The Handbook of Prudential Requirements for Investment Intermediaries contains a number of requirements that apply to the investment business activities of Investment Intermediaries. See Appendix 8 to view the whole document.
- An investment intermediary must at all times be in a position to meet its financial obligations in full as they fall due.
- An investment intermediary must maintain at all times a positive net asset position. Goodwill and other intangible assets are to be excluded from the calculation of a firm’s balance sheet assets for regulatory reporting purposes.
- An investment intermediary that acts as a product producer (i.e. appoints sub- brokers) must have minimum shareholders’ funds (or in the case of an unincorporated body of persons, a sole trader or partnership a positive capital account) of €50,000 at all times.
- Investment intermediaries, including unincorporated bodies of persons, sole traders and partnerships, are required to prepare annual audited accounts no later than six months after the end of the financial year-end. The audited accounts may be requested by the Central Bank at any time following this six month period after the investment intermediary’s financial yearend.
- An investment intermediary that is an unincorporated body of persons, a sole trader or partnership, shall prepare audited accounts in respect of:
• the investment intermediary’s overall financial position i.e. all of the intermediary’s activities, both regulated and unregulated; or
• the investment intermediary’s investment business activities.
- The accounts must clearly identify which is the case.
- An investment intermediary that is an unincorporated body of persons, a sole trader or partnership should include the following in its audited accounts:
• A profit and loss account or an income and expenditure account; and
• A balance sheet or capital account.
For intermediaries authorised under the Investment Intermediaries Act, a transitional arrangement applied to firms that held qualifying goodwill (under the former Handbook) as at the 30th of September 2014. Such qualifying goodwill must be verified by an auditor as representing the net present value of future cash flows arising from existing investment instruments (excluding goodwill on non-life insurance business). This arrangement will allow these firms a maximum of 5 years to reduce their goodwill, with the firm’s first write off being included in their financial accounts from the 1st of April 2015 (annual return due to be submitted by end October 2015). Any impairment of goodwill must be written off immediately and in full. Failure to submit the firm’s Annual Return on or before the due date (i.e. within 6 months of its financial year-end) resulted in the firm not being able to avail of this transitional arrangement
An investment intermediary that is a sole trader, partnership or an unincorporated body of persons shall supplement the audited accounts with the provision of a certificate of solvency signed by the sole trader or a separate certificate of solvency signed by each partner of a partnership or person in an unincorporated body of persons.
On an annual basis, intermediaries are required to make returns to the Central Bank of Ireland via their portal. It is important to note that even though it is no longer a requirement to submit *annual audited accounts to the Central Bank of Ireland, intermediaries authorised under the Investment Intermediaries Act should still have their audited accounts prepared on an annual basis.
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