The eagerly awaited legislation introducing the Irish Collective Asset-management Vehicle (“ICAV”) was published by the Department of Finance today, 29 July 2014, in the form of the Irish Collective Asset-management Vehicle Bill 2014 (the “Bill”). The partners in Matheson’s Asset Management and Investment Funds Group have been to the fore in recommending and assisting in the development and implementation of Ireland’s new fund vehicle.
The Bill is now due to pass through the next stages of the Irish legislative process and it is anticipated that it will be enacted during the third quarter of 2014. On that basis, it is expected that ICAVs will become available, as an investment fund specific corporate vehicle, during the last quarter of this year. The Central Bank of Ireland has committed that it will be in a position to accept ICAV applications within two weeks of the legislation being enacted.
What is the ICAV?
The ICAV is a new corporate vehicle designed for Irish investment funds, providing a tailor-made corporate fund vehicle for both UCITS and alternative investment funds (“AIFs”). Conceived specifically with the needs of investment funds in mind, the ICAV, as a bespoke corporate investment fund vehicle, will have the advantage that it will not be automatically impacted by amendments to certain pieces of European and domestic company legislation that are targeted at trading companies rather than investment funds.
What are the benefits of the ICAV?
The ICAV will have a number of benefits over the existing Irish corporate structure. These will include the ability to dispense with AGMs in specific circumstances, the ability to produce more streamlined audited accounts and the ability to more easily amend constitutive documents. Another important feature of the ICAV will be its ability to elect its classification under the US check-the-box taxation rules. The Irish plc is not currently permitted to check-the-box for US tax purposes, meaning that it is treated as a separate entity and subject to two levels of tax: one at the corporate level where the income is earned and the second at the shareholder level when distributions are made. An “eligible entity” ie, an entity that can elect its classification under the check-the-box rules, can elect for alternative, more favourable tax treatment. The ICAV will be an eligible entity for these purposes.