IRELAND: A GUIDEBOOK FOR CHINESE ASSET MANAGERS irishfunds.ie
Ireland: A Guidebook for Chinese Asset Managers - PAGE 1 CONTACT
Irish Funds Irish Funds 5th Floor, Ashford House Square de Meeûs 37, 18-22 Tara Steet 1000 Brussels, Dublin 2 Belgium D02 VX67
t: +353 (0) 1 675 3200
e: [email protected] w: irishfunds.ie
Key Contacts For enquiries, please contact:
Pat Lardner Chief Executive t: +353 1 675 3201 e: [email protected]
Kieran Fox Director of Business Development t: +353 1 675 3203 e: [email protected]
The full range of industry publications produced by Irish Funds are noted in Appendix 3 and can be found at irishfunds.ie.
PAGE 2 - Ireland: A Guidebook for Chinese Asset Managers CONTENTS
Glossary 6
Chapter 1: Why Ireland? 8 1. What drove the development of Ireland as an international funds centre? 9 2. What differentiates Ireland from other European asset management 10 and fund centres? 3. Ireland facilitating access to the Chinese securities markets 10 4. Ireland’s strategic position: responding to Brexit 12
Chapter 2: An introduction to the Irish funds industry 15 1. Assets under management 18 2. Raising investor capital 20 3. Distributing Irish fund products around the world 20
Chapter 3: Fund types and legal structures 21 1. Fund types 21 - UCITS funds - Using an umbrella fund structure - ETFs - Alternative UCITS / Liquid Alternatives - Alternative investment funds - Qualifying Investor AIF (QIAIF) - Loan Origination QIAIF (L-QIAIF) - Retail Investor AIF (RIAIF) 2. Investor types permitted by Irish authorised funds 25 3. Legal structures 25 - Irish Collective Asset-management Vehicle (ICAV) - Investment Company - Unit Trust - Common Contractual Fund - Investment Limited Partnership
Ireland: A Guidebook for Chinese Asset Managers - PAGE 3 CONTENTS
Chapter 4: Laws and Regulations – Regulatory Regime 27 1. EU legislation 27 - UCITS Directive - AIFMD - MiFID II - European Securities and Markets Authority (ESMA) 2. Irish legislation 29 - Role of the regulator
Chapter 5: Applying for Approval From the Regulator 30 1. For both UCITS and AIFs 30 2. UCITS authorisation 30 3. AIFs 30
Chapter 6: Fund Operations and Governance 32 1. Fund service providers 32 - Fund administrator - Investment manager - Depositary - AIFM and UCITS Mancos - Distributor - Board of directors 2. Irish fund governance requirements 34 - Corporate governance requirements - Supervisory requirements - Reporting requirements
PAGE 4 - Ireland: A Guidebook for Chinese Asset Managers CONTENTS
Chapter 7: Distribution: Using Irish Domiciled Funds 37 as a Bridge to the Global Market 1. Where are Irish funds sold? 37 2. Distribution of Irish funds in Europe 38 - UCITS marketing passport - AIF Marketing and management passport - National Private Placement Regimes (NPPRs) - Key European fund distribution channels 3. Distributing Irish funds globally 41 4. Listing a fund on the Irish Stock Exchange (ISE) 41
Chapter 8: Taxation of Irish Funds 42 1. Tax treaty network 42 2. FATCA (Foreign Accounting Tax Compliance Act) 42 3. Common Reporting Standards (CRS) 42 4. Tax implications for funds 42 5. Tax implications for investors 42 6. Value Added Tax (VAT) 42
Chapter 9: Setting Up a Business in Ireland 43 1. Employment permits 43 2. Visas 43
Chapter 10: Relevant Government Departments, 44 Agencies and Other Bodies 1. Department of Finance 44 2. Central Bank of Ireland 44 3. Department of Foreign Affairs and Trade / Irish Embassy and Consular Network 45 4. IDA Ireland 45 5. Irish Funds 45 6. Irish Stock Exchange 45
Ireland: A Guidebook for Chinese Asset Managers - PAGE 5 CONTENTS
Appendices: 46 1. Documents required by Central Bank of Ireland to set up a fund; 46 2. Double Taxation Treaties entered into by Ireland; 47 3. Links to publications on key topics in the Irish Funds Industry. 49
PAGE 6 - Ireland: A Guidebook for Chinese Asset Managers GLOSSARY OF KEY TERMS
AIF: Alternative Investment Fund AIFM: Alternative Investment Fund Manager AIFMD: Alternative Investment Fund Managers Directive AMAC: Asset Management Association of China AUA: Assets under Administration CBI: Central Bank of Ireland CCF: Common Contractual Fund CIS: Collective Investment Scheme DAC: Designated Activity Company EEA: European Economic Area ETF: Exchange Traded Fund ESMA: European Securities and Markets Authority EU: European Union FATCA: Foreign Account Tax Compliance Act (USA) FDI: Financial Derivative Instruments ICAV: Irish Collective Asset Management Vehicle IREF: Irish Real Estate Funds IRISH FUNDS: Irish Funds Industry Association ILP: Investment Limited Partnership IOI: Instrument of Incorporation IOSCO: International Organization of Securities Commissions KIID: Key Investor Information Document L-QIAIF: Loan Originating Qualifying Investor Alternative Investment Fund MANCO: Management Company MiFID: Markets in Financial Instruments Directive MMIF: Money Market and Investment Fund POA: Programme of Activity QIAIF: Qualified Investor Alternative Investment Fund RIAIF: Retail Investor Alternative Investment Fund RQFII: RMB Qualified Foreign Institutional Investor SMIC: Self-managed Investment Company SRRI: Synthetic risk and reward indicator TER: Total expense ratio UCITS: Undertaking for Collective Investment in Transferable Securities
Ireland: A Guidebook for Chinese Asset Managers - PAGE 7 CHAPTER 1 – WHY IRELAND?
As a relatively small and open economy located in the north-west corner of Europe with a population of almost 5 million people, Ireland may not naturally, at first glance, resonate as the globally significant centre for asset management and investment funds which it has become. Today, Ireland is the domicile for 5.7% of world-wide investment funds assets, making it the third largest global centre and the second largest in Europe.1 Over 1,000 global fund managers have utilised the skills and services which Ireland provides to bring their products and services to an increasingly global audience.
This was many years in the making and extends to a range of industries and business sectors. The environment and strong reputation created as a location for international business is recognised globally.
Ireland: A Competitive Environment Advantageous Demographics 1st in the world for the attracting and retaining talent Ireland has the youngest population in the EU and 3rd in the world for a motivated workforce2 with 33% of population under 25 (IDA Ireland – November 2019) 2nd in the EU / 7th globally for overall competitiveness and 3rd globally for business The only native English-speaking country in the efficiency (IMD World Competitiveness Survey 2019) Eurozone.
The 4th largest exporter of Financial Services in A multi-lingual society with over 600,000 Irish the EU (Eurostat 2018 data). residents having fluency in a second language other than English, according to 2016 census data. 1st in the EU and 4th globally with the highest proportion of 25-34 year olds with a third level A Location Which Creates Value qualification (54%).3 96% of CEOs from multinational companies based in Ireland say they will increase or maintain their A Key Business Location investment in Ireland in the coming year.5 3rd globally and 2nd in Europe for inward investment by quality and value.4 Open and Transparent Jurisdiction An internationally recognised open jurisdiction that A business location for: is committed to maintaining its 12.5% corporation • 5 of the top 10 companies on the Forbes’s List tax rate. Irish domiciled funds are exempt from of the World’s Most Innovative Companies. corporation tax at the fund level and the income is • 9 of the top 10 global technology companies, therefore taxed at the level of the investor rather with more than 500 software firms in Ireland than the fund. overall. • All of the top 10 global pharmaceutical Ireland is an OECD member and has committed to companies. the various tax anti-tax avoidance initiatives under • 14 of the top 15 global aviation leasing the OECD BEPS initiative, thus our tax system is companies. robust and in line with international standards while • 20 of the top 25 financial services companies. remaining competitive.
Ireland’s trade, business and cultural links with China continue to expand across a range of industries including agriculture, education, information technology and financial services. This was underpinned with the approval from the board of the Beijing based Asia Infrastructure Investment Bank of Ireland’s application for membership.
Find out more about Why Ireland for asset management in Getting Started in Ireland at irishfunds.ie.
1Source: EFAMA Statistical Release Q3, 2019 2Source: IMD World Talent Ranking 2019 3Department of Education and Skills - Education at a Glance – OECD Indicators 2019 PAGE 8 4Source: IBM 2019 Global Location Report 5Source: The 22nd Annual Global PwC CEO Survey - Finding Growth in an uncertain World CHAPTER 1 – WHY IRELAND?
