relating to pending orders;

(ii) to advise or procure another person to enter into such a transaction.

55.

(1) The arrangements required under paragraph 54 shall in particular be designed to ensure that:

(a) each relevant person covered by paragraph 54 is aware of the restrictions on personal transactions, and of the measures established by the management company in connection with personal transactions and disclosure, in accordance with that paragraph;

(b) the management company is informed promptly of any personal transaction entered into by a relevant person, either by notification of that transaction or by other procedures enabling the management company to identify such transactions;

(c) a record is kept of the personal transaction notified to the management company or identified by it, including any authorisation or prohibition in connection with such a transaction.

(2) For the purposes of clause (b) of subparagraph (1), where certain activities are performed by third parties, the management company shall ensure that the entity performing the activity maintains a record of personal transactions entered into by any relevant person and provides that information to the management company promptly on request.

56.

Paragraphs 54 to 55 shall not apply to the following kinds of personal transactions:

(a) personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed; and

(b) personal transactions in UCITS or units in collective undertakings that are subject to supervision under the law of a Member State which requires an equivalent level of risk spreading in their assets, where the relevant person and any other person for whose account the transactions are effected are not involved in the management of that undertaking.

57.

For the purposes of paragraphs 54 to 56, “personal transaction” shall have the same meaning as in Article 11 of Directive 2006/73/EC.

Internal control mechanisms — Recording of portfolio transactions

58.

Management companies shall ensure, for each portfolio transaction relating to UCITS, that a record of information which is sufficient to reconstruct the details of the order and the executed transaction is produced without delay.

59.

(1) The record referred to in paragraph 58 shall include—

(a) the name or other designation of the UCITS and of the person acting on account of the UCITS,

(b) the details necessary to identify the instrument concerned,

(d) the type of the order or transaction,

(e) the price,

(f) for orders, the date and exact time of the transmission of the order and name or other designation of the person to whom the order was transmitted, or for transactions, the date and exact time of the decision to deal and execution of the transaction,

(g) the name of the person transmitting the order or executing the transaction,

(h) where applicable, the reasons for the revocation of an order, and

(i) for executed transactions, the counterparty and execution venue identification.

(2) For the purposes of clause (i) of subparagraph (1), an “execution venue” shall mean a regulated market, a multilateral trading facility, a systematic internaliser as referred to under Regulation 3(1) of the MIFID Regulations, or a market maker or other liquidity provider or an entity that performs a similar function in a third country to the functions performed by any of the foregoing.

Internal control mechanisms — Recording of subscription and redemption orders

60.

Management companies shall take all reasonable steps to ensure that the received UCITS subscription and redemption orders are centralised and recorded immediately after receipt of any such order.

61.

That record shall include information on the following:

(a) the relevant UCITS;

(b) the person giving or transmitting the order;

(d) the date and time of the order;

(e) the terms and means of payment;

(f) the type of the order;

(g) the date of execution of the order;

(h) the number of units subscribed or redeemed;

(i) the subscription or redemption price for each unit;

(j) the total subscription or redemption value of the units;

(k) the gross value of the order including charges for subscription or net amount after charges for redemption.

Internal control mechanisms — record-keeping requirements

62.

(1) Management companies shall ensure the retention of the records referred to in paragraphs 58 to 61 for a period of at least 5 years.

(2) However, the Bank may, in exceptional circumstances, require management companies to retain any or all of those records for a longer period, determined by the nature of the instrument or portfolio transaction, where it is necessary to enable the authority to exercise its supervisory functions under these Regulations.

63.

(1) Following the termination of the authorisation of a management company, the management company shall retain records referred to in paragraph 62 for the outstanding term of the 5-year period.

(2) Where the management company transfers its responsibilities in relation to the UCITS to another management company, arrangements shall made to ensure that such records for the past 5 years are accessible to that company.

64.

The records shall be retained in a medium that allows the storage of information in a way accessible for future reference by the Bank, and in such a form and manner that the following conditions are met:

(a) the Bank must be able to access them readily and to reconstitute each key stage of the processing of each portfolio transaction;

(b) it must be possible for any corrections or other amendments, and the contents of the records prior to such corrections or amendments, to be easily ascertained; and

Conflict of interests: Criteria for the identification of conflicts of interest

65.

For the purposes of identifying the types of conflict of interest that arise in the course of providing services and activities and whose existence may damage the interests of a UCITS, management companies shall take into account, by way of minimum criteria, the question of whether the management company or a relevant person, or a person directly or indirectly linked by way of control to the management company, is in any of the following situations, whether as a result of providing collective portfolio management activities or otherwise:

(a) the management company or that person is likely to make a financial gain, or avoid a financial loss, at the expense of the UCITS;

(b) the management company or that person has an interest in the outcome of a service or an activity provided to the UCITS or another client or of a transaction carried out on behalf of the UCITS or another client, which is distinct from the UCITS interest in that outcome;

(c) the management company or that person has a financial or other incentive to favour the interest of another client or group of clients over the interests of the UCITS;

(d) the management company or that person carries on the same activities for the UCITS and for another client or clients which are not UCITS;

(e) the management company or that person receives or will receive from a person other than the UCITS an inducement in relation to collective portfolio management activities provided to the UCITS, in the form of monies, goods or services, other than the standard commission or fee for that service.

66.

Management companies shall, when identifying the types of conflict of interests, take into account:

(a) the interests of the management company, including those deriving from its belonging to a group or from the performance of services and activities, the interests of the clients and the duty of the management company towards the UCITS, and

(b) the interests of 2 or more managed UCITS.

Conflicts of interest policy

67.

(1) Management companies shall establish, implement and maintain an effective conflicts of interest policy. That policy shall be set out in writing and shall be appropriate to the size and organisation of the management company and the nature, scale and complexity of its business.

(2) Where the management company is a member of a group, the policy shall also take into account any circumstances of which the company is or should be aware which may give rise to a conflict of interest resulting from the structure and business activities of other members of the group.

