The ICAV Bill has now been passed by both Houses of the Oireachtas. The ICAV is a new form of corporate vehicle specifically tailored for the funds industry. The ICAV will sit alongside the available fund structures in Ireland, namely the variable capital company (VCC), the unit trust, the common contractual fund (CCF) and the investment limited partnership (ILP). The Central Bank will act as both the incorporating and authorising body for ICAVs. 

The key advantages of an ICAV are as follows:  

  • the ICAV will benefit from being subject to a separate and distinct corporate fund regime which has been drafted specifically for use by the funds industry. As such, the ICAV will not be subject to a number of the general Irish and European company law requirements which are applicable to VCCs by virtue of their incorporation under the Companies Acts but are generally more appropriate to trading companies. The ICAV should, accordingly, represent a simpler and more cost effective choice of corporate vehicle for funds.
  • Additionally, and of particular interest to managers of funds targeting US investors, the ICAV will be able to elect its classification under the US ‘check-the-box’ taxation rules. This will allow an ICAV to be treated as a partnership for US tax purposes and so avoid certain adverse tax consequences for US taxable investors. This is in contrast to the status of the VCC which is not able to ‘check-the-box’ for US tax purposes. This gives rise to potential treatment as a Passive Foreign Investment Company (PFIC) for US investors which, depending on the precise status of the investor and the elections it makes, can give rise to a greater tax and administrative burden than if the fund is able to ‘check-the-box’.