Like cuckoos that occupy the nests of other birds, Irish funds that wanted to structure as corporates have always had to use Ireland’s company laws. But Irish fund professionals have welcomed government plans to give funds their own legal corporate structure.
Funds requiring a corporate structure have traditionally been created as public limited companies (PLCs) and obliged to follow sometimes superfluous rules applied to other public companies. But the ministry of finance has proposed a structure that should cut down on administrative burdens.
The ministry of finance has, in principle, proposed the development of legislative proposals for a new corporate structure as part of Sicav legislation.
The Irish Funds Industry Association (IFIA) says this will create flexibility and cut down on administrative costs. But the structure will also be of particular interest to US fund managers because it meets their “check-the-box” requirements.
Ken Owens, IFIA chairman, said the trade body had recently met “hundreds” of American managers on its US roadshow.
“In 2011 Ireland was the managers’ European domicile of choice attracting twice as much in new Ucits monies as all others put together. This new structure will make Ireland even more attractive to managers all over the globe, but especially in the US.”
Investment funds in Ireland structured as corporates are usually incorporated as public limited companies (PLCs) under Part XIII of the Companies Act 1990. The IFIA said that while PLCs continued to be an “extremely effective and popular structure”, the Irish funds industry believes that managers will benefit from the creation of a structure which is designed specifically for investment funds and which is not subject to rules which were designed for other forms of company.
It will remove the need for compliance with various requirements under Irish company law which have no real purpose where investment vehicles are concerned, the IFIA said.
PLCs will continue to be available to promoters who wish to use them and conversion to the new structure will be optional for existing PLCs.
Under US check-the-box taxation rules, corporate entities have to elect their own classification and it is believed the Sicav will allow for this.
The proposed legislation is likely to be enacted by the end of 2012.
The IFIA, quoting figures from the European Fund and Asset Managers Association, said that in 2011 Ireland attracted some €60 billion in new Ucits monies – twice as much as all others put together.
©2012 funds europe