Ireland and China: A very bright future industry, there were a number of external global footprints. While recognising In 2019, China was Ireland’s largest factors which helped fuel the industry’s the uniquely Chinese nature of these trade partner in Asia. Two-way trade range of services. developments they follow a pattern in goods and services amounted to which Ireland is familiar supporting, some €17 billion6 up from just over €7 An evolution of the asset management namely growing industries looking for billion in 2013. Chinese investment is industry globally since the 1980’s (both a location to provide European and now starting to flow more strongly into in terms of where asset managers seek international access with effective Ireland. 2019 also marked the 40th investor capital and where they deploy regulation, a highly efficient and flexible anniversary of the establishment of it) created a supply of investment business environment and expertise diplomatic relations between Ireland and expertise and product solutions investing across strategies and security types. In the People’s Republic of China. This is a in a far wider range of securities and this sense, Ireland has experience over a relationship that continues to bring great strategies. This coincided with the long period of time. benefits to both countries. creation of a passportable investment fund framework in the European Union With an industry that employs The ‘Global Ireland: Delivering in the (EU) which enabled delivery of this ever- 16,000 dedicated investment funds Asia Pacific Region to 2025’ strategy increasing range of solutions to wider professionals, servicing over 1,000 draws the roadmap and sets out the investor audiences around the globe. global managers, Ireland is a proven milestones in how Ireland will structure Ireland’s dynamic and flexible business domicile of choice for international fund and focus its relationship with this environment, coupled with a strong promoters wanting to access the Chinese important region in the years ahead. educational and skills base facilitated securities markets. The Irish funds The strategy was published in January expert and efficient solutions for asset industry consistently tops sector polls 2020 and was the result of extensive managers seeking to internationalise for its expertise, efficiency and business- consultation by the Department of their businesses. This was facilitated friendly environment. Foreign Affairs and Trade with other by the development of the legal and departments, state agencies, civil regulatory environment here over The relevance of Ireland for the Chinese society, business and academia. The many years to support growth while Asset Management industry strategic direction contained within it is maintaining rigorous standards. 1. Providing access for global managers informed by those consultations, and by seeking to invest into China, thereby the experience of Team Ireland on-the- Ireland’s industry is different from broadening and deepening local ground. The government has pledged many others in that it serves investment capital markets, benefiting local and to open a new consulate in China, managers from around the world who international investors and market deepen and expand Enterprise Ireland’s are trying to reach global investors and participants. presence in China and develop further not specifically Irish based investors. It 2. As a home of over 7,500 regulated the Chinese-Irish relationship in areas is therefore an industry developed with funds offering a variety of economic such as trade and investment, education, an export and international mind-set and investment exposures, Ireland agriculture and food, and tourism.7 rather than one to primarily serve a local can assist the natural process of investor base. investment diversification which will 1. What drove the occur amongst Chinese investors as development of Ireland as an In more recent years we have also seen Irish domiciled product is distributed international funds centre? the rapid emergence of the Chinese in China. securities markets as a destination 3. Supporting the expansion of Chinese In addition to all of the steps for international investment and a asset managers internationally as taken domestically to facilitate the range of indigenous Chinese managers they seek to distribute their products development and growth of the funds looking to expand their regional and and services in the European Union
6Source: Irish Central Statistics Office, www.cso.ie 7Global Ireland: Delivering in the Asia Pacific Region to 2025 PAGE 9 CHAPTER 1 – WHY IRELAND?
and beyond. Ireland, as a committed of business growth through equivalent and is growing rapidly. It comprises an member of the European Union, growth in its young and highly exchange-based market and the CIBM: provides full market access to the EU educated local workforce. and will be the sole English-speaking, • Has higher combined global rankings a) The exchange-based bond market, Common Law tradition country in the in competitiveness (top 10 in the regulated by the China Securities EU post Brexit and as such, will with world) and is ranked 1st in the world Regulatory Commission (“CSRC”), certainty: for attracting and retaining talent (IMD facilitates public offers on the • participate fully in the EU Internal Competitiveness Yearbook 2019). Shanghai Stock Exchange and the Market; • Is cost effective and dynamic, given Shenzhen Stock Exchange and • have full, EU-wide passporting for that cumulatively labour costs have private placements to individuals financial products domiciled, managed increased by less than the EU, euro and small- and medium-sized and marketed from Ireland; area and the UK from 2012 to 2018. institutional investors. • have full access to EU Horizon 20208 (Eurostat, Labour Cost database). b) The CIBM, regulated by the funding for R&D collaborations with • Doesn’t impose annual subscription9 National Association of Financial non-European countries, including taxes on funds. Market Institutional Investors under China; and the supervision of the People’s • have similar full access to EU funding 3. Ireland facilitating access to Bank of China (“PBOC”), is an in the higher education sector, etc. the Chinese securities markets over-the-counter wholesale market for institutional investors. 2. What differentiates Ireland With world-class and innovative product from other European asset solutions, Irish domiciled funds offer In 2016, the PBOC further liberalised management and fund access to the Chinese securities markets access to the CIBM. Eligible foreign centres? in a variety of ways, including through institutions (including fund management the Chinese Interbank Bond Market companies, asset managers and certain Within the EU there are a considerable (“CIBM”), Shanghai and Shenzhen Stock launched funds) can now access RMB range of choices for asset managers Connect, Bond Connect as well as the fixed income securities dealt on the looking for a location to assist them Qualifying Foreign Institutional Investor CIBM without recourse to a QFII or in growing their European business. (“QFII”) and Renminbi Qualifying RQFII quota. The application process Traditionally Ireland and Luxembourg Foreign Institutional Investor (“RQFII”) consists of a registration with the PBOC are the European locations of choice for regimes. While all of these schemes in Shanghai that is carried out by the this business given many shared features can provide access to Chinese assets, eligible foreign institution which provides including the legislative framework asset managers wishing to invest in the direct access for your Irish fund to the and the existence of clusters of key Chinese securities markets will need to bond market. The first Irish fund to supporting skills – areas we describe assess each scheme to decide which directly access the CIBM through this later in this guide. best meets its needs. new registration process was a UCITS fund and was approved by the Central The uniqueness of Ireland’s offering Looking further ahead, we know that Bank of Ireland, the Irish regulator, in is that it: post-Brexit Ireland will be of interest to February 2017. • Combines a native English speaking Chinese asset managers. environment and common law Shanghai-Hong Kong Stock Connect & framework within the EU which makes Chinese Interbank Bond Market (CIBM) Shenzhen-Hong Kong Stock Connect it more accessible for global clients. China’s onshore bond market is one The Shanghai-Hong Kong Stock Connect • Has maintained consistently high rates of the world’s largest credit markets programme launched on 17 November
8 ec.europa.eu/programmes/horizon2020/en/what-horizon-2020 9 The Luxembourg taxe d’abonnement is a subscription tax (droit d’enregistrement) based on the negotiability of securities issued by an Undertaking for Collective Investment (UCI), a Specialised Investment Fund – SIF, a Reserved Alternative Investment Fund PAGE 10 – RAIF or by a Family Wealth Management Company (société de gestion de patrimoine familial - SPF). www.guichet.public.lu/ entreprises/en/sectoriel/organisme-placement-collectif/taxe-abonnement/index.html CHAPTER 1 – WHY IRELAND?
2014 and the Shenzhen-Hong Kong the Northbound Trading Link of Stock MSCI: new roadmap for China Stock Connect programme launched Connect. The Central Bank of Ireland A-Share inclusion on 5 December 2016. These mutual permits both Irish UCITS and AIFs to There has been a significant increase market access programmes link the invest via Stock Connect10. in interest for China A Shares following stock markets, and their respective China’s inclusion in the MSCI Emerging clearing and settlement systems, in both Bond Connect Markets Index. In early 2019, MSCI Shanghai and Shenzhen with Hong Kong. Further to the introduction and included China A shares in relevant Under Stock Connect, investors in Hong implementation of “Bond Connect” indices. The successful implementation Kong and Mainland China can trade and announced early in 2017 allows overseas of the 5% inclusion of China A settle shares listed on the other market funds to invest in bonds traded in CIBM shares was a positive experience for via the exchange and clearing house in in transactions carried out in Hong Kong. international investors. At the end of their home market. This opened up a This development signals the latest push February 2019, MSCI Inc. announced substantive facility for overseas funds by mainland authorities to make China’s the increasing weight of China A shares to invest directly in Chinese domestic- bonds more accessible to offshore in the MSCI Indexes by increasing the listed equities without the need for QFII investors. The Central Bank of Ireland inclusion factor from 5% to 20% in three or RQFII quota. Foreign investment permits both Irish UCITS and AIFs to steps over the course of 2019. funds can access Chinese equities listed invest via Bond Connect11. in Shanghai and Shenzhen through
China A shares in the MSCI Indexes by increasing the inclusion factor from 5% to 20% in three steps over the course of 2019.12
Step 1 Step 2 Step 3
MSCI EM MSCI EM MSCI EM MSCI EM 5% 10% 15% 20% China China A China A China A LC LC LC+MC
China x A 30.2% China x A 31.7% China x A 29.2% China x A 29.5% China A 0.7% China A 1.76% China A 2.5% China A 4.1% Korea 14.4% Korea 12.7% Korea 11.6% Korea 11.6% Taiwan 11.6% Taiwan 10.9% Taiwan 10.7% Taiwan 11.5% India 8.2% India 8.6% India 8.7% India 9.1% South Africa 6.0% South Africa 6.0% South Africa 5.9% South Africa 4.8% Brazil 7.7% Brazil 6.7% Brazil 7.9% Brazil 7.2% Others 21.2% Others 20% Others 20.4% Others 19.7% Data as of October 22, 2018 Saudi Arabia 1.4% Saudi Arabia 2.8% Saudi Arabia 2.4% Argentina 0.3% Argentina 0.3% Argentina 0.1% Data as of April 17, 2019 Data as of July 17, 2019 Data as of October 18, 2019
China A shares making up a fifth of the MSCI Emerging Markets Index in a full inclusion and means billions of dollars flowing to China’s markets from funds benchmarked to MSCI indexes.
