The provisions of the Companies (Miscellaneous Provisions) Act 2009 (the Act) which facilitate the migration of fund companies into Ireland from prescribed jurisdictions come into effect today.The named jurisdictions from which funds may migrate using this mechanism are: the British Virgin Islands, the Cayman Islands, Jersey, Guernsey, Bermuda and the Isle of Man. Further jurisdictions may be added to this list in due course.
This mechanism will provide an alternative to merging, or entering into a formal scheme of amalgamation, with a successor Irish fund company (which has, up until now, been the preferred method for fund companies to move to Ireland).
The new procedure aims to maximise efficiency and to minimise any regulatory, tax or other burdens on the migrating company. It will enable funds structured as companies to convert to EU regulated funds, enjoying the market advantage of recognised investor protection safeguards (such as independent custody and administration, including valuation). Migrating funds will have the flexibility to structure as UCITS (with the benefit of the UCITS passport) or as Irish Qualifying Investor Funds (with the benefit of greater flexibility in investment options). Funds may also migrate to Ireland so as to position themselves to deal with the potential challenges presented by the AIFM Directive (such as the marketing of non EU funds in the EU) and other initiatives.
The new process ensures that there is no change in the legal entity and thus investors remain shareholders in the same entity. This should:
- ensure there is no chargeable event for the fund or its investors, as a result of the migration, as it will not involve a sale or transfer of assets or shares,
- eliminate or significantly reduce stamp duties, other taxes and other costs relating to migration as there will be no change in the beneficial ownership of the fund's assets,
- minimise delays and unnecessary paperwork,
- make it easier to use the track record of the fund for marketing purposes.
The Irish limb of the process will be quite streamlined. It should involve a single filing of registration documentation with each of the Irish Companies Registration Office and the Irish Financial Regulator.
The following are the key steps and requirements.
- The migrating fund will apply to the Irish Registrar of Companies to be registered in Ireland by way of continuation of existence.
- The application will be signed by a director of the migrating fund and will be accompanied by the prescribed registration documents (which will include a director's statutory declaration in respect of the migrating fund and a declaration as to its solvency) as well as a further declaration as to compliance with the Act's requirements by a solicitor or director.
- The migrating fund must have obtained confirmation from the Irish Financial Regulator that it proposes to authorise the applicant (whether as a UCITS or a non UCITS) .This will mean that any migrating fund will have to comply with all of the relevant requirements of the Irish Financial Regulator. We anticipate that the finalisation of documentation for the Irish Financial Regulator and the Irish Registrar of Companies will run in parallel.
- The migrating fund must be solvent with no action pending to wind it up or to appoint a liquidator to it.
- Notice of redomiciliation must be served on the creditors of the migrating fund.
- Any necessary contractual consents must have been obtained by the migrating fund.
- A schedule of charges and security interests granted by the migrating fund which, if granted by an Irish company would have been registerable in Ireland, must be filed.
- The migration process will be subject to compliance with the relevant appropriate legislative and regulatory requirements in the country of origin of the migrating fund and to compliance with the requirements of the constitution of the migrating fund.
We anticipate that the Irish Registrar of Companies will register the migrating fund and the Irish Financial Regulator will authorise the fund on the same day. From the date of registration the migrating fund company shall be deemed to be a company formed under the Irish Companies Acts. Following such registration, the migrated fund company must apply to be deregistered in its country of origin.