On 27 September 2024, the Central Bank of Ireland (the "Central Bank") published its process clarification with respect to UCITS and AIF fund name changes following the publication of ESMA's guidelines on funds' names using ESG or sustainability-related terms (the "Guidelines") earlier this year.
In addition, the Central Bank has confirmed that the "fast-track" process it introduced in February 2023, to facilitate updates to pre-contractual disclosures in order to provide information to investors on investments in taxonomy-aligned fossil gas and nuclear economic activities will close effective 18 October 2024.
Background
ESG Fund Naming Rules
Following a consultation in November 2022 with the aim of developing a set of guidelines on fund names which contain ESG or sustainability-related terms, on 21 August 2024, ESMA published the Guidelines as translated in all official EU languages. The Guidelines seek to address the potential risk of greenwashing in fund names by introducing quantitative thresholds criteria for the use of ESG- and sustainability-related terminology. During the consultation, ESMA had outlined its view that a fund name can have a significant impact on an investor's investment decision that the objective of the Guidelines was to ensure that investors are protected against unsubstantiated or exaggerated sustainability claims in fund names while also providing asset managers with clear and measurable criteria to assess their ability to use ESG or sustainability-related terms in fund names.
The Central Bank has now established a streamlined filing process in order to facilitate the implementation of the Guidelines for funds that are obliged to change their names. This streamlined process is limited solely to name changes required to comply with the Guidelines and cannot be used to make additional changes to the relevant offering documents or to effect a reclassification of the fund disclosures pursuant to Regulation (EU) 2019/2088 ("SFDR").
Pre-Contractual and Periodic Reporting Annexes
On 20 February 2023, legislation1 amending the provisions of Delegated Regulation (EU) 2022/1288 ("SFDR Level 2") came into force obliging fund management companies with Article 8 or Article 9 funds to make the required disclosures including using updated pre-contractual annexes in order to include information on investments in taxonomy-aligned fossil gas and nuclear economic activities.
To facilitate this update, the Central Bank had introduced a fast-track filing process for required pre-contractual updates in the offering documents of SFDR Article 8 and Article 9 funds. This SFDR Level 2 fast-track filing process is now set to end.
Central Bank Approach: Streamlined Process
The Central Bank has now confirmed that fund name changes and corresponding updates to fund prospectuses required to comply with the requirements set out in the Guidelines can be effected via submission to the dedicated SFDR mailbox SFDR@centralbank.ie. For other SFDR-related amendments or re-classification filings the Central Bank's standard post-authorisation processes apply.
UCITS management companies and alternative investment fund managers seeking to avail of the fast-track will be required to certify compliance of the revised fund name with the Guidelines via an attestation that must be submitted to the Central Bank with the request seeking a change of name of the relevant UCITS or AIF.
The attestation should state that:
- The amendments made are in accordance with the Guidelines; and
- No other amendments have been made to the fund documentation.
We have set out the key dates of the transition period for the Guidelines and the Central Bank's process in the table below. The table also includes confirmation of the effective date of the closure of the fast-track process for the SFDR Level 2 updates.