68.

The conflicts of interest policy established in accordance with paragraph 67 shall include the following:

(a) the identification of, with reference to the collective portfolio management activities carried out by or on behalf of the management company, the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of the UCITS or one or more other clients; and

(b) procedures to be followed and measures to be adopted in order to manage such conflicts.

Independence in conflicts management

69.

The procedures and measures provided for in paragraph 68(b) shall be designed to ensure that relevant persons engaged in different business activities involving a conflict of interest carry on those activities at a level of independence appropriate to the size and activities of the management company and of the group to which it belongs and to the materiality of the risk of damage to the interests of clients.

70.

(1) The procedures to be followed and measures to be adopted in accordance with paragraph 68(b) shall include the following where necessary and appropriate for the management company to ensure the requisite degree of independence:

(a) effective procedures to prevent or control the exchange of information between relevant persons engaged in collective portfolio management activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients;

(b) the separate supervision of relevant persons whose principal functions involve carrying out collective portfolio management activities on behalf of, or providing services to, clients or to investors whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the management company;

(c) the removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities;

(d) measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out collective portfolio management activities; and

(e) measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate collective portfolio management activities where such involvement may impair the proper management of conflicts of interest.

(2) Where the adoption or the practice of one or more of those measures and procedures does not ensure the requisite degree of independence, management companies shall adopt such alternative or additional measures and procedures which the Bank considers are necessary and appropriate for those purposes.

Management of activities giving rise to detrimental conflicts of interest

71.

Management companies shall keep and regularly update a record of the types of collective portfolio management activities undertaken by or on behalf of the management company in which a conflict of interest entailing a material risk of damage to the interests of one or more UCITS or other clients has arisen or, in the case of an ongoing collective portfolio management activity, may arise.

72.

Where the organisational or administrative arrangements made by the management company for the management of conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of UCITS or of its unit-holders will be prevented, the senior management or other competent internal body of the management company shall be promptly informed in order for them to take any necessary decision to ensure that in any case the management company acts in the best interests of the UCITS and of its unit-holders.

73.

The management company shall report situations referred to in paragraph 72 to investors by any appropriate durable medium and give reasons for its decision.

Strategies for exercise of voting rights

74.

Management companies shall develop adequate and effective strategies for determining when and how voting rights attached to instruments held in the managed portfolios are to be exercised, to the exclusive benefit of the UCITS concerned.

75.

The strategies referred to in paragraph 74 shall determine measures and procedures for—

(a) monitoring relevant corporate events,

(b) ensuring that the exercise of voting rights is in accordance with the investment objectives and policy of the relevant UCITS, and

76.

A summary description of the strategies referred to in paragraph 74 shall be made available to investors. Details of the actions taken on the basis of those strategies shall be made available to the unit-holders free of charge and on their request.

Regulation 35(7)

Schedule 6 Particulars of standard agreement between trustee and mangement company

The trustee and the management company, referred to in this Schedule as the “parties to the agreement”, shall include in the agreement in writing referred to in Regulations 35(6) or 51(3) at least the following particulars related to the services provided by and procedures to be followed by the parties to the agreement:

(a) a description of the procedures, including those related to the safe-keeping, to be adopted for each type of asset of the UCITS entrusted to the trustee;

(b) a description of the procedures to be followed where the management company envisages a modification of the fund rules or prospectus of the UCITS, and identifying when the trustee should be informed, or where a prior agreement from the trustee is needed to proceed with the modification;

(c) a description of the means and procedures by which the trustee will transmit to the management company all relevant information that the management company needs to perform its duties including a description of the means and procedures related to the exercise of any rights attached to financial instruments, and the means and procedures applied in order to allow the management company and the UCITS to have timely and accurate access to information relating to the accounts of the UCITS;

(d) a description of the means and procedures by which the trustee will have access to all relevant information it needs to perform its duties;

(e) a description of the procedures by which the trustee has the ability to enquire into the conduct of the management company and to assess the quality of information transmitted, including by way of on-site visits; and

(f) a description of the procedures by which the management company can review the performance of the trustee in respect of the trustee’s contractual obligations.

The parties to the agreement referred to in Regulations 35(6) or 51(3) shall include at least the following elements related to the exchange of information and obligations on confidentiality and money laundering in that agreement:

(a) a list of all the information that needs to be exchanged between the UCITS, its management company and the trustee related to the subscription, redemption, issue, cancellation and repurchase of units of the UCITS;

(b) the obligations for confidentiality applicable to the parties to the agreement; and

(c) information on the tasks and responsibilities of the parties to the agreement in respect of obligations relating to the prevention of money laundering and the financing of terrorism, where applicable.

The obligations referred to in paragraph 2(b) shall be drawn up so as not to impair the ability of the Bank in its capacity as the competent authority of the management company or as the competent authority of the UCITS in gaining access to relevant documents and information.

Where the trustee or the management company envisage appointing third parties to carry out their respective duties, both parties to the agreement referred to in Regulation 35(6) or 51(3) shall include at least the following particulars in that agreement:

(a) an undertaking by both parties to the agreement to provide details, on a regular basis, of any third parties appointed by the trustee or the management company to carry out their respective duties;

(b) an undertaking that, upon request by one of the parties, the other party will provide information on the criteria used for selecting the third party and the steps taken to monitor the activities carried out by the selected third party; and

(c) a statement that a trustee’s liability as referred to in Regulation 36 or 52 shall not be affected by the fact that it has entrusted to a third party all or some of the assets in its safe-keeping.

The parties to the agreement referred to in either Regulation 35(6) or 51(3) shall include at least the following particulars related to amendments and the termination of the agreement in that agreement:

(a) the period of validity of the agreement;

(b) the conditions under which the agreement may be amended or terminated; and

(c) the conditions which are necessary to facilitate transition to another trustee and, in case of such transition the procedure by which the trustee shall send all relevant information to the other trustee.