10 Subject to the conditions set out in its UCITS and AIFMD Q&As at ID 1015 and ID 1094 respectively which can accessed at www.centralbank.ie/regulation/industry-market-sectors/funds/ucits/guidance and www.centralbank.ie/regulation/industry-market-sectors/funds/aifs/guidance. 11 Subject to the conditions set out in the UCITS and AIFMD Q&As at ID 1089 and ID 1130 respectively which can be accessed at PAGE 11 www.centralbank.ie/regulation/industry-market-sectors/funds/ucits/ guidance and www.centralbank.ie/regulation/industry-market-sectors/funds/aifs/guidance. 12 See www.msci.com/china CHAPTER 1 – WHY IRELAND?
Qualified Foreign Institutional Investor Kong financial institutions. However, it to just that quota but will be able to (QFII) Scheme has now been expanded to a number invest any offshore Renminbi that it The QFII programme was introduced in of foreign countries, including Ireland holds in mainland China’s securities 2002 and allows foreign institutional which received RQFII quota of RMB 50 markets. For Irish fund management investors to invest in their local currency billion in December 2016. The granting companies that have not yet applied for in China’s securities market. QFII was of quota by the Chinese authorities to RQFII quota but are considering doing so, it is expected that the application intended to be the method by which Ireland was an important milestone in process will be revised to reflect that institutions, pension funds and asset the relationship and aligned with the it is no longer an application to obtain objectives of the Irish government’s owners apply for quota to invest in quota but rather to register as an RQFII the China markets. The allocation of IFS2020 Strategy. investor. QFII quota is regulated by the State Administration of Foreign Exchange Similar to the QFII regime, an The abolition of QFII and RQFII (“SAFE”) and also involves obtaining a application needs to be made to SAFE investment quotas is a welcome QFII licence from the CSRC. Through for a quota and to the CSRC for a licence development for the Irish funds industry. a QFII quota, foreign institutional before RQFII quota is granted. The In line with recent announcements from investors can invest in, inter alia, investment universe is the same as for index providers concerning increased RMB-denominated financial products, QFII licence holders. Notably, open- inclusion of China equity and fixed including stocks, bonds and warrants ended funds are not subject to any initial income securities in worldwide indices, it traded or transferred on the Shanghai or lock-up period and can repatriate funds is expected that greater allocations to the Shenzhen Stock Exchanges, fixed income on a daily basis which makes it very Chinese market will increasingly become a feature of Irish domiciled funds. The products traded in the inter-bank bond attractive for UCITS funds. The Central removal of QFII and RQFII investment market, securities investment funds and Bank of Ireland approved the first UCITS quotas is likely to assist in that allocation stock index futures. In February 2016, fund with 100% exposure to the Chinese process. the QFII rules were again enhanced equity market through an RQFII licence reducing the initial lock-up period in December 2013. RQFII is suitable for to three months and allowing open- both UCITS and AIFMD funds. 4. Ireland’s strategic position: ended funds to repatriate on a daily responding to Brexit basis. Given the initial lock-up period QFII and RQFII Updates On 10 September 2019, the State requirement, QFII products tend to be The United Kingdom’s decision to leave structured as AIFMD funds. Administration of Foreign Exchange (“SAFE”), mainland China’s foreign the European Union (EU) has resulted in a range of uncertainties and challenges RMB Qualified Foreign Institutional exchange regulator, announced the abolition of investment quotas for the for firms currently using or planning Investor (RQFII) Scheme QFII and RQFII schemes. SAFE has not on using the United Kingdom as their The RQFII regime was introduced in announced a timeline for the lifting of primary base for European operations 2011 and is a modified version of the the relevant quotas but has committed to serve the EU marketplace. This QFII scheme. It facilitates the use to immediately revise the relevant extends across all areas of financial of RMB held outside of China to be regulations to make it clear that QFII and services, including the funds industry, invested in China’s securities market RQFII investors will no longer need to but solutions are available for Chinese and was intended to be the method by apply for the quota. managers seeking to distribute products which individual participants apply for or establish operations given that Ireland Once the new rules are implemented, quota to invest in the China markets remains a fully committed member of it is expected that an Irish fund which can then be used to gather funds. the EU. It initially only applied to Hong Kong management company which has been subsidiaries of PRC firms and Hong granted RQFII quota will not be limited
PAGE 12 CHAPTER 1 – WHY IRELAND?
• Engaged in an extensive programme investment management services to Irish of meetings with EU partners and funds. Simultaneously, the new context EU institutions regarding the UK’s presents opportunities to strengthen Ireland: Committed to the EU withdrawal from the EU and the our partnership for the benefit of • Ireland is a fully committed member withdrawal agreement; European and global investors. Many of the EU. Ireland is an independent • Initiated a Cabinet Committee financial services/asset management sovereign State and our membership dedicated to Brexit, chaired by the firms historically headquartered in the of the EU is not affected by the Taoiseach (Prime Minister), overseeing UK have now located their European UK’s decision to leave. the overall Government response; headquarters in Ireland following the UK • As an EU member Ireland has • Strengthened relevant Departments, Brexit referendum decision. guaranteed access to financial agencies and overseas missions to services passporting across the EU deal with Brexit issues; The funds industry here remains focused and EEA. • Announced a new trading strategy on its continued ability to provide • Ireland is a member of the EU since – Ireland Connected – with a seamless access to key financial services 1973 and was one of the founding strong focus on intensifying trade passports, as well as to assist global and members of the Eurozone in 1999 in traditional markets and market regional players examine the specifics (coming into use in 2002). Today diversification; of their product, service and distribution Ireland is one of 19 countries in the • Ensured that key agencies in Ireland footprints and the business models and Eurozone. provide assistance to their clients to structures which support them. Ireland • Irish public support for the EU prepare for Brexit – making companies is in a very strong position to maximise is very high (89% according to a more competitive, diversifying market opportunities in international financial Eurobarometer report in September exposure and up-skilling teams; and services arising from Brexit, not least due 2019.). There is strong support for • The International Financial Services to our strong track record and excellent the EU across all major political Strategy 2025 – Ireland for Finance reputation as a place to do business. parties. places a strong focus on the solutions to Brexit which Ireland can provide. Ireland remains a committed member • EU membership remains central of the European Union and will remain to the success of our open, Brexit solutions for the asset so, providing full market access to the competitive economy and has management and funds industry EU. As Ireland is in the same time been the foundation for much of For almost three decades the industry zone, English-speaking, and also has the economic and social progress in Ireland has been providing solutions a common law legal system, and the we have made over the last four for global asset managers to establish Dublin to London air route is the busiest decades. As an EU Member State investment funds for distribution across in Europe, it means we are well-placed to we have unfettered access to the Europe and the rest of the world. In this assist managers. EU’s Single Market of more than regard, while Brexit will clearly pose 500 million citizens. some new challenges, the essential The reasons why investment managers function provided by the industry in (both indigenous UK firms and Ireland to global fund managers will international firms with a presence in continue. the UK) already look to Ireland as their Government response to Brexit international funds partner will continue The Irish Government has re-affirmed The Irish fund industry’s response beyond Brexit and those whom have Ireland’s commitment to the European to these challenges focuses on the previously gravitated to the business Union (EU) and is well prepared to meet continuity of being able to distribute environment available in the United the challenges arising from Brexit. To Irish investment funds to UK investors Kingdom will naturally consider Ireland. ensure an effective response the Irish and for UK based managers to provide Government has:
PAGE 13 CHAPTER 1 – WHY IRELAND?
Management Companies any delegation of tasks, take all should maintain a dedicated Fund managers typically will establish major strategic and operational and monitored email address their own management company or use decisions affecting the fund/ in order to improve the a third-party management company management company responsiveness to information platform. Management companies requests from the CBI. are required in Ireland when setting 2. Organisational Effectiveness: up a fund and they act as the central • One independent director must carry 6. Procedural Matters: co-ordinator of the different service out an organisational effectiveness • The requirements with regard to providers of the fund. Management role - separate to managerial the application for authorisation companies in Ireland fulfil the 6 key functions. as a fund management company identified management functions as • Director responsible must ensure are set out, including the format prescribed by the Central Bank of Ireland that the fund/management company and content of the business (‘CBI’). These 6 functions are investment continues to be organised and plan/programme of activity. management; fund risk management; resourced in the most appropriate • The guidance outlines the operational risk management; manner on an on-going basis. procedures under the UCITS distribution; regulatory compliance; and AIFMD Regulations with and capital and finance management 3. Directors Time Commitments: regard to the fund management functions. • A high risk director is defined company passport. as a director with more than 20 In 2013, (‘CBI’) commenced a review directorships and an aggregate In June 2019, the CBI began of the effectiveness of governance level of annual professional time scoping a review of how firms in the funds it has authorised and commitment in excess of 2,000 have implemented the package of supervises. This became known as the hours. management company effectiveness “CP86” review. It concluded with the • Funds with such directors will measures introduced under CP86. introduction of a revised framework of be subject to greater regulatory The aim of this review will be rules and guidance - for newly authorised scrutiny. to identify standards of industry funds in 2017 and for existing funds compliance, to inform the CBI’s in 2018. The purpose of this new 4. Managerial Functions: supervisory approach and to ensure framework was to improve the quality • Designated persons must carry out that management companies have and level of governance and oversight their managerial functions in a systems of governance in place to carried out by fund management manner which ensures that the fund protect investors’ best interests. companies. Amongst other things, the management company complies CP86 framework set out clearly the with its regulatory obligations. This review will be followed shortly by CBI’s expectations of directors of funds • Annex I of the guidance lists onsite inspections across a selected and those responsible for the oversight the obligations placed on AIFMs sample of entities. of designated activities and the 6 key and Annex II lists the obligations identified management functions. placed on UCITS management The overall status currently is such companies. Each regulatory that the CBI are aiming to conclude The Central Bank’s Fund Management obligation is assigned to one of the this work during the course of 2020. Companies – Guidance covers the six managerial functions. Their aim is to determine whether following 6 key areas: CP86 is being implemented in a 5. Operational Issues: way that delivers the improvements 1. Delegate Oversight: • Fund management companies will intended, and if not they will take any • The delegation of a task does not be required to keep all of their steps needed to rectify the problems. release the board from its ultimate records in a way that makes them responsibility for the relevant immediately retrievable in or from The use of management companies is management functions Ireland. also described in further detail in the • The board should, notwithstanding • Fund management companies Chapter 6.
