Ireland has enacted new legislation to enable fund companies to migrate into Ireland and be registered as Irish regulated funds without any change in the legal entity. The process aims to maximise efficiency and to minimise any regulatory, tax or other burdens on the migrating company.

This new procedure 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). Other reasons why funds may migrate to Ireland would be to position themselves to deal with the potential challenges presented by both the AIFM Directive (such as the marketing of non EU funds in the EU) and OECD and EU tax initiatives affecting traditional offshore fund domiciles.

Ireland is estimated to service over 40% of global alternative investment funds as at October 2009. As at June 2009, Ireland had €1.4 trillion in total fund assets under administration, €650 billion of which are in non-domiciled funds and €703 billion in domiciled funds, according to the Irish Funds Industry Association. Many offshore funds are already serviced in Ireland and many fund promoters and investment managers may already have established funds in Ireland and will be familiar, and comfortable, with the jurisdiction.

To facilitate the migration of fund companies into Ireland, the Companies (Miscellaneous Provisions) Act 2009 (the Act) was signed into law on 23 December 2009. It includes provisions which will enable existing offshore fund companies to re-domicile to Ireland. This will be an alternative to such companies 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 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 the 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, in summary, 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 be obtained by the migrating fund.
  • The migration process will be subject to compliance with the relevant 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 must then apply to be deregistered in its country of origin.

By enacting this legislation in a short timeframe, the Irish Government has once again shown its commitment to the funds industry in Ireland. This development also demonstrates the ability of the funds industry to work with the relevant authorities in Ireland in order to support and assist the delivery of measures which, it is believed, will be responsive to the needs of the international funds community.