Ireland has been promising for some time to introduce a new type of corporate fund structure known as an “ICAV” which will not be required to be incorporated under the Irish Companies Acts and will not be a public limited company (“plc”). The Irish Collective Asset-management Vehicles Act 2015 (No. 2/2015) (the “ICAV Act”) was commenced with effect from 12 March, 2015, pursuant to Ministerial order. The Central Bank of Ireland (the “Central Bank”) is now accepting applications for ICAVs and the relevant application forms are available on their website.
It is widely anticipated that this ICAV structure will be the default structure for asset managers seeking to establish new funds in Ireland.
It is expected that the ICAV will;
- offer a more cost and administratively efficient structure for corporate fund vehicles benefitting from the disapplication of company law provisions originally intended, designed for trading companies.
- be structured so that they can “check-the-box” to be treated as a partnership or disregarded entity for US federal tax purposes. That will facilitate investment by US taxable and/or US taxable and tax-exempt investors in a master feeder structure.
- be subject to the same attractive Irish tax regime that currently applies to plcs.
- not be subject to risk spreading/diversification requirements.
- facilitate account preparation at umbrella or sub-fund level.
- be available to investment companies from other jurisdictions who wish to re-domicile, register and continue in Ireland as an ICAV.
Central Bank filing
ICAVs will be incorporated once authorised by the Central Bank as a UCITS or AIF under existing UCITS and AIFMD frameworks. ICAV application forms for registration are available on the Central Bank website and should be completed and submitted to ICAVregistrations@centralbank.ie.
Conversion steps and necessary documents
Existing UCITS plcs and AIF plcs can continue to operate as such post-introduction of the ICAV Act however these structures have the option to convert to ICAV status in a straightforward manner by making an application to the Central Bank. The application requirements, the registration/de-registration process and the effects of conversion are highlighted below.
The conversion process will require completion of an application form which must be submitted to the Central Bank, accompanied by: (a) a copy of the investment company’s certificate of incorporation; (b) a certified copy of the investment company’s memorandum and articles of association and of the instrument of incorporation in respect of the proposed ICAV; (c) details of the investment company’s registered office, directors and secretary; (d) a statutory declaration of a director of the company (accompanied by an independent person’s report); (e) a declaration of solvency; (f) a schedule of charges or securities interests created or granted by the company; and (g) details of the proposed name of the ICAV.
The conversion process is completed by the Central Bank issuing a registration order in respect of the registration of the company as an ICAV and entering in a register the details of the charges and securities interests of the ICAV. Once the company is registered as an ICAV, it can then apply to be deregistered at the Companies Registration Office with effect from the date of its ICAV registration.
(iii) Conversion will not affect contracts, etc.
Registration as an ICAV does not affect any contract made, resolution passed or any other act or things done in relation to the company as previously established and registered in Ireland during the period that it was so established and registered (i.e. prior to the ICAV registration) nor does it operate to affect the rights, authorities, functions, liabilities or obligations of the company or any person or to render defective any legal proceedings by or against the company
It is anticipated that the introduction of ICAVs will add to the solutions and structures already available in Ireland to fund promoters and will enhance Ireland’s competitiveness as a funds domicile.
It is expected that advisers will present the ICAV as the default option in which asset managers launch their new UCITS/AIF product. We have developed a suite of ICAV fund documentation for this purpose.
Your local service provider can assist with an analysis of existing products to enable those clients decide if they wish to convert to an ICAV.
Brian Dillon and Maura O’Driscoll, Dillon Eustace