The latest hedge fund industry statistics show that Ireland’s global market share as a domicile for hedge funds doubled in the year to the end of Q3 of 2010. 63% of European hedge funds are now domiciled in Ireland. (Hedge Fund Research).
Ireland has now overtaken key offshore jurisdictions such as Bermuda and the British Virgin Islands as a choice of domicile for hedge funds and has further strengthened its position as the leading European hedge fund domicile.
The Irish Qualifying Investor Fund, or “QIF”, which is the structure of choice for managers establishing hedge funds in Ireland, has proven increasingly popular, as it constitutes an extremely versatile, tax efficient and regulated European fund product, which can be authorised in only 24 hours.
The Central Bank, as regulator of investment funds in Ireland, has continued to revise its regulations in recent years. Over the course of the past year, in particular, this has resulted in the increased attractiveness of the QIF and has ensured that key conditions are similar to those which investors and managers are familiar with based on products available from offshore centres.
For example, recent enhancements include: (i) reducing the minimum investment amount to Euro €100,000; (ii) allowing managers to apply their own branding to the sub-funds they manage independent to that of the fund’s platform sponsor (iii) permitting funds to charge fees and expenses to capital, provided certain requirements are met; (iv) dispensing with the requirement to produce semi-annual accounts; and (v) providing that extensions to offering periods only need to be notified to the Central Bank on an annual basis.
A key factor in the enormous growth recently recorded by QIFs is that the Irish regulatory regime is already aligned with many of the requirements of the Alternative Investment Fund Management Directive (the “AIFM Directive”), which was recently finalised by the European Commission. This Directive provides for a harmonised framework that will introduce the opportunity to passport Irish QIFs throughout Europe from 2013. As an on-shore, European, fully regulated product, the QIF automatically meets the material requirements of the AIFM Directive.