PAGE 14 CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
For almost 30 years Ireland has been a leading domicile and servicing location for internationally distributed investment funds, covering the widest range of fund types and investment strategies. The funds industry acts as a bridge connecting investment managers with end investors. International fund promoters are attracted to Ireland due to its open, transparent and well-regulated investment environment, its strong emphasis on investor protection, its efficient tax structure and dynamic and innovative business culture.
Ireland is a global centre of excellence for funds and asset management given:
1009 fund managers from 54 17 of the top 20 global Irish domiciled funds are distributed countries (380 UK, 280 North managers have Irish to 90 countries across Europe, the America, 55 Switzerland, 79 Asia, domiciled funds14. Americas, Asia and the Pacific, the 215 other countries have chosen Middle East and Africa.15 Ireland to domicile or service their international investment fund hub.13
Rest of Ireland Europe 44% 56% e291bn 4,000 e232bn
Ireland has over 4,000 stock exchange Over 40% of global hedge fund Ireland is a leading European listed investment funds and Euronext assets are serviced in Ireland, domicile for exchange traded funds. Dublin is recognised globally as a making it the largest hedge fund Irish domiciled ETFs represent leading exchange for the listing of administration centre in the world approximately 50% of the total investment funds with investment and Europe’s leading hedge fund European ETF market.18 managers from over 40 global locations domicile.17 listing their funds on the ISE.16
1st Ireland was the first European jurisdiction to provide for a regulated structure for hedge funds.
13 Monterey Ireland Report 2019 14-18 www.irishfunds.ie/getting-started-in-ireland/why-ireland PAGE 15 CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
Fund managers: who’s already here?
1000+ fund promoters have chosen Ireland to domicile and/or service their funds.
Currently a range of Chinese asset managers (or their subsidiaries/affiliates) use Ireland for a variety of asset management and fund related services.
1009 Fund Managers from 54 Countries
280 North America 380 UK
79 Asia 55 Switzerland 215 Other
The ability to support the widest possible range of investment strategies and structures is important in supporting managers whether they possess single or multiple capabilities.
PAGE 16 CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
With over 16,000 professionals employed exclusively in the servicing of investment funds, the Irish funds industry has developed a centre of excellence with expertise that spans a wide range of services including fund administration, transfer agency, custody, legal, tax and audit services, stock exchange listing, compliance and consultancy services. As a result of this experience, Ireland has become one of the largest and fastest-growing international fund domiciles.
1009 Fund Promoters (564 promoters of Irish Domiciled Funds)
Irish Investment Funds Industry 45.2
TOTAL FUNDS TRILLION TOTAL AUA DISTRIBUTION TO OVER 14,113 43.0 90 Countries
7,707 Irish Domiciled TRILLION DOMICILED AUA 6,406 NonDomiciled
Lawyers Accountants Administrators Listing Brokers Depositaries Asset Managers
Over 16,000 Employed
Source: Central Bank of Ireland, Monterey Insight Ireland Survey 2019 and Irish Funds (Net assets and number of funds valid as of December 2019). PAGE 17 CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
1. Assets under management
As of December 2019, assets in Irish 1. Total Assets under Administration in Ireland domiciled funds reached a record net assets of €3.0 trillion. Irish funds are distributed globally, and the record Euro Billion level of assets was also driven by record levels of net sales. Net sales 6,000 up to September 2019 across all fund types equated to €283 billion. 5,220 This figure is more almost triple the 5,000 entire net sales amount in 2018 of €95.5 billion. In addition, the Irish industry provides administration 4,000 3,805 € services to an additional 2.2 trillion 3,374 of fund assets domiciled elsewhere, bringing the total value of assets 3,000 2,722 under administration to €5.2 trillion. 2,199 Ireland is the home domicile for 2,000 1,882 1,886
5.8% of global investment funds 1,393 1,398 1,442 20 assets. The statistics in Graph 1 965 demonstrate considerable growth 1,000 for those managers using Ireland 0 as a domicile for their funds and 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 the industry generally. In the eight SOURCE: Central Bank of Ireland and Irish Funds, Dec, 2019 years between 2011 and 2019, the net assets held in Irish domiciled funds has increased 150%; growth 2. Growth in Irish domiciled fund assets21 which has been aided by year on year increases in the number of Euro Billion funds (including sub funds) locating 3,500 in Ireland, in each year aside from 732 2018. 3,000
2,500 610 As indicated in Graph 2 the majority 565 22 505 of funds conform to the UCITS 2,000 451 rules while the introduction of 388 the Alternative Investment Fund 1,500 300 Managers Directive has provided 259 235 1,000 205 impetus to the creation of Alternative 151 1,446 1,578 1,830 1,810 2,315 1,275 Investment Funds (AIFs). These 967 1,043 500 758 820 fund structures and accompanying 597 requirements are discussed later in this guidebook. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
UCITS AIFs
20 EFAMA International Statistical Release Q4 2019 21 Irish Funds December 2019 PAGE 18 22 Undertakings for Collective Investments in Transferable Securities CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
Breakdown of asset classes of domiciled funds The Irish funds industry supports the broadest range of products across the 7,500+ funds domiciled here – from traditional to alternative, passive to active, and liquid to illiquid.
Source: Central Bank of Ireland, December, 2019 Irish Domiciled Funds Breakdown by type
25% 18% ALTERNATIVES MONEY MARKET
23% 27% BOND EQUITY
2% OTHER 5% BALANCED
Product Focus: Exchange-traded funds (ETFs)
Since the launch of the first European domiciled ETF (Exchange Traded Fund) in 2000, Ireland has been the most popular European domicile for ETF issuers. The maturity of the Irish service model ensures that ETF issuers have access to service providers with highly automated and scalable global models.
In addition to Irish domiciled ETFs representing over 57% of the total European ETF market, Ireland attracted the largest net inflows of ETFs €( 52.9 billion) in Europe during the first half of 2019, largely due to strong inflows into bond funds€ ( 36 billion).
PAGE 19 CHAPTER 2: AN INTRODUCTION TO THE IRISH FUNDS INDUSTRY
2. Raising investor capital
Among the largest European domiciles, Ireland attracted net sales of €92 billion in the first half of 2019, driven by strong net inflows into equity, money market funds, and in particular bonds.23
Net Sales - Total Domiciled Funds €BN
400 SOURCE: Central Bank of 42 Ireland, December 2019
30 300
200 25 21 48 100 Total Net Sales - AIFs
105 128 297 47 253 Total Net Sales - UCITS
2015 2016 2017 2018 2019
3. Distributing Irish fund products around the world
Ireland is a major hub for cross-border Ireland is an internationally recognised The most popular markets for distribution. It is one of the leading EU jurisdiction with membership of the EU, registrations of Irish domiciled funds for “exporting” jurisdictions for investment Eurozone, OECD, FATF and IOSCO. sale are listed below24. funds, for both UCITS and non-UCITS. International fund promoters use Ireland Ireland does not operate a banking Ireland’s Registrations in: as their domicile of choice for fund secrecy regime and with openness, products and seek to access not only the transparency and regulation as the UK 3,547 European market place but also markets pillars of the industry, Ireland leads outside the EU. the global industry in compliance with Germany 3,187 internationally agreed tax standards, Irish funds are sold to 90 countries in France 3,009 the Americas, Asia and the Pacific, the further evidenced by volunteering for Middle East and Africa. Wherever your a peer review by the G20 and OECD Switzerland 2,711 fund is domiciled, it can be serviced countries. Ireland cooperates with all EU states on the basis of the European out of Ireland – 30 languages and 28 Netherlands 2,568 currencies are fully supported. directives and the Irish Central Bank has signed Memoranda of Understanding More than 1,000 fund managers/ with over 40 countries including China, More information on the practicalities promoters have chosen Ireland to Dubai, France, Hong Kong, Isle of Man, of distributing Irish funds is available domicile and/or service their funds. Germany, Japan, Jersey, Malaysia, South in Chapter 7. Furthermore, the Irish Stock Exchange is Africa, Switzerland, Taiwan, United the leading stock exchange globally for Kingdom, and the USA. the listing of investment funds.