The parties to the agreement referred to either in Regulation 35(6) or 51(3) shall specify that the law of the UCITS home Member State applies to that agreement.

In cases where the parties to the agreement referred to in either Regulation 35(6) or 51(3) agree to the use of electronic transmission for part or all of information that flows between them, such agreement shall contain provisions ensuring that a record is kept of such information.

The agreement referred to in either Regulation 35(6) or 51(3) may cover more than one UCITS managed by the management company. In such case, the agreement shall list the UCITS covered.

Parties to the agreement shall either include details of means and procedures referred to in paragraph 1(c) and (d)—

(a) in the agreement referred to in either Regulation 35(6) or 51(3), or

(b) in a separate agreement in writing.

Regulation 61(5)

Schedule 7 Detailed content, format and method by which to provide information referred to in Regulation 61

The information to be provided in accordance with Regulation 61(3) to the unit-holders of the merging UCITS shall also include—

(a) details of any differences in the rights of unit-holders of the merging UCITS before and after the proposed merger takes effect,

(b) if the key investor information of the merging UCITS and the receiving UCITS show synthetic risk and reward indicators in different categories, or identify different material risks in the accompanying narrative, a comparison of those differences,

(c) a comparison of all charges, fees and expenses for both UCITS, based on the amounts disclosed in their respective key investor information,

(d) if the merging UCITS applies a performance-related fee, an explanation of how it will be applied up to the point at which the merger becomes effective,

(e) if the receiving UCITS applies a performance-related fee, how it will subsequently be applied to ensure fair treatment of those unit-holders who previously held units in the merging UCITS,

(f) in cases where Regulation 64 permits costs associated with the preparation and the completion of the merger to be charged to either the merging or the receiving UCITS or any of their unit-holders, details of how those costs are to be allocated, and

(g) an explanation of whether the management or investment company of the merging UCITS intends to undertake any rebalancing of the portfolio before the merger takes effect.

The information to be provided in accordance with Regulation 61(3) to the unit-holders of the receiving UCITS shall also include an explanation of whether the management or investment company of the receiving UCITS expects the merger to have any material impact on the portfolio of the receiving UCITS, and whether it intends to undertake any rebalancing of the portfolio either before or after the merger takes effect.

The information to be provided in accordance with Regulation 61(3)(b)(iii) shall also include—

(a) details of how any accrued income in the respective UCITS is to be treated;

(b) an indication of how the report of the independent auditor or the trustee referred to in Regulation 60(3) may be obtained.

Where the terms of the proposed merger include provisions for a cash payment in accordance with paragraph (a) and (b) of the definition in Regulation 3(1) of “merger”, the information to be provided to the unit-holders of the merging UCITS shall contain details of that proposed payment, including when and how unit-holders of the merging UCITS will receive the cash payment.

The merger proposal must be approved by unit-holders of the merging UCITS and may contain a recommended course of action by the respective management company or board of directors of the investment company.

The information to be provided to the unit-holders of the merging UCITS shall include—

(a) the period during which the unit-holders shall be able to continue making subscriptions and requesting redemptions of units in the merging UCITS,

(b) the time when those unit-holders not making use of their rights granted pursuant to Regulation 63(1), within the relevant time limit, shall be able to exercise their rights as unit-holders of the receiving UCITS, and

(c) an explanation that in cases where the proposal is approved by the necessary majority, those unit-holders who vote against the proposal or who do not vote at all, and who do not make use of their rights granted pursuant to Regulation 63(1) within the relevant time limit, shall become unit-holders of the receiving UCITS.

Where a summary of the key points of the merger proposal is provided at the beginning of the information document, it must cross-refer to the parts of the information document where further information is provided. Key investor information shall be used without alterations or supplements, except for translation into one of the languages referred to in Regulation 118(1)(b)(ii), in all Member States where the UCITS is notified to market its units in accordance with Regulation 117.

An up-to-date version of the key investor information of the receiving UCITS shall be provided to existing unit-holders of the merging UCITS.

The key investor information of the receiving UCITS shall be provided to existing unit-holders of the receiving UCITS where it has been amended for the purpose of the proposed merger.

10.

Between the date when the information document pursuant to Regulation 61(1) is provided to unit-holders and the date when the merger takes effect, the information document and the up-to-date key investor information of the receiving UCITS shall be provided to each person who purchases or subscribes units in the merging UCITS or the receiving UCITS or asks to receive copies of the trust deed, deed of constitution or articles, prospectus or key investor information of either UCITS.

11.

The merging and the receiving UCITS shall provide the information pursuant to Regulation 61(1) to unit-holders on paper or in another durable medium.

12.

Where the information is to be provided to all or certain unit-holders using a durable medium other than paper, the following conditions shall be fulfilled:

(a) the provision of the information is appropriate to the context in which the business between the unit-holder and the merging UCITS or the receiving UCITS or, where relevant, the respective management company is, or is to be, carried on;

(b) the unit-holder to whom the information is to be provided, when offered the choice between information on paper or in another durable medium, specifically chooses the durable medium other than paper.

13.

For the purposes of paragraphs 11 and 12, the provision of information by means of electronic communications shall be treated as appropriate to the context in which the business between the merging UCITS and the receiving UCITS or their respective management companies and the unit-holder is, or is to be, carried on if there is evidence that the unit-holder has regular access to the Internet. The provision by the unit-holder of an e-mail address for the purposes of the carrying on of that business shall be treated as such evidence.

14.

The information to be provided in accordance with clause (iv) of subparagraph (b) of paragraph (3) of Regulation 61 shall include—

(a) the procedure by which unit-holders will be asked to approve the merger proposal, and what arrangements will be made to inform them of the outcome,

(b) the details of any intended suspension of dealing in units to enable the merger to be carried out efficiently, and

Regulation 61(5)

SCHEDULE 8 Provision of Key Investor Information

An up-to-date version of the key investor information of the receiving UCITS shall be provided to existing unit-holders of the merging UCITS.

