Ireland: Law of Offshore
Investment Funds Law
The Central Bank of Ireland supervises investment funds under the following laws (and its own regulations) (between 2003 and 2010, the Financial Services Regulatory Authority was responsible for the supervision of all financial institutions).
- Statutory Instrument No. 78 1989 (UCITS Regulations);
- Companies Act 1990;
- Unit Trusts Act 1990;
- Investment Limited Partnerships Act 1994.
Investment funds can take various forms; the most commonly used are investment companies, unit trusts, limited partnerships, or limited duration companies (see Forms of Company for basic information on formation, etc).
Funds of funds are permitted except for UCITS vehicles, but must not place more than 20% of net assets in the units of any one other scheme, which must itself offer a level of protection equivalent to that available in Ireland, and must itself not invest in units of other funds of funds; umbrella funds are permitted for all types of investment fund. These rules are somewhat relaxed for funds which are marketed only to professional investors, known as 'Qualifying Investors', who must invest a specified amount, and have a net worth (or discretionary investments if a corporation) above a designated amount. Such limited-investor funds are known as 'QIF' (Qualified Investor Funds).
Funds need to have a presence in Ireland, depending on their constitution: UCITS must have their registered office and their head office in Ireland; funds based on limited partnerships must also have a registered office and a principal place of business in Ireland; unit trusts have to use an Irish-incorporated management company (there are some requirements for its solidity, and it must have at least two Irish-resident directors); investment companies with variable capital must be Irish-incorporated.
All funds must have a trustee (who must be separate from the manager in the case of a unit trust); the trustee must either be a bank with an Irish license and a designated minimum share capital, or must be wholly-owned by such a bank or an equivalently solid financial institution.
All funds must publish a prospectus, which must be approved by the Central Bank. Annual and half-yearly reports must be sent to shareholders and to the Central Bank. Shareholders' meetings must be held in Ireland; and there must be regular directors' meetings, which should preferably be in Ireland.
The Irish Stock Exchange: Listing of Funds
As of December 2012, 2,579 funds were listed on the Irish Stock Exchange (ISE), of which about half are domiciled in Ireland, mostly in the International Financial Services Centre in Dublin (see Offshore Legal and Tax Regimes). The recent success of the ISE in attracting funds is partly due to its flexible and rapid procedures; it has a specialised department to deal with the listing of offshore funds.
Listing does not depend on the underlying form of a fund; both open-ended and closed-ended funds are admitted, and they can be structured as investment companies, unit trusts, limited partnerships or limited duration companies. Listing rules accommodate equity, bond, derivative, venture capital and property funds; funds issuing debt securities may be listed subject to a number of prudential conditions.
The ISE will list funds for professional investors (meaning a minimum initial investment from any domicile; funds for retail investors must be domiciled in a jurisdiction the ISE considers 'regulated'; currently that means EU member states, Guernsey, Jersey, the Isle of Man, Hong Kong or Bermuda.
The listing process takes approximately four to six weeks. To list on the Irish Stock Exchange, an EU fund must pay a listing fee of EUR2,000 plus a similar amount in annual fees. Non-EU funds must pay EUR2,180 to list.
There needs to be a sponsoring broker who will handle the listing process. There are sets of rules governing listing particulars, directors, investment managers, custodial arrangements. financial disclosure, investment policies and continuing obligations. A streamlined listing process was recently introduced with the co-operation of the Central Bank whereby new open-ended funds which combine their offering documents and listing particulars are exempted from many of the procedural steps and requirements of the usual process.