Requests for a Derogation for a Retail Investor AIF/Qualifying Investor AIF/ ELTIF

A request for a derogation from the AIF Rulebook may be sought by a Retail Investor AIF/Qualifying Investor AIF/ ELTIF and will be considered on a case-by-case basis.  Fully completed derogation requests will generally be considered by a Derogation Committee which meets monthly.

Information on what should be included in such a request is set out below.

Submitting a request for a derogation

Requests a derogation should be sent to [email protected] and clearly marked as a “Request for Derogation for a [Retail Investor AIF] [Qualifying Investor AIF] [ELTIF] (delete as appropriate). Requests for a derogation must be made in good time to allow these to be considered by the Central Bank in advance of submitting an application for authorisation. The Central Bank will endeavour to assess all requests for a derogation and/or respond to queries in relation to same in a timely manner. 

A request for a derogation must contain the following information (non-exhaustive list):

  1. A detailed and comprehensive submission clearly outlining the rule(s) in the AIF Rulebook in respect of which a derogation is being sought. The submission should detail what aspects of the proposal do not fully comply with the AIF Rulebook, set out the reason why the relevant rule cannot be complied with, and why the proposal should be deemed acceptable;
  2. Copies of the prospectus/supplement(s), as relevant; and
  3. A letter requesting the derogation and demonstrating how the proposal does not dilute investor protections or conflict with the relevant legislative/regulatory provisions.

Details of derogation requests commonly granted by the Central Bank are set out in the table below.  However, each request is considered on a case-by-case basis based on the merits and the circumstances specific to the Retail Investor AIF / Qualifying Investor AIF / ELTIF  in question.  As a result, the Central Bank reserves the right not to grant the below mentioned derogations. 

  Derogation requests commonly granted 
  Nature of derogation

Central Bank expectations
 1. Derogation to permit investment by “the AIFM or an entity within the AIFM’s group” as an additional exemption from the minimum subscription requirement (as provided for in Chapter 2, Part 1, Section 1, i, paragraph 4 of the AIF Rulebook)  In addition to (1) and (2) above, applicants should provide a confirmation that:
  • In the case of investments by employees, the Qualifying Investor AIF will ensure that the management company, investment company or general partner, as appropriate, is satisfied that prospective unitholders fall within the criteria “the AIFM or an entity within the AIFM’s group”; and
  • The Qualifying Investor AIF will ensure that investing employees certify that they are availing of the exemption and that they are aware that the Qualifying Investor AIF is normally marketed solely to qualifying investors who are subject to a minimum subscription of €100,000.
 2. Derogation from Chapter 2, Part II, Section 2, paragraph 8 of the AIF Rulebook - regarding “A QIAIF to whom paragraph 2 of this section applies may not invest in an investment fund which itself invests more than 50% of net assets in another investment fund”

The Central Bank has previously considered requests for a derogation from this provision for Qualifying Investor AIFs which wish to make an investment into a fund (the “Feeder Fund”) (which itself invests into a fund (the “Master Fund”).

In addition to (1) and (2) above, applicants should provide:

  • A rationale for why the proposed structure is required in the context of the Qualified Investor AIF and how it benefits investors;
  • A confirmation that the Master Fund is providing an eligible exposure (i.e. one which a Qualifying Investor AIF could achieve by investing directly); and
  • Details of the fee structure being put in place between the Qualified Investor AIF, Feeder Fund and Master Fund to ensure there is no duplication of fees as a result of this structure.

The Central Bank may request any other information it deems necessary in the course of assessing individual requests, including certain confirmations from the management company (where one has been designated to act in respect of a particular fund) and in the absence of any such designation, the board of the Retail Investor AIF/ Qualifying Investor AIF / ELTIF if required.

If the derogation request is, in principle, granted by the Central Bank then as part of the application for authorisation, the derogation must be formally sought in the letter seeking authorisation of the Retail Investor AIF / Qualifying Investor AIF / ELTIF.

In accordance with Chapter 1, Part I, Section 3, i, paragraph 8 of the AIF Rulebook in the case of a Retail Investor AIF, Chapter 2, Part I, Section 3, i, paragraph 8 of the AIF Rulebook in the case of a Qualifying Investor AIF and Chapter 6, Part I, Section 3, i, paragraph 6 of the AIF Rulebook in the case of an ELTIF, details of derogations granted by the Central Bank must be included in the prospectus.