The key investor information of the receiving UCITS shall be provided to existing unit-holders of the receiving UCITS where it has been amended for the purpose of the proposed merger.

Regulation 69(7)

Schedule 9Requirements Applicable to Risk management

(a) Management companies shall establish, implement and maintain an adequate and documented risk management policy which identifies the risks the UCITS they manage are or might be exposed to.

(b) The risk management policy shall comprise such procedures as are necessary to enable the management company to assess for each UCITS it manages the exposure of the UCITS to market, liquidity and counterparty risks, and the exposure of the UCITS to all other risks, including operational risks, which may be material for each UCITS it managers.

(i) the techniques, tools and arrangements that enable them to comply with the obligations set out in paragraphs 7 to 10;

(ii) the allocation of responsibilities within the management company pertaining to risk management.

Management companies shall ensure that the risk management policy referred to in paragraph 1 states the terms, contents and frequency of reporting of the risk management function referred to in Regulation 69 to the board of directors and to senior management and, where appropriate, to the supervisory function.

For the purposes of paragraphs 1 and 2, management companies shall take into account the nature, scale and complexity of their business and of the UCITS they manage.

Management companies shall assess, monitor and periodically review:

(a) the adequacy and effectiveness of the risk management policy and of the arrangements, processes and techniques referred to in paragraphs 7 to 14;

(b) the level of compliance by the management company with the risk management policy and with arrangements, processes and techniques referred to in paragraphs 7 to 14;

(c) the adequacy and effectiveness of measures taken to address any deficiencies in the performance of the risk management process.

Management companies shall notify the Bank of any material changes to the risk management process.

The requirements laid down in paragraph 4 shall be reviewed by the Bank on an on-going basis and accordingly when granting authorisation.

(1) Management companies shall adopt adequate and effective arrangements, processes and techniques in order to—

(a) measure and manage at any time the risks which the UCITS they manage are or might be exposed to,

(b) ensure compliance with limits concerning global exposure and counterparty risk, in accordance with paragraphs 11 to 14 and 20 to 25.

(2) Those arrangements, processes and techniques shall be proportionate to the nature, scale and complexity of the business of the management companies and of the UCITS they manage and be consistent with the UCITS risk profile.

For the purposes of paragraph 7, management companies shall take the following actions for each UCITS they manage:

(a) put in place such risk measurement arrangements, processes and techniques as are necessary to ensure that the risks of taken positions and their contribution to the overall risk profile are accurately measured on the basis of sound and reliable data and that the risk measurement arrangements, processes and techniques are adequately documented;

(b) conduct, where appropriate, periodic back-tests in order to review the validity of risk measurement arrangements which include model-based forecasts and estimates;

(c) conduct, where appropriate, periodic stress tests and scenario analyses to address risks arising from potential changes in market conditions that might adversely impact the UCITS;

(d) establish, implement and maintain a documented system of internal limits concerning the measures used to manage and control the relevant risks for each UCITS taking into account all risks which may be material to the UCITS as referred to in paragraphs 1 to 3 and ensuring consistency with the UCITS risk-profile;

(e) ensure that the current level of risk complies with the risk limit system as set out in sub-paragraph (d) for each UCITS;

(f) establish, implement and maintain adequate procedures that, in the event of actual or anticipated breaches to the risk limit system of the UCITS, result in timely remedial actions in the best interests of unit-holders.

(1) Management companies shall employ an appropriate liquidity risk management process in order to ensure that each UCITS they manage is able to comply at any time with Regulation 104(1).

(2) Where appropriate, management companies shall conduct stress tests which enable assessment of the liquidity risk of the UCITS under exceptional circumstances.

10.

Management companies shall ensure that for each UCITS they manage the liquidity profile of the investments of the UCITS is appropriate to the redemption policy laid down in the fund rules or the instruments of incorporation or the prospectus.

11.

On a daily basis management companies shall calculate the global exposure of a managed UCITS as referred to in Regulation 69(4) as either of the following:

(a) the incremental exposure and leverage generated by the managed UCITS through the use of financial derivative instruments including embedded derivatives pursuant to Regulation 69(4)(c), which may not exceed the total of the UCITS net asset value;

(b) the market risk of the UCITS portfolio.

12.

(1) Management companies may calculate global exposure by using the commitment approach, the value at risk approach or other advanced risk measurement methodologies as may be appropriate. For the purposes of this provision, “value at risk” shall mean a measure of the maximum expected loss at a given confidence level over a specific time period.

(2) Management companies shall ensure that the method selected to measure global exposure is appropriate, taking into account the investment strategy pursued by the UCITS and the types and complexities of the financial derivative instruments used, and the proportion of the UCITS portfolio which comprises financial derivative instruments.

13.

Where a UCITS in accordance with Regulation 69(2)(a) employs techniques and instruments including repurchase agreements or securities lending transactions in order to generate additional leverage or exposure to market risk, management companies shall take these transactions into consideration when calculating global exposure.

14.

Where the commitment approach is used for the calculation of global exposure, management companies shall apply this approach to all financial derivative instrument positions including embedded derivatives as referred to in Regulation 69(4)(c), whether used as part of the UCITS general investment policy, for purposes of risk reduction or for the purposes of efficient portfolio management as referred to in Regulation 69(2) and (3).

15.

(1) Where the commitment approach is used for the calculation of global exposure, management companies shall convert each financial derivative instrument position into the market value of an equivalent position in the underlying asset of that derivative (standard commitment approach).

(2) The Bank may allow management companies to apply other calculation methods which are equivalent to the standard commitment approach.

16.

A management company may take account of netting and hedging arrangements when calculating global exposure, where these arrangements do not disregard obvious and material risks and result in a clear reduction in risk exposure.

17.

Where the use of financial derivative instruments does not generate incremental exposure for the UCITS, the underlying exposure need not be included in the commitment calculation.