23 EFAMA Quarterly Statistical Release (second quarter of 2019) 24 PwC Analysis, 31 December 2019 PAGE 20 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
1. Fund types
European investment funds are either regulated as Undertakings for Collective Investment in Transferable Securities (UCITS) funds under the UCITS directive or as non-UCITS or Alternative Investment Funds (AIFs) under the Alternative Investment Fund Managers Directive (AIFMD).
UCITS funds can be used for a wide range of strategies and asset classes. This ranges from traditional strategies including equities and fixed income to certain strategies which would traditionally have been regarded as alternative investment strategies, for example certain long / short strategies or structured product strategies. Exchange Traded Funds (ETFs) and Money Market Funds (MMFs) are generally established at UCITS funds. The Qualifying Investor Alternative Investment Fund provides great flexibility in terms of investment strategies as no investment, borrowing or leverage restrictions apply.
Overview of the key differences between the UCITS and AIF frameworks
UCITS AIF
• Retail or professional investors • Professional investors
• No minimum investment • 1100,000+ minimum investment
• Well diversified • Few investment restrictions
• Specified investment restrictions • Few derivative restrictions
• Regulated markets • May invest through unregulated markets
• Limited borrowing • Can be open or closed-ended
• Limited derivatives
• Must be open ended
PAGE 21 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
UCITS funds The flexibility of UCITS is evident in that they may be set up Undertakings for Collective Investment in Transferable Secu- as a single fund or as an umbrella fund that is comprised of rities (UCITS) were first introduced in Europe in 1985. UCITS several ring-fenced sub-funds (more information on umbrella were designed with the retail investors in mind, ensuring funds is available below), each with a different investment appropriate levels of protection for investors. objective and policy. Each sub-fund is treated as a separate entity, with the assets and liabilities segregated from other UCITS funds are now a global brand and recognised all over sub-funds within the umbrella UCITS fund. Management of the world. In addition to the European market, UCITS are also each sub-fund can be performed by a different investment distributed in Asia, South America and the Middle East. They manager and sub-funds are permitted to invest in each other, are available to retail and institutional investors. subject to certain investment restrictions.
Using an umbrella fund structure Umbrella funds are the most popular configuration used when They are governed by one main constitutive document establishing Irish domiciled investment funds. The funds are and once the umbrella fund has been authorised, creating established with a number of separate compartments, known additional sub-funds is very straightforward and largely focuses as sub-funds, each of which represents a separate group of on preparing a supplemental prospectus which outlines the investors and assets and liabilities. They are governed by a key features of that sub-fund and its share classes. single constitutive document. At the umbrella level, a number of funds can be established with different investment policies or fee structures, but still adhering to the overall UCITS framework.
ETFs An Exchange Traded Funds (ETF) is an investment vehicle that An ETF may be established as a UCITS or an AIF. However, is structured to enable investors to track a particular index most ETFs in Ireland have been set up under the UCITS through a single liquid instrument that can be purchased or regime, thereby benefitting from the high level of acceptance sold on a stock exchange. An ETF offers the advantages of an of UCITS by regulators and investors worldwide due to the investment fund, such as low costs and broad diversification investment rules, investor protections and risk management together with characteristics more commonly associated with safeguards provided under the UCITS framework equities, such as access to real time pricing and trading.
Alternative UCITS / Liquid Alternatives
The Alternative UCITS arena, which utilises sophisticated Read more about Alternative UCITS in Fund Types and Legal strategies, is the European counterpart to the US ’40 Act Structures on the Irish Funds website. open-ended liquid alternative fund and has also experienced significant growth. Ireland’s strength in Alternative UCITS combines proven skills in the servicing of alternative strategies with a proven UCITS pedigree.
PAGE 22 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
Alternative investment funds (AIFs) Qualifying Investor AIF (QIAIF) Loan origination QIAIF (L-QIAIF) The Alternative Investment Fund The Qualifying Investor AIF is an Irish Ireland was one of the first EU member Managers Directive (AIFMD), regulated investment fund operating states to introduce a specific regulatory implemented in July 2013, has within the AIFMD framework suitable framework for loan originating investment transformed the EU regulatory landscape for well-informed and professional funds. Recent enhancements to this in the alternatives space. All non UCITS investors. As the QIAIF is not subject to regime make loan origination funds even funds, or Alternative Investment Funds any investment or borrowing restrictions, more attractive for promoters, managers (AIFs) are covered by AIFMD which it can be used for the widest range of and, most importantly, investors. The has introduced new organisational, investment purposes. time frame for the authorisation of a operational, transparency and conduct of L-QIAIF by the Central Bank of Ireland business requirements on AIFMs and the QIAIFs require a minimum initial is 24 hours following the filing of the funds they manage. subscription per investor of .100,000 requisite documentation with them. (or equivalent) with no limit on Traditionally AIFs are hedge funds or subscriptions thereafter. QIAIFs are The L-QIAIF is a structure that meets funds with a more complex portfolio of open to professional or well-informed both the requirements of the direct assets. The AIF benefits from many of investors who must fall into one of three lender and the institutional alike. For the same regulatory benefits as a UCITS categories: direct lenders, the stricter regulatory such as investor confidence, custodial capital rules for banks leading to the safekeeping and oversight. However as 1. A professional investor within the reduced availability of credit, together AIFs tend to be aimed at professional meaning of Annex II of the Markets with the increasing demand for capital, investors, the AIF allows for a far wider in Financial Instruments Directive has created a major market opportunity. range of investments, derivatives and (MiFID) For institutional investors, the low strategies. 2. An investor who receives an interest rate environment is making appraisal from an EU credit it difficult for investors to get yield, Ireland was the first jurisdiction to institution, a MiFID firm or a and this has resulted in an increasing provide a regulated framework for UCITS management company that number of institutional investors AIFs and remains at the forefront of they have the appropriate level of allocating capital to the private credit developments with the implementation expertise asset class. A common requirement for of AIFMD. The AIFMD framework is 3. An investor who certifies that many institutional investors under their in many ways reflective of pre-existing they are an informed investor by investment mandates is that capital requirements in Ireland relating to providing written confirmation. may only be allocated to regulated supervisory oversight, an independent investment funds. The L-QIAIF fulfils depositary, corporate governance, this requirement. valuations and investor disclosure. The AIFM Directive regulates the AIFM rather than the fund itself.
Further details on AIFs and AIFMD can be found in this guide in Chapter 4: Laws and regulations – regulatory regime.
PAGE 23 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
Retail Investor AIF (RIAIF) Comparison between QIAIF and RIAIFs The Retail Investor AIF has replaced the previous non-UCITS retail regime in QIAIF RIAIF Ireland with a more flexible framework. Investor Professional Investor Retail Investor The updated RIAIF framework allows Minimum Investment e100,000 None for the creation of an investment fund Can be sold cross border? Yes, with AIFM passport No which is subject to less investment and eligible asset restrictions than the UCITS Leverage Cannot exceed 200% Cannot exceed 25% of regime but is more restrictive than the of net assets for a Loan net assets QIAIF regime. Consequently, the RIAIF Origination AIF could provide an attractive alternative for Real Estate Investments No restrictions Numerous restrictions on managers who need to set up a regulated valuation reports, price fund but whose investment strategies do paid, occupancy not easily fit within the UCITS rules. Derivative Investments Depends on fund Numerous restrictions Securities not traded on No specific limit Max 20% of net assets As the RIAIF is a retail fund product, it a regulated market cannot avail of the automatic right to market across Europe under the AIFMD Securities of a single issuer Max of 50% of net assets Max 20% of net assets, or marketing passport, which is only for in any one unregulated 35% for an Index tracking professional investors. However, access investment fund RIAIF to individual markets may be granted Investments in State or No restrictions Max 20% unless prior on a case by case basis. Furthermore, Local Authority Central Bank approval is with retail investor protection in mind, guaranteed Securities obtained the Central Bank has stipulated that a RIAIF may only have a fully authorised Cash No restrictions Max 10% with one AIFM. Non-EU managers (that do not institution or 30% with certain guaranteed have a fully authorised, EU-based AIFM) institutions and sub-threshold AIFMs are therefore prevented from managing a RIAIF. Investment in other funds Up to 100% subject to Max 30% in any one open max 50% in any one ended fund, and further unregulated fund. If QIAIF restrictions for short term is a money market fund money market funds then the investee funds must also be money market funds Derivatives - OTC No restriction Max 5% of net assets, counterparty risk max 10% if with a relevant institution.
