CFCL Investment regulation – Ireland
Reference
Regulatory structure
Please refer to the Multi-Market Securities for the complete information about the Regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 27 February 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless CFCL for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding restrictions - Register Market - Ireland
Restrictions on clients
CFCL clients domiciled in Ireland are not allowed to hold the Irish investment funds on the Register market through CFCL. It is the responsibility of the client to ensure compliance with this restriction.
Certain funds may impose specific restrictions on investor domicile (for example, in the case of U.S. persons) due to taxation and securities law considerations. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Sanction laws may restrict the operation of the fund in countries that are subject to sanctions.
Restrictions on settlement
There is no general restriction on settlement on Irish investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Holding restrictions - CSD Market – Ireland
Foreign Investment Regulation
There is no specific law covering restrictions on foreign investment in Irish companies but it is for each company to determine their own rules and requirements relating to Foreign Ownership restrictions, which is covered within the Articles of Association of the company. Limitations on the ownership of a security type by a foreign investor are set by individual companies.
Foreign Ownership Limit: The inclusion of a limit on non-UK or non-EU shareholders is unusual, although possible. Historically, some companies involved in industries of national importance (airlines, etc.) had limits on the percentage of foreign interest, but since 2003, this has generally been relaxed. Where companies do operate such a scheme, upon acquisition of such securities, and at the point of registration, details of the nationality of the beneficiary are lodged with the registrar, either in paper form or electronically. This is done via a nationality declaration.
Please refer to Investment regulation - Ireland for complete information on Holding Restrictions for Ireland.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.
Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Category 1
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Category 2
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Category 3
Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – Register Market - Ireland
Disclosure Category: 1
Clearstream Fund Centre S.A. (“CFCL”) may fall under an obligation to disclose the identity and holdings of clients and/or ultimate beneficial owners in the case of holding Irish investment funds.
Consent
In order to comply with the applicable legislation, Clients with holdings in Irish investment funds or entering into transactions in the Irish market must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CFCL.
Disclosure Requirement
Clients are advised that the local laws and regulations oblige CFCL to disclose the requested information on CFCL clients and/or ultimate beneficial owners to the party that is entitled by law to receive such information.
Under Irish law, the investment fund, or a delegate on its behalf, is also required to verify the investor’s identity. They must monitor and collect AML documents on clients and applicants, including any ultimate beneficial owners. CBL acting as a sub-custodian for CFCL, as a nominee investor, is obliged to provide this information, if requested.
Background and legal basis
In the case of holding Irish investment fund units or shares, CFCL is obliged under the following legislation to disclose the identity and holdings of clients and/or ultimate beneficial owners:
- European Union (Anti-Money Laundering: Beneficial Ownership and Corporate Entities) Regulation 2016;
- The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010;
- Taxes Consolidation Act 1997;
- Transparency (Directive 2004/109/EC) (Amendment) (No.2) Regulation 2015.
CFCL as an intermediary is obliged under certain condition to disclose to the Irish Revenue Commissioners the identity of beneficial owners.
Sanctions
Failure to comply with the disclosure request from the regulators/authorities within the stipulated time frame may result in suspension of the business relation with the client until the requested information is fully and accurately disclosed.
Non-compliant clients will either not be permitted to receive any subscription/redemption proceeds or will be subjected to exit tax charges until they are fully compliant.
Obligation to report threshold crossings
“Transparency Regulations” obliges a person holding voting shares to disclose the acquisition and disposal of shares. Disclosure is required when the person’s voting rights exceed, fall below or reach a threshold of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50%, or 75% of the total amount of voting rights issued. The regulation will only be applicable to shares that are traded on a regulated market. Investment funds that are unlisted will not be subject to this reporting requirement.
Disclosure requirements – CSD Market – Ireland
Disclosure Category: 1
In the case of holdings in Irish equities, CBL is under an obligation, under Section 1062 of the Companies Act 20141, to disclose the identity and holdings of clients holding applicable positions.
Consent
In order to comply with the legislation as mentioned below, clients entering into transactions in the Irish domestic market consent and are hereby deemed to consent to disclosure and to the appointment of the issuer, regulator or other requesting party as their attorney-in-fact, under power of attorney to collect from CBL such information as is required to be disclosed.
Stamp duty
The Irish Statute Book Instrument Nr. 542/2003 and the Stamp Duty Consolidation Act 1999 organise stamp duty, which is charged to the beneficial owner via the custodian and CBL.
Shareholders who do not disclose the identity and residence of the final beneficial owner cannot benefit from a tax reduction for which they may be eligible.
Documentary evidence of details of all transactions and, where applicable, proof of relief from stamp duty must be retained for three years from the settlement date of each transaction and must be forwarded upon request from CBL or the revenue commissioners.
By holding Irish equities in an account with CBL, clients will be deemed to have authorised the disclosure to the revenue commissioners, upon request, of all details of transactions relating to Irish equities.
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right of issuers to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant information to facilitate such identification.
In accordance with the SDR II Law as amended, an intermediary (in this case, Clearstream Banking) shall, upon receipt of the shareholder identification disclosure request, transmit similar request to the next intermediaries in the custody chain (that is, Clearstream Banking clients with holdings in the requested securities). A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. Clearstream Banking will generate the response as required, with information regarding shareholder's identity, limited to Clearstream Banking books only.
Please refer to the Disclosure Requirements – Ireland for the complete information about the disclosure requirements.
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1. Formerly Section 81 of the Companies Act 1990.