18.

Where the commitment approach is used, temporary borrowing arrangements entered into on behalf of the UCITS in accordance with Regulation 103 need not be included in the global exposure calculation.

19.

Management companies shall ensure that counterparty risk arising from an over-the-counter (OTC) financial derivative instrument is subject to the limits set out in Regulation 70.

20.

(1) When calculating the UCITS exposure to a counterparty in accordance with the limits as referred to in Regulation 70(1), management companies shall use the positive mark-to-market value of the OTC derivative contract with that counterparty.

(2) Management companies may net the derivative positions of a UCITS with the same counterparty, provided that they are able to legally enforce netting agreements with the counterparty on behalf of the UCITS. Netting shall only be permissible with respect to OTC derivative instruments with the same counterparty and not in relation to any other exposures the UCITS may have with that same counterparty.

21.

Management companies may reduce the UCITS exposure to a counterparty of an OTC derivative transaction through the receipt of collateral. Collateral received shall be sufficiently liquid so that it can be sold quickly at a price that is close to its pre-sale valuation.

22.

Management companies shall take collateral into account in calculating exposure to counterparty risk as referred to in Regulation 70(1) when the management company passes collateral to OTC counterparty on behalf of the UCITS. Collateral passed may be taken into account on a net basis only if the management company is able to legally enforce netting arrangements with this counterparty on behalf of the UCITS.

23.

Management companies shall calculate issuer concentration limits as referred to in Regulation 70 on the basis of the underlying exposure created through the use of financial derivative instruments pursuant to the commitment approach.

24.

With respect to the exposure arising from OTC derivatives transactions as referred to in Regulation 70(2), management companies shall include in the calculation any exposure to OTC derivative counterparty risk.

25.

Management companies shall verify that UCITS exposures to OTC derivatives are assigned fair values that do not rely only on market quotations by the counterparties of the OTC transactions and which fulfil the criteria set out in Regulation 68(1)(g)(iii).

26.

For the purposes of paragraph 25, management companies shall establish, implement and maintain arrangements and procedures which ensure appropriate, transparent and fair valuation of UCITS exposures to OTC derivatives. Management companies shall ensure that the fair value of OTC derivatives is subject to adequate, accurate and independent assessment. The valuation arrangements and procedures shall be adequate and proportionate to the nature and complexity of the OTC derivatives concerned. Management companies shall comply with the requirements set out in Regulations 23 and 73(4) and when arrangements and procedures concerning the valuation of OTC derivatives involve the performance of certain activities by third parties.

27.

For the purposes of sub-paragraphs 16 and 17, the risk management function shall be appointed with specific duties and responsibilities.

28.

The valuation arrangements and procedures referred to in paragraph 17 shall be adequately documented.

29.

Management companies shall deliver to the Bank, at least on an annual basis, reports containing information which reflects a true and fair view of the types of derivative instruments used for each managed UCITS, the underlying risks, the quantitative limits and the methods which are chosen to estimate the risks associated with the derivative transactions.

30.

The Bank shall review the regularity and completeness of information referred to in paragraph 1 and may take any action that it deems necessary in that regard.

Regulations 80(6), 81(3) and 82(4)

Schedule 10 Requirements applicable to master-feeder structures

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to access to information:

(a) how and when the master UCITS provides the feeder UCITS with a copy of its trust deed, deed of constitution or articles, prospectus and key investor information or any amendment thereof;

(b) how and when the master UCITS informs the feeder UCITS of a delegation of investment management and risk management functions to third parties in accordance with Regulation 24;

(c) where applicable, how and when the master UCITS provides the feeder UCITS with internal operational documents, such as its risk management process and its compliance reports;

(d) what details of breaches by the master UCITS of the law, the trust deed, deed of constitution or articles and the agreement between the master UCITS and the feeder UCITS the master UCITS shall notify the feeder UCITS of and the manner and timing thereof;

(e) where the feeder UCITS uses financial derivative instruments for hedging purposes, how and when the master UCITS will provide the feeder UCITS with information about its actual exposure to financial derivative instruments to enable the feeder UCITS to calculate its own global exposure as envisaged by Regulation69(4);

(f) a statement that the master UCITS informs the feeder UCITS of any other information-sharing arrangements entered into with third parties and where applicable, how and when the master UCITS makes those other information-sharing arrangements available to the feeder UCITS.

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to the basis of investment and divestment by the feeder UCITS:

(a) a statement of which share classes of the master UCITS are available for investment by the feeder UCITS;

(b) the charges and expenses to be borne by the feeder UCITS, and details of any rebate or retrocession of charges or expenses by the master UCITS; and

(c) if applicable, the terms on which any initial or subsequent transfer of assets in kind may be made from the feeder UCITS to the master UCITS.

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to standard dealing arrangements:

(a) coordination of the frequency and timing of the net asset value calculation process and the publication of prices of units;

(b) coordination of transmission of dealing orders by the feeder UCITS, including, where applicable, the role of transfer agents or any other third party;

(c) where applicable, any arrangements necessary to take account of the fact that either or both UCITS are listed or traded on a secondary market;

(d) where necessary, other appropriate measures to ensure compliance with the requirements of Regulation 80(2);

(e) where the units of the feeder UCITS and the master UCITS are denominated in different currencies, the basis for conversion of dealing orders;

(f) settlement cycles and payment details for purchases or subscriptions and repurchases or redemptions of units of the master UCITS including, where agreed between the parties, the terms on which the master UCITS may settle redemption requests by a transfer of assets in kind to the feeder UCITS, notably in the cases referred to in Regulations 80(4) and (5);

(g) procedures to ensure enquiries and complaints from unit-holders are handled appropriately; and

(h) where the trust deed, deed of constitution or articles and prospectus of the master UCITS give it certain rights or powers in relation to unit-holders, and the master UCITS chooses to limit or forego the exercise of all or any such rights and powers in relation to the feeder UCITS, a statement of the terms on which it does so.