Numerous collateral and other rules apply
PAGE 24 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
2. Investor types permitted Other fund types, such as UCITS or Retail Irish Collective Asset-management by Irish authorised funds AIFs may choose to accept investments Vehicle (ICAV) from non-qualifying or retail investors. The Irish Collective Asset-management The determination of which types of Read more about fund types in Getting Vehicle (ICAV) was introduced in March investors are permitted in an Irish Started In Ireland on irishfunds.ie. 2015 in Ireland and since then the authorised fund are driven primarily by majority of all new funds have been set the Central Bank of Ireland’s regulations. 3. Legal structures up using this structure. An ICAV can be Qualifying Investor AIFs (QIAIFs) require formed as either a UCITS or an AIF. that certain types of qualifying investors There are a number of legal structures are eligible to invest in a QIAIF, with a under which UCITS and AIF fund The ICAV is an Irish corporate fund minimum investment of .100,000 or products may be constituted. The choice vehicle that exists alongside the current equivalent in different currencies. of legal structure will depend on the fund structures that are available in fund manager preference, market or Ireland. ICAVs are regulated funds The following are the categories of investor requirements and operational and, therefore, have all of the benefits qualifying investor that may invest in a considerations. The legal structures of a regulated structure. The ICAV QIAIF: available include: was introduced to enhance Ireland’s • an investor who is a professional client competitiveness as a domicile for under Annex II of MiFID; or • Irish Collective Asset-management investment funds by virtue of its • an investor who receives an appraisal vehicle attractive legal structure. A benefit of the from an EU credit institution, a MiFID • Investment Company introduction of the specific ICAV vehicle is that, as a vehicle designed specifically firm or a UCITS management company • Unit Trust for collective investment, it is anticipated that the investor has the appropriate • Common Contractual Fund expertise, experience and knowledge to that it should qualify to ‘check the box’ • Investment Limited Partnership adequately understand the investment and be treated as a pass-through entity in the scheme; or for US tax purposes. These legal structures are established • an investor who certifies that they are under Irish Law and as such are subject an informed investor by confirming that The ICAV is also more tailored to the to its provisions. The ICAV is the most (a) they have such knowledge of and needs of the global funds industry due popular legal structure used for collective experience in financial and business to the fact that its founding legislation investment schemes launched in Ireland. matters as would enable the investor to is bespoke and more suitable to an properly evaluate the merits and risks investment vehicle rather than general of the prospective investment; or (b) trading companies under the Irish that the investor’s business involves, Legal Vehicles Companies Acts. The purpose of the whether for its own account or the vehicle is to minimise the administrative account of others, the management, complexity and cost of establishing acquisition or disposal of property of and maintaining collective investment the same kind as the property of the schemes in Ireland. Investment QIAIF. ICAV Company Like other regulated fund structures, There are a number of exceptions provided the ICAV can be established by way of to this rule, for example, to the QIAIF a filing with the Central Bank of Ireland Common Investment (the “Central Bank”) and can seek Management Company or General Partner, Contractual Limited a director or employee of the Management Fund (CCF) Partnership authorisation as either a UCITS or an Company (subject to certain provisions). alternative investment fund (“AIF”). These rules are laid out in the Chapter From a regulatory perspective, the ICAV Unit Trust 2 Qualifying Investor AIF requirements, may be established as either a stand- General Rules, of the AIF Rulebook. alone or an umbrella fund and can be
PAGE 25 CHAPTER 3: FUND TYPES AND LEGAL STRUCTURES
structured to suit all major investment Trust does not have legal personality, it double tax agreement concluded between strategies (accommodating traditional as cannot enter into contracts. the investor and investment locations. well as alternative investment policies). Professional tax advice is advisable and It can also avail of a full suite of liquidity A separate management company should be sought before considering options making it suitable for mutual is always required and managerial establishment of a CCF for this purpose. funds, hedge, real estate, infrastructure, responsibility rests with the board of The CCF is authorised and regulated by lending vehicles, private equity, managed directors of the management company. the Central Bank of Ireland. accounts and hybrid funds. This separate management company can also be used to manage other UCITS Investment Limited Partnership (ILP) The ICAV will also be permitted to prepare and AIFs. The trust deed is the primary An investment limited partnership is a separate sub-fund accounts for individual legal document which constitutes the regulated partnership-based structure sub-funds within an umbrella structure. trust and it sets out the various rights provided for under the terms of the 1994 This is a very important feature for large and obligations of the trustee, the Investment Limited Partnership Act. multi-manager structures as currently management company and the unit One or more general partners are Irish PLCs have to produce one set of holders. appointed under a limited partnership accounts for the entire umbrella (with agreement. Investors subscribe to a single year-end date) and the ability Common Contractual Fund (CCF) the fund as limited partners and are of investors in one sub-fund to receive A CCF is a contractual arrangement generally only liable to it to the extent financial details of all other sub-funds. established under a deed, which provides of their investment. Investment limited that investors participate as co-owners partnerships are designed to act as Investment Company/Variable of the assets of the fund. The ownership regulated vehicles are only available Capital Company interests of investors are represented by as AIFs and not as UCITS funds. The Companies are registered in Ireland under ‘units’, which are issued and redeemed in main advantage to using this vehicle is a series of Acts called the Companies a manner similar to a unit trust. The CCF to achieve tax transparency for investors Acts. The shareholders of the company is an unincorporated body, it does not which may be important when seeding enjoy limited liability. The main aim of have a separate legal personality distinct the vehicle with existing investments. funds set up as investment companies from its owners and is transparent for This is combined with the fact that it is the collective investment of its funds Irish legal and tax purposes. is a regulated collective investment and property with the aim of spreading vehicle which can have tax benefits when investment risk. A company is managed As a result of its transparent nature, investing in certain jurisdictions. for the benefit of its shareholders. investors in a CCF are treated as if they directly own a proportionate share of the The ILP legislation is currently being Variable capital companies can underlying investments of the CCF rather updated. The resultant changes should repurchase their own shares and their than shares or units in an entity which greatly enhance the attractiveness of the issued share capital must at all times itself owns the underlying investments. ILP structure for private equity managers be equal to the net asset value of the A CCF can be established as a UCITS and investors while also enhancing the underlying assets. fund (Undertakings for Collective management and operation of the ILP. Investment in Transferable Securities) It is expected that these changes will Unit Trust or an AIF (Alternative Investment Fund). be enacted in 2020. The reformed ILP The Unit Trust is a contractual fund Tax transparency is a key feature which structure is expected to be particularly structure constituted by a trust deed differentiates it from other types of Irish popular for private equity asset classes between a trustee and a management funds. Where the CCF’s transparency is and will greatly enhance Ireland’s asset company (manager) under the Unit Trusts respected by both the investor domicile management product offering for asset Act, 1990. A Unit Trust is not a separate and the jurisdiction where assets are held managers. legal entity and therefore the trustee acts then potentially the investors in the CCF as legal owner of the fund’s assets on may benefit from lower or indeed zero Read more about fund legal structures in behalf of the investors. Since the Unit rates of withholding tax depending on the Getting Started In Ireland on irishfunds.ie.
PAGE 26 CHAPTER 4: LAWS AND REGULATIONS – REGULATORY REGIME
Financial services in Europe are governed and regulated predominantly by EU Directives, which set out the legislative framework for the investment funds industry. These interact with national regulatory regimes which have provided the basis for the growth and development of Europe over the last 30 years.
1.EU legislation regulations. These new regulations The new Regulations amend the UCITS consolidate the 2015 UCITS regulations Regulations. Additionally they contain UCITS Directive and its subsequent amendments. updated references and requirements The original European Directive (law) to reflect the EU (Markets in Financial upon which the UCITS framework The amendments are broken out into Instruments) Regulations 2017, and was built was developed in 1985 and four areas and the key updates to each the Central Bank (Supervision and has been augmented and added to in topic is included below; Enforcement) Act 2013. subsequent years – commonly these updates or revisions are referred to as The Regulations 2019 [S.I. No. 430 of UCITS III, IV and so on. The first UCITS • Irish Collective Asset- 2019] address and change three key European directive set out a common set management vehicle. updates: of rules for the cross-border distribution • UCITS share class provisions: of collective investment schemes via the Under-hedged positions cannot European Passport. fall below 95% of the portion of • Provide for segregation of UCITS the net asset value of the share assets generally and from the assets The UCITS rules are in effect class. of a depositary or its agent. product based regulation and include • UCITS performance fee • Provide for segregation of UCITS requirements around allowable provisions: Fees calculated assets on the insolvency of a investments, liquidity, disclosure, cannot crystallise more than once depositary or any third party located investor protection and as well the per year, and fees paid shall not in the EU technical and practical organisation occur more than once per year. • Update investor money and client of such funds. Given the detailed • General clarifications of the asset requirements to align with and specific nature of the rules CBI UCITS regulations: The current legislation. UCITS funds are suitable for broad CBI clarified that the regulation spectrum distribution to both retail and related to the holding of ancillary institutional investors. liquidity applies in the case of Find more detail on UCITS in the Regulation any single credit institution. section of centralbank.ie. The most recent iteration of the UCITS • Money market funds: Certain rules are encompassed in Directive provisions have been dis-applied 2014/91/EU (commonly known as due to the implementation of UCITS V) on the coordination of laws, the EU Money Market Fund regulations and administrative provisions Regulation (‘MMFR’). relating to undertakings for collective investment in transferable securities as regards depositary functions, The most recent iteration of the UCITS remuneration policies and sanctions. rules took place on 27 August 2019. The Government of Ireland (“GoI’) published On 6 June 2019, the Central Bank of the European Union (Amendment) Ireland (‘CBI’) published revised UCITS Regulations 2019 [S.I. No. 430 of 2019].
