Ireland’s Central Bank sets out proposals for depositaries of AIFs not investing in assets which must be held in custody

On 19 November 2018, the Central Bank of Ireland published a Notice of Intention setting out its intended framework for entities acting as depositary for specific types of Alternative Investment Funds (AIFs) which generally do not invest in assets that must be held in custody. Comments are invited on these proposals until 19 January 2019.


On 19 November 2018, the Central Bank of Ireland (the Central Bank) published a Notice of Intention (the Notice), in which it proposes a regulatory framework for entities applying to act as depositary for specific types of Alternative Investment Funds (AIFs) which generally do not invest in assets that must be held in custody, under Regulation 22(3)(b) of Ireland’s AIFM Regulations 2013 (the AIFM Regulations).

The Central Bank invites comments from stakeholders on its proposals by no later than 19 January 2019 - comments should be submitted by email to

In the meantime, the Central Bank will consider any applications to act as a depositary in respect of such an AIF in line with its intentions as set out in the Notice.


Regulation 22(3) of the AIFM Regulations sets out the different categories of entity which can be appointed as a depositary of an AIF.

Regulation 22(3)(b) permits the Central Bank to allow another type of depositary (a Real Asset Depositary), in relation to a closed ended AIF which does not generally invest in assets that must be held in custody.

Such an entity must:

  • carry out depositary functions as part of its professional or business activities
  • be subject to:
    • mandatory and legally recognised professional registration, or
    • legal or regulatory provisions or rules of professional conduct and
  • be able to provide sufficient financial and professional guarantees in order for it to perform its depositary functions effectively.

At present, the Central Bank’s AIF Rulebook does not provide for this category of depositary.

The Central Bank’s proposals

The Notice contains the Central Bank’s proposals to make provision for an entity to act as a Real Asset Depositary for an AIF which primarily invests in assets – such as title deeds or other types of physical assets which are not exchange traded - which are not capable of being registered or held in an account directly or indirectly in the depositary’s name.

The Central Bank intends to require an entity which applies to be a Real Asset Depositary to:

  • seek authorisation under the Investment Intermediaries Act 1995
  • comply with the majority of the Depositary Requirement conditions set out in Chapter 5 of the AIF Rulebook, and
  • satisfy the Central Bank that it has, and maintains:
    • appropriate expertise and experience to carry out its depositary tasks
    • sufficient resources and adequate governance / internal organisation
    • the ability to meet the capital requirement of €125,000 or one quarter of total expenditure (whichever is higher), and
    • two Irish resident directors.

In addition, a Real Asset Depositary would be subject to a number of obligations set out in Chapter 5 of the AIF Rulebook, namely:

  • reporting
  • business continuity planning
  • reporting annually to investors in the AIF on the management by the AIFM, and
  • reporting breaches to the Central Bank.

A Real Asset Depositary would be allowed to safe-keep title documents of "other assets" (ie, those which do not constitute "financial instruments that can be held in custody" for the purposes of Regulation 22(8)(a) of the AIFM Regulations).

Where the AIF to which the Real Asset Depositary is appointed invests in financial instruments which can be held in custody, and the Real Asset Depositary does not propose to delegate safe-keeping of these or to enter into agreements with its sub-custodian to discharge the related liability, the Central Bank intends to require, as a condition of authorisation, that the Real Asset Depositary holds sufficient financial resources to cover the value of the financial instruments.

The Notice also sets out the Central Bank’s intention:

  • to prohibit a Real Asset Depositary from:
    • providing for the safe-keeping of assets other than documents of title (such as precious metal, wine or art) unless the Central Bank has received and accepted satisfactory evidence of the depositary’s capacity to do so, and
    • acting for retail AIFs
  • to require:
    • disclosure to investors on the status of the Real Asset Depositary, the limited nature of its activities and the liability which applies, and
    • those applying to be a Real Asset Depositary to possess professional indemnity insurance for loss or damage caused through the negligent performance of its activities. (The Central Bank notes that it is “likely” that a pre-determined level of cover would be required, depending on the portfolio value of the AIF(s) to which the Real Asset Depositary is appointed.)
  • to limit the holding of financial instruments to those which the relevant AIF might acquire in limited circumstances (such as for cash management, due to an IPO strategy or private equity acquisitions of publicly held companies).

Safekeeping and oversight obligations

Although the AIFM Regulations allow a more flexible regime in terms of the category of entities which may be a Real Asset Depositary, the detailed safe-keeping and oversight requirements applicable to all depositaries would not be waived, nor would the attendant liability.

An entity applying to be a Real Asset Depositary must, therefore, be able to demonstrate to the Central Bank that it:

  • is able to meet the safekeeping and oversight obligations under the AIFM Regulations
  • has effective policies and procedures to ensure that the depositary oversight role is carried out, and
  • has the level of access necessary to effectively oversee the AIFM and any of its delegates, particularly those appointed to carry out fund administration or portfolio management.

Next steps

The Central Bank invites stakeholders to comment on the proposals set out in the Notice by email (to by 19 January 2019.

Depending on the outcome of the Central Bank’s review, requirements applicable to Real Asset Depositaries will be included in the AIF Rulebook and would be subject to consultation in that context.

In the meantime, the Central Bank will consider applications to act as a Real Asset Depositary in line with the intentions outlined in the Notice.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.