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to events affecting dealing arrangements:

(a) the manner and timing of a notification by either UCITS of the temporary suspension and the resumption of repurchase, redemption, purchase or subscription of units of that UCITS; and

(b) arrangements for notifying and resolving pricing errors in the master UCITS.

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to standard arrangements for the audit report:

(a) where the feeder UCITS and the master UCITS have the same accounting years, the coordination of the production of their periodic reports;

(b) where the feeder UCITS and the master UCITS have different accounting years, arrangements for the feeder UCITS to obtain any necessary information from the master UCITS to enable it to produce its periodic reports on time and which ensure that the auditor of the master UCITS is in a position to produce an ad hoc report on the closing date of the feeder UCITS in accordance with Regulation 82(1)(a).

The agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall include the following with regard to changes to standing arrangements:

(a) the manner and timing of notice to be given by the master UCITS of proposed and effective amendments to its trust deed, deed of constitution or articles, prospectus and key investor information, if these details differ from the standard arrangements for notification of unit-holders laid down in the master UCITS fund rules, instruments of incorporation or prospectus;

(b) the manner and timing of notice by the master UCITS of a planned or proposed liquidation, merger, or division;

(c) the manner and timing of notice by either UCITS that it has ceased or will cease to meet the qualifying conditions to be a feeder UCITS or a master UCITS respectively;

(d) the manner and timing of notice by either UCITS that it intends to replace its management company, its trustee, its auditor or any third party which is mandated to carry out investment management or risk management functions;

(e) the manner and timing of notice of other changes to standing arrangements that the master UCITS undertakes to provide.

Where the feeder UCITS and the master UCITS are established in the State, the agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall provide that the law of the State shall apply to the agreement and that both parties agree to the exclusive jurisdiction of the courts of the State.

Where the feeder UCITS and the master UCITS are established in different Member States, the agreement between the master UCITS and the feeder UCITS referred to in Regulation 80(1) shall provide that the applicable law shall be either the law of the Member State in which the feeder UCITS is established or that it shall be that of the Member State in which the master UCITS is established and that both parties agree to the exclusive jurisdiction of the courts of the Member State whose law they have stipulated to be applicable to the agreement.

The management company’s internal conduct of business rules referred to in Regulation 80(1)(c) shall include appropriate measures to mitigate conflicts of interest that may arise between the feeder UCITS and the master UCITS, or between the feeder UCITS and other unit-holders of the master UCITS, to the extent that these are not sufficiently addressed by the measures applied by the management company in order to meet requirements of Regulations 22(2)(b), 23(1)(e), 24(1)(e) and 71(b).

10.

The management company’s internal conduct of business rules referred to in Regulation 80(1)(c) shall include at least the following with regard to the basis of investment and divestment by the feeder UCITS:

(a) a statement of which share classes of the master UCITS are available for investment by the feeder UCITS;

(b) the charges and expenses to be borne by the feeder UCITS, and details of any rebate or retrocession of charges or expenses by the master UCITS; and

(c) where applicable, the terms on which any initial or subsequent transfer of assets in kind may be made from the feeder UCITS to the master UCITS.

11.

The management company’s internal conduct of business rules referred to in Regulation 80(1)(c) shall include at least the following with regard to standard dealing arrangements:

(a) coordination of the frequency and timing of the net asset value calculation process and the publication of prices of units;

(b) coordination of transmission of dealing orders by the feeder UCITS, including, if applicable, the role of transfer agents or any other third party;

(c) where applicable, any arrangements necessary to take account of the fact that either or both UCITS are listed or traded on a secondary market;

(d) appropriate measures to ensure compliance with the requirements of Regulation 80(2);

(e) where the feeder UCITS and the master UCITS are denominated in different currencies, the basis for conversion of dealing orders;

(f) settlement cycles and payment details for purchases and redemptions of units of the master UCITS including, where agreed between the parties, the terms on which the master UCITS may settle redemption requests by a transfer of assets in kind to the feeder UCITS, notably in the cases referred to in Regulation 80(4) and (5); and

(g) where the trust deed, deed of constitution or articles and prospectus of the master UCITS give it certain rights or powers in relation to unit-holders, and the master UCITS chooses to limit or forego the exercise of all or any such rights and powers in relation to the feeder UCITS, a statement of the terms on which it does so.

12.

The management company’s internal conduct of business rules referred to in Regulation 80(1)(c) shall include at least the following with regard to events affecting dealing arrangements:

(a) the manner and timing of notification by either UCITS of the temporary suspension and the resumption of the repurchase, redemption or subscription of units of UCITS; and

(b) arrangements for notifying and resolving pricing errors in the master UCITS.

13.

The management company’s internal conduct of business rules referred to in Regulation 80(1)(c) shall include at least the following with regard to standard arrangements for the audit report:

(a) where the feeder UCITS and the master UCITS have the same accounting years, the coordination of the production of their periodic reports; and

(b) where the feeder UCITS and the master UCITS have different accounting years, arrangements for the feeder UCITS to obtain any necessary information from the master UCITS to enable it to produce its periodic reports on time and which ensure that the auditor of the master UCITS is in a position to make an ad hoc report on the closing date of the feeder UCITS in accordance with the first subparagraph of Regulation 80(2).

14.

Where the feeder UCITS and the master UCITS have concluded an agreement in accordance with Regulation 80(1), the agreement between the trustees of the master UCITS and the feeder UCITS shall provide that the law of the Member State applying to that agreement in accordance with Regulation 65(1)(b) shall also apply to the information-sharing agreement between both trustees and that both trustees agree to the exclusive jurisdiction of the courts of that Member State;

15.

Where the agreement between the feeder UCITS and the master UCITS has been replaced by internal conduct of business rules in accordance with Regulation 80(1)(c), the agreement between the trustees of the master UCITS and the feeder UCITS shall provide that the law applying to the information-sharing agreement between both trustees shall be either that of the Member State in which the feeder UCITS is established or, where different, that of the Member State in which the master UCITS is established, and that both trustees agree to the exclusive jurisdiction of the courts of the Member State whose law is applicable to the information-sharing agreement.