PAGE 27 CHAPTER 4: LAWS AND REGULATIONS – REGULATORY REGIME
Alternative Investment Fund Managers AIFM Requirements as sufficient regulation to meet this Directive (AIFMD) Since the implementation of AIFMD on requirement. AIFMD provides an EU framework 22 July 2013, EU AIFMs are subject to for the regulation and oversight of harmonised requirements relating to: Governance and oversight - The Directive alternative investment fund managers has a substantial impact on the (AIFMs), enabling a passport for • Authorisation governance framework of AIFs and AIFMs alternative investment funds (AIFs) • Organisational arrangements as it imposes additional responsibilities pursuing investment strategies which • Conduct of business on the AIFM itself. Emphasis is do not conform to the liquidity, • Remuneration placed on having a robust governance leverage, diversification and other rules • Conflicts of interest and effective risk management attaching to UCITS funds. • Risk management culture, in particular in light of the • Liquidity management AIFM’s accountability for delegation Similar to the UCITS Directive for • Delegation arrangements, responsibility for retail funds, the AIFMD enables AIFs • Appointment of a depositary valuation, necessary flow of information authorised in one member state to be and ownership of key decisions. sold across the EU under a marketing AIFMD: Key Provisions passport. Delegation of portfolio arrangements Risk management - The risk management One of the key provisions of the activity needs to be functionally and Directive is that the AIFM cannot hierarchically segregated from the delegate functions to the extent that it portfolio management function and must becomes a letterbox entity and while operate independently and with sufficient New Regime EU AIFM Commenced Transition Deadline there has so far been limited regulatory expertise, authority and resources to guidance to assess what exactly would ensure all risks in the AIFM and AIFs are
22 July 2013 22 July 2014 constitute this, the understanding is appropriately quantified, monitored and managed on an ongoing basis. Non-EU that the AIFM must be able to retain passport a certain level of substance, activity (oct) 2015 and expertise, particularly in the area Find more detailed information on AIFMD of risk management and/or portfolio in the Regulation section on centralbank.ie. management, even if certain roles are in Authorisation for Report on end of Non-EU practice delegated to third parties. An Non-EU AIFMS Private Placement important area of focus is the need to Markets in Financial Instruments 2019 onwards (oct) 2018 have appropriate due diligence prior to Directive MiFID I & II engaging with the third party and what MiFID is the EU legislation that regulates AIFMs managing and/or marketing processes need to be put in place for the firms who provide services to clients AIFs in the European Economic ongoing monitoring of the delegate. In linked to ‘financial instruments’ (shares, Area (EEA) are in scope of AIFMD, order for a manager to be appointed as bonds, units in collective investment with the applicable compliance an investment manager with investment schemes and derivatives), and the requirements dependent on a number discretion under UCITS or AIF rules, venues where those instruments are of factors, including marketing and/ the manager needs to be sufficiently traded. or management activity in the EEA, regulated in in their home state. The transitional arrangements and level of CBI deem the holding of a Type 9 Asset managers authorised in the AuM. license from the Securities & Futures EU to provide investment advice and Commission of Hong Kong (the “SFC”) portfolio management for AIFs and/or
PAGE 28 CHAPTER 4: LAWS AND REGULATIONS – REGULATORY REGIME
UCITS within the definition of a MiFID European Securities and Markets encourages all applicants to engage with investment firm will be directly subject Authority (ESMA) them early in the application process, to all aspects of MiFID II in relation to ESMA is an independent EU Authority including initial pre-application meetings these activities. that contributes to safeguarding the which very often will bring significant stability of the European Union’s clarity of requirements to applicants. AIFMs or UCITS management companies financial system by enhancing the which solely carry out collective portfolio protection of investors and promoting Find more detailed information on the management are not within the scope of stable and orderly financial markets. authorisation process in the Regulation MiFID II itself. However, to the extent ESMA forms part of the EU supervisory section on centralbank.ie. that they are also authorised to carry framework and works with national on advisory and portfolio management regulators across the EU (like the Central activities these will be subject to Bank of Ireland) to ensure the consistent the MiFID II rules, which are now in application and implementation of some places more onerous than the European rules. corresponding AIFMD/UCITS regimes. The Central Bank of Ireland is The MiFID II Directive encompasses represented on the ESMA Board. the rules and guidelines on governance, products, investor protection and Find out more about ESMA on their website at information disclosure. In addition, the esma.europa.eu. requirements for third country firms to access the EU market are addressed. 2.Irish legislation
On 15 August 2017 the Department Role of the regulator of Finance issued S.I. No. 375 of A key component of a successful and 2017 transposing MiFID II (the “Irish attractive jurisdiction for the location MIFID II Regulations”). The MIFID II of financial services activities is a Working Group continues to analyse strong and independent regulator, with these Regulations, which largely mirror international credibility. The Central MiFID II. While a number of technical Bank of Ireland (CBI) is committed to amendments may be desirable, no delivering high quality, effective financial major substantive issues have been regulation and supervision to achieve identified to date. The publication of its mandate of safeguarding financial the Irish MiFID II Regulations follows stability and protecting consumers. the publication of the Department of Finance’s Feedback Statement on MIFID The CBI has a strong commitment to II in July 2018. transparency and clarity in respect of its authorisation process, ensuring that Find more detailed information on MiFID II in all applicants have a very clear idea as the Regulation section on centralbank.ie. to what is expected. The CBI strongly
PAGE 29 CHAPTER 5: APPLYING FOR APPROVAL FROM THE REGULATOR
The Central Bank of Ireland (CBI) is Submission of UCITS authorisation responsible for the authorisation and documentation to the Central Bank The time frame for approval of a UCITS supervision of all collective investment of Ireland fund from confirmation of receipt of schemes (i.e. both UCITS and AIFs). The The application to the CBI is made complete applications by the CBI is authorisation process varies depending online and will involve submitting several 8 – 10 weeks. on the fund type you have selected. third party service agreements. The following documentation, inter alia, is Authorisation process for UCITS 1. For both UCITS and AIFs required to be submitted. management companies All applicants seeking to provide services For all Irish domiciled funds the • the name of UCITS; to collective investment schemes are following service providers must be • a statement of the general nature of requested to contact the CBI in advance approved in advance of fund approval: the investment objectives of the of making a formal application. UCITS and evidence of incorporation; It is normal practice for the CBI to • An Irish based depository • the prospectus; engage with new applicants to discuss • An Irish based administrator • full information on the UCITS their proposed business prior to • An Irish regulated external auditor management company; beginning the authorisation process. • A management company • the full name and address of the (Unit Trust and CCF) proposed depositary; This serves a dual purpose by enabling • UCITS Manco / AIFM • information is also required on the BCI to familiarise itself with the the proposed investment adviser, background and business credentials The CBI has a levy in place for the auditor, any third party which has of the applicant whilst identifying, at a establishment of new fund structures been contracted by the UCITS, or critical early stage, any potential issues authorised/approved after 1 December management company acting for with the proposed business. 2017. The amount of the levy will be the UCITS; driven by the number of sub-funds and • online application to be completed by Note that third party management type of structure. the investment manager (note that all companies are commonly used in applications for clearance by non-EU Ireland by fund managers to fulfil the 2. UCITS authorisation based entities should be completed UCITS Management Company role and through the CBI’s portal known as are commonly used by overseas fund The CBI is designated in the Regulations Orion); managers with Irish collective investment as the competent authority with schemes. responsibility for the authorisation and • additional information may also be supervision of UCITS. The authorisation required by the CBI in the course of Find more detailed information on the process for UCITS has two elements: determining individual applications. authorisation process for UCITS management companies in the Regulation section on 1. The approval of service providers Note: references above to “information centralbank.ie. as noted above for both UCITS on management company/administrator and AIFs. third party” etc. in effect means that the 3. AIFs 2. The approval of UCITS UCITS must submit the original signed documentation - applications to the agreement with these parties to the CBI. Fund Approval Overview CBI must include the prospectus; UCITS directors are subject to the CBI instrument of incorporation, fitness and probity checks and must agreements with service providers, Approval of key parties submit the associated questionnaire Setting up an Irish regulated AIF firstly business plans, the risk management via the CBI online reporting tool. Once process and the fund’s Key Investor involves identification of the key parties authorised by the CBI a scanned letter of to the fund, who must be approved by Information Document (KIID). authorisation will be issued by email.
