The Irish Collective Asset-management Vehicles Act 2015 (the ICAV Act) was signed into law on 4 March 2015. The ICAV Act allows for the establishment of a new Irish corporate investment fund structure (the Irish Collective Asset- management Vehicle or ICAV) that is tailored to the needs of the global funds industry. The ICAV sits alongside the other 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). As with Irish VCCs, ICAVs may be set-up as a stand-alone structure or an umbrella structure. Key advantages include;
- The ICAV benefits from being subject to a separate and distinct corporate governance regime which has been drafted specifically for use by the funds industry. As such, the ICAV is not 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 Irish Companies Acts, but which are generally more appropriate to trading companies than fund vehicles. The ICAV represents a simpler and more cost effective choice of corporate vehicle for funds. This should also “future proof” the ICAV against future changes in Irish and European company law.
- The ICAV is able to elect its classification under the US ‘check-the-box’ taxation rules (which is of particular interest to managers of funds targeting US investors). This allows an ICAV to be treated as a partnership for US tax purposes and thereby avoid certain adverse tax consequences for US taxable investors. This is in contrast to the status of the VCC which is unable to ‘check-the-box’ for US tax purposes, and 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’. The Central Bank of Ireland acts as the incorporating, authorising and supervisory body for the ICAV. It has a page on its website with links to application forms for applications for registration and post-registration filings and an ICAV Q&A. The Central Bank also updated its funds authorisation application forms and its AIF Rulebook to reflect the introduction of the ICAV.