16.

(1) Where the feeder UCITS and the master UCITS have concluded an agreement in accordance with Regulation 80(1), the agreement between the auditors of the master UCITS and the feeder UCITS provides that the law of the Member State applying to that agreement in accordance with Regulation 82 shall also apply to the information-sharing agreement between both auditors and that both auditors agree to the exclusive jurisdiction of the courts of that Member State.

(2) Where the agreement between the feeder UCITS and the master UCITS has been replaced by internal conduct of business rules in accordance with Regulation 80(1)(c), the agreement between the auditors of the master UCITS and the feeder UCITS provides that the law applying to the information-sharing agreement between both auditors shall be that of the Member State in which the feeder UCITS is established or, where different, that of the Member State in which the master UCITS is established, and that both auditors agree to the exclusive jurisdiction of the courts of the Member State whose law is applicable to the information-sharing agreement.

PART 2 Liquidation, Merger or Division of master UCITS

17.

A feeder UCITS authorised by the Bank shall submit to the Bank no later than 2 months after the date on which the master UCITS informed it of the binding decision to liquidate, the following:

(a) where the feeder UCITS intends to invest at least 85 % of its assets in units of another master UCITS in accordance with Regulation 80(4)(a)—

(i) its application for approval for that investment,

(ii) its application for approval of the proposed amendments to its fund rules or instrument of incorporation,

(iii) the amendments to its prospectus and its key investor information in accordance with Regulations 92 and 102 respectively, and

(iv) the other documents required pursuant to Regulation 79(3);

(b) where the feeder UCITS intends to convert into a UCITS that is not a feeder UCITS in accordance with Regulation 80(4)(b):

(i) its application for approval of the proposed amendments to its fund rules or instrument of incorporation; and

(ii) the amendments to its prospectus and its key investor information in accordance with Regulations 92 and 102 respectively;

and

18.

By way of derogation from paragraph 17, where the master UCITS informed the feeder UCITS of its binding decision to liquidate more than 5 months before the date at which the liquidation will start, the feeder UCITS shall submit to its competent authorities its application or notification in accordance with one of subparagraph (a), (b) or (c) of paragraph 17 at the latest 3 months before that date.

19.

The feeder UCITS shall inform its unit-holders of its intention to be liquidated without undue delay.

20.

(a) The Bank shall inform a UCITS within 15 working days following the complete submission of the documents referred to in Regulation 79(3), whether the required approvals have been granted.

(b) On receiving the Bank’s approval pursuant to subparagraph (a), the feeder UCITS shall duly inform the master UCITS.

(c) The feeder UCITS shall take necessary measures to comply with the requirements of Regulation 80 as soon as possible after the competent authorities have granted the necessary approvals pursuant to Regulation 79.

(d) Where the payment of liquidation proceeds of the master UCITS is to be executed before the date on which the feeder UCITS is to start to invest in a different master UCITS pursuant to Regulation 80(4) or in accordance with its new investment objectives and policy pursuant to Regulation 80(5), the Bank shall grant approval subject to the following conditions:

(i) the feeder UCITS shall:

(I) receive the proceeds of the liquidation in cash; or

(II) receive some or all of the proceeds of the liquidation as a transfer of assets in kind where the feeder UCITS so wishes and where the agreement between the feeder UCITS and master UCITS or the internal conduct of business rules and the binding decision to liquidate provide for it;

(ii) any cash held or received in accordance with this subparagraph may be re-invested only for the purpose of efficient cash management before the date on which the feeder UCITS is to start to invest either in a different master UCITS or in accordance with its new investment objectives and policy.

(e) Where sub-paragraph (d)(i)(II) applies, the feeder UCITS may realise any part of the assets transferred in kind for cash at any time.

21.

A feeder UCITS authorised by the Bank shall submit to the Bank, not later than one month after the date on which the feeder UCITS received the information of the planned merger or division in accordance with the Regulation 80(5)(a), the following:

(a) where the feeder UCITS intends to continue to be a feeder UCITS of the same master UCITS:

(i) its application for approval thereof;

(ii) where applicable, its application for approval of the proposed amendments to its fund rules or instrument of incorporation; and

(iii) where applicable, the amendments to its prospectus and its key investor information in accordance with Regulations 92 and 102 respectively;

(b) where the feeder UCITS intends to become a feeder UCITS of another master UCITS resulting from the proposed merger or division of the master UCITS or where the feeder UCITS intends to invest at least 85% of its assets in units of another master UCITS not resulting from the merger or division—

(i) its application for approval of that investment,

(ii) its application for approval of the proposed amendments to its trust deed, deed of constitution or articles,

(iii) the amendments to its prospectus and its key investor information in accordance with Regulations 92 and 102 respectively, and

(iv) the other documents required pursuant to Regulation 79(3);

(c) where the feeder UCITS intends to convert into a UCITS that is not a feeder UCITS in accordance with Regulation 80(4)(b)—

(i) its application for approval of the proposed amendments to its fund rules or instrument of incorporation, and

(ii) the amendments to its prospectus and its key investor information in accordance with Regulations 92 and 102 respectively;

(d) where the feeder UCITS intends to be liquidated, a notification of that intention.

22.

For the purpose of the application of subparagraphs (a) and (b) of paragraph 21 the following should be taken into account:

(a) the expression “continues to be a feeder UCITS of the same master UCITS” refers to cases where:

(i) the master UCITS is the receiving UCITS in a proposed merger, and

(ii) the master UCITS is to continue materially unchanged as one of the resulting UCITS in a proposed division.

(b) The expression “becomes a feeder UCITS of another master UCITS resulting from the merger or division of the master UCITS” refers to cases where—

(i) the master UCITS is the merging UCITS and, due to the merger, the feeder UCITS becomes a unit-holder of the receiving UCITS, and

(ii) the feeder UCITS becomes a unit-holder of a UCITS resulting from a division that is materially different to the master UCITS.

23.

By way of derogation from paragraph 21, in cases where the master UCITS provided the information referred to in or comparable with Regulation 61 to the feeder UCITS more than 4 months before the proposed effective date, the feeder UCITS shall submit to the Bank its application or notification in accordance with one of subparagraph (a), (b), (c) or (d) of paragraph 21 at the latest 3 months before the proposed effective date of the merger or division of the master UCITS.

24.

The feeder UCITS shall inform its unit-holders and the master UCITS of its intention to be liquidated without undue delay.

25.

(a) The feeder UCITS shall be informed within 15 working days following the complete submission of the documents referred to in Regulation 79(3), whether the competent authorities have granted the required approvals.

(b) Upon receipt of the information that the competent authorities have granted approval according to subparagraph (a), the feeder UCITS shall inform the master UCITS of it.

(c) After the feeder UCITS has been informed that the competent authorities have granted the necessary approvals pursuant to Regulation 79, the feeder UCITS shall take the necessary measures to comply with the requirements of Article 64 of Directive 2009/65/EC without undue delay.

(d)(i) In the cases of Regulation 80(5) and 84(1), the feeder UCITS shall exercise the right to request repurchase and redemption of its units in the master UCITS in accordance with Article 45(1), and subparagraph 3 of Article 60(5), of Directive 2009/65/EC, where the competent authority of the UCITS has not granted the necessary approvals required pursuant to Article 22(1) of that Directive by the working day preceding the last day on which the feeder UCITS can request repurchase and redemption of its units in the master UCITS before the merger or division is effected.

(ii) The feeder UCITS shall also exercise this right in order to ensure that the right of its own unit-holders to request repurchase or redemption of their units in the feeder UCITS according to Article 64(1)(d) of Directive 2009/65/EC is not affected.

(iii) Before exercising the right referred to in clause (i), the feeder UCITS shall consider available alternative solutions which may help to avoid or reduce transaction costs or other negative impacts for its own unit-holders.

(e)(i) Where the feeder UCITS requests repurchase or redemption of its units in the master UCITS, it shall receive one of the following:

(I) the repurchase or redemption proceeds in cash;

(II) some or all of the repurchase or redemption proceeds as a transfer in kind where the feeder UCITS so wishes and where the agreement between the feeder UCITS and the master UCITS provides for it.

(ii) Where clause(i)(II) applies, the feeder UCITS may realise any part of the transferred assets for cash at any time.

(f) The competent authorities of the feeder UCITS shall grant approval on the condition that any cash held or received in accordance with subparagraph (e) may be re-invested only for the purpose of efficient cash management before the date on which the feeder UCITS is to start to invest in the new master UCITS or in accordance with its new investment objectives and policy.

26.

The information-sharing agreement between the trustee of the master UCITS and the trustee of the feeder UCITS referred to in Regulation 81(1)(a) shall include the following:

(a) the identification of the documents and categories of information which are to be routinely shared between both trustees, and whether such information or documents are provided by one trustee to the other or made available on request;

(b) the manner and timing, including any applicable deadlines, of the transmission of information by the trustee of the master UCITS to the trustee of the feeder UCITS;

(c) the coordination of the involvement of both trustees, to the extent appropriate in view of their respective duties under national law, in relation to operational matters, including:

(i) the procedure for calculating the net asset value of each UCITS, including any measures appropriate to protect against the activities of market timing in accordance with Regulation 80(2);

(ii) the processing of instructions by the feeder UCITS to purchase, subscribe or request the repurchase or redemption of units in the master UCITS, and the settlement of such transactions, including any arrangement to transfer assets in kind;

(d) the coordination of accounting year-end procedures;

(e) what details of breaches by the master UCITS of the law and the fund rules or instrument of incorporation the trustee of the master UCITS shall provide to the trustee of the feeder UCITS and the manner and timing of their provision;

(f) the procedure for handling ad hoc requests for assistance from one trustee to the other; and

(g) identification of particular contingent events which ought to be notified by one trustee to the other on an ad hoc basis, and the manner and timing in which this will be done.

27.

The irregularities referred to in Regulation 81(2) which the trustee of the master UCITS detects in the course of carrying out its function under these Regulations and which may have a negative impact on the feeder UCITS shall include, but are not limited to:

(a) errors in the net asset value calculation of the master UCITS;

(b) errors in transactions for or settlement of the purchase, subscription or request to repurchase or redeem units in the master UCITS undertaken by the feeder UCITS;

(c) errors in the payment or capitalisation of income arising from the master UCITS, or in the calculation of any related withholding tax;

(d) breaches of the investment objectives, policy or strategy of the master UCITS, as described in its fund rules or instrument of incorporation, prospectus or key investor information; and

(e) breaches of investment and borrowing limits set out in national law or in the fund rules, instruments of incorporation, prospectus or key investor information.

28.

The information-sharing agreement between the auditor of the master UCITS and the auditor of the feeder UCITS referred to in Regulation 82(1)(a) shall include the following:

(a) the identification of the documents and categories of information which are to be routinely shared between both auditors;

(b) whether the information or documents referred to in subparagraph (a) are to be provided by one auditor to the other or made available on request;

(c) the manner and timing, including any applicable deadlines, of the transmission of information by the auditor of the master UCITS to the auditor of the feeder UCITS;

(d) the coordination of the involvement of each auditor in the accounting year-end procedures for the respective UCITS;

(e) identification of matters that shall be treated as irregularities disclosed in the audit report of the auditor of the master UCITS for the purposes of Regulation 82(2);

(f) the manner and timing for handling ad hoc requests for assistance from one auditor to the other, including a request for further information on irregularities disclosed in the audit report of the auditor of the master UCITS.

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