PAGE 30 CHAPTER 5: APPLYING FOR APPROVAL FROM THE REGULATOR
the CBI. The AIFM, directors, investment financial resources is also required ICAV authorisation manager/advisor, fund administrator, to be submitted as part of the The ICAV can be established by way of depositary and auditor must all be pre- online application. This information a filing with the Central Bank of Ireland cleared by the CBI. The service providers should include, inter alia, background (the “Central Bank”) and can seek located in Ireland will generally have details and experience, organisational authorisation as either a UCITS or an already been authorised/approved by the structure, to include details of alternative investment fund (“AIF”). CBI, meaning that the focus will be on shareholders, assets under management From a regulatory perspective, the ICAV approving any managers or delegates and latest audited financial statements. may be established as either a stand- located outside of Ireland who have not An investment manager cleared to act alone or an umbrella fund and can be previously been approved. for an Irish authorised fund should structured to suit all major investment inform the Central Bank in advance of strategies (accommodating traditional as Investment Manager approval any upcoming changes to its regulatory well as alternative investment policies). In accordance with the provisions of the status, name, or registered address. It can also avail of a full suite of liquidity UCITS Directive and AIFMD, where an options making it suitable for mutual investment fund proposes to delegate the Note that third party management funds, hedge, real estate, infrastructure, investment management function, the companies are commonly used in Ireland lending vehicles, private equity, managed mandate may only be given to entities by fund managers to fulfil the regulatory accounts and hybrid funds. which are authorised or registered for requirements and are commonly used the purpose of asset management and by overseas fund managers with Irish AIFM authorisation process subject to prudential supervision. Where collective investment schemes The authorisation process for an AIFM the proposed investment manager is centres on the requirement to submit not located in Ireland, and is given to a Further details on the investment a “programme of activity” (POA) to the third-country undertaking, cooperation manager application approval process CBI. This is essentially a governance between the supervisory authorities can be found on the Central Bank of document or a regulatory compliance concerned must be ensured. Supervisory Ireland’s website.26 plan, setting out the AIFM organisational cooperation generally takes the form of a structure, its daily operational plan and memorandum of understanding between how it intends to comply with the CBI’s both jurisdictions. Fund application requirements. A detailed application form must be Non-EU applicant investment managers submitted to the Central Bank, filed The POA will pertain to certain key must complete an online application together with the prospectus, the managerial functions, including in through the Central Bank of Ireland’s constitutional documents of the fund particular portfolio management and portal known as Orion.25 and the material contracts with the risk management as well as governance various parties to the fund, e.g. and valuation procedures. The POA will Where an investment manager is located Depositary Agreement, Administration also detail the AIFM policies relating to outside of Ireland, the Central Bank must Agreement etc. remuneration, delegation of tasks to third be satisfied that the firm is appropriately Fund approval timeframes parties, conflicts of interest policy and regulated in its Home State. Specifically, anti-money laundering policy. the firm must be authorised and The QIAIF is authorised in 24 hours, subject to prudential regulation by its provided a completed application is Third party management companies are Home competent authority. The online received before 3pm on the day of most commonly utilised by Chinese/Asian application for clearance must include filing. In order to avail of the 24 hour Fund Managers to fulfil this function. contact details of the Home competent turnaround, the parties to the fund must authority. be pre-approved and the fund must Find more detailed information on the certify that it complies with the QIAIF authorisation process in the Regulation Information concerning the applicant’s requirements. section on centralbank.ie. expertise, integrity and adequacy of
25 https://orion.centralbank.ie/ 26www.centralbank.ie/regulation/industry-market-sectors/funds-service-providers/investment-manager-and-investment-advisors PAGE 31 CHAPTER 6: FUND OPERATIONS AND GOVERNANCE
1. Fund service providers • Calculation of net asset value and Core responsibilities of depositaries dealing price, including pricing of the The depositary for a UCITS fund The following service providers are underlying securities; must be: required when setting up a fund in • Maintenance and updating of • A national central bank; Ireland: accounting records; • A credit institution; or • Preparation of annual and semi-annual • A legal entity authorised by its national financial statements; An Irish based depository competent authority to carry on • Reconciliation of investment and cash depositary activities under the UCITS positions with custody records; Directive, subject to the fulfilment An Irish regulated external auditor • Maintenance and servicing of investor of certain capital, prudential and register; and organisational requirements. • Correspondence with investors, An Irish based administrator including maintenance and issue No company may act as both a (central administration) of subscription and redemption management company and depositary or documentation. investment company and depositary. A management company (for a Unit Trust and CCF) The administration of collective The depositary for an EU AIF must be: investment schemes (whether Irish • An EU credit institution or or non-Irish) is a regulated activity • A UCITS depositary or A UCITS Manco / AIFM under the Investment Intermediaries • A MiFID investment entity authorised Act 1995 (as amended), and any to provide custodial services and which firm carrying out fund administration Investment manager fulfils additional capital requirements. activities in Ireland must be authorised by the CBI under that Act. The CBI has The depositary is required to be Distributor specific requirements with regard to the established in the same EU Member outsourcing of administrative activities. state as the AIF or UCITS. Additionally the depositary’s appointment contract Legal advisor must detail its services in terms of Core responsibilities safekeeping, oversight, segregation and information exchange. This contract, like Company secretary/registered office of the investment manager The function of the investment manager all third party agreements, is submitted is to take the day-to-day investment as part of the CBI authorisation process. Money Laundering Reporting decisions in relation to the fund and Officer (MLRO) trade the assets of the fund in line with AIFM and UCITS Management the fund’s investment objectives and Companies (ManCos) policies. An Irish Manco can obtain authorisation Listing agent (if applicable) as (i) a UCITS management company; Before the CBI considers an application or (ii) an AIFM; or (iii) a dual for authorisation of a fund, it must be authorisation as a Super Manco i.e. both satisfied with the investment manager UCITS management company and AIFM. of the proposed fund. The CBI does not The Manco can also extend its licence Core responsibilities require that the investment manager to perform MiFID individual portfolio of fund administrators be located in Ireland. In cases where management functions. All of the An Irish administrator must be appointed the investment manager is located in above authorisations can be passported to provide administration services to Irish Ireland, it would require an authorisation throughout the EEA on either a freedom funds. The administrator is responsible under MiFID (see Chapter 4 for more of services or branch basis. for the following: information on MiFID).
PAGE 32 CHAPTER 6: FUND OPERATIONS AND GOVERNANCE
What are the differences between what an AIFM can do and a UCITS ManCo can do?
AIFM UCITS
(i) Managing AIFs (i) Collective Portfolio Management Defined as performing at least the following investment management functions Defined as the management of unit for one or more AIFs: trusts/common funds and of - Portfolio management investment - Risk management companies. This includes: - Investment management; (ii) Additional Annex I Functions - Administration; and May also perform the below as long as in the course of its collective management - Marketing. of an AIF: a) Administration (ii) Individual Portfolio Management • legal and fund management accounting services; Defined as the management of • customer inquiries portfolios of investments, including • valuation and pricing, including tax returns; those owned by pension funds, in accordance with mandates given • regulatory compliance monitoring; by investors on a discretionary • maintenance of unit/shareholder register; client-by client basis, where such • distribution of income; portfolios include one or more of the • unit/shares issues and redemptions; instruments listed in Section C of • contract settlements, including certificate dispatch; the Annex to the MiFID. • record keeping b) Marketing (iii) Non-Core Services c) Activities related to the assets of AIFs - investment advice concerning one or more of the instruments listed (iii) Other Services in Annex I, Section C to MiFID; Assuming an extended authorisation is granted, an AIFM can also: and -act as a UCITS management company, - safekeeping and administration -provide individual portfolio management in accordance with mandates given in relation to units of collective by investors on a discretionary client-by-client basis, investment undertakings. -provide “non-core” services of investment advice; safe-keeping and administration in relation to units of collective investment undertakings; *A UCITS ManCo may not be or reception and transmission of orders in relation to financial instruments. authorised solely to provide *In each case, the AIFM would need to be authorised for these additional Individual Portfolio Management activities either under AIFMD or under the UCITS Directive. services and Non-Core Services. Furthermore, a UCITS ManCo (iv) Marketing may only be authorised to provide The activity of “marketing” is defined as “a direct or indirect offering or the non-core services where it is placement at the initiative of the AIFM or on behalf of the AIFM of units or authorised for Individual Portfolio shares in an AIF it manages to or with investors domiciled or with a registered Management services. office in the [European] Union”. *Also covers activities of others such as intermediaries or placement agents acting “on behalf of the AIFM”.
PAGE 33 CHAPTER 6: FUND OPERATIONS AND GOVERNANCE
Distributor Whereas an investment or management an individual (a “designated person”) The Distributor is responsible for company with a PRISM impact rating of who is responsible for monitoring establishing the distribution strategy of Medium Low or above shall have at least: and overseeing the six managerial the fund and selling/marketing the fund (i) 3 directors resident in Ireland or, functions (regulatory compliance, fund to investors. at least, 2 directors resident in risk management, operational risk Ireland and one designated management, capital and financial Board of directors person resident in Ireland, management, distribution and The board of directors monitor (ii) half of its directors resident investment management). the performance of the duties and in the EEA, and responsibilities delegated to the various (iii) half of its managerial functions Supervisory requirements service providers. Depending on the performed by at least 2 regulatory classification of the fund and designated persons resident UCITS the nature of the fund itself, directors in the EEA. • Each subfund or an umbrella fund may be allocated responsibilities for must be authorised by the Central monitoring the performance of certain Fund documentation Bank of Ireland (CBI). tasks between quarterly board meetings There are a number of documents that • The prospectus for each fund must and escalating to the wider board, if must be submitted to the regulator, be submitted along with details of necessary. The Central Bank of Ireland. agreements with the administrator, You can read more about these in depositary and any other third party The regulatory authorities in Ireland Appendix 1 at the end of this document. involved. have put a particular focus on directors’ • The CBI must also be notified in functions being more substantive in advance of any significant amendment terms of active governance and evidential 2. Irish fund governance to the prospectus or Key Investor oversight. The Corporate Governance requirements Information Document (KIID) and if Code for Collective Investment the changes are considered “material” Schemes and Management Companies then investors must be notified before Corporate governance requirements recommends: these changes come into effect. • At least three directors All Irish investment funds are subject to the Corporate Governance Code for • Majority of non-executive directors AIF Collective Investment • At least one independent director Schemes and Management Companies. • The AIF must appoint an Alternative Investment Fund Manager (AIFM). Directors must be pre-approved by the In December 2016, the Central Bank • The AIFM is subject to certain CBI and are subject to CBI’s Fitness and of Ireland (CBI) published the final requirements and must have been Probity Regime. guidance paper on Fund pre-approved by the CBI before it is Management Company Effectiveness. appointed by the AIF. A management company with a Low The guidance covers the following areas: • The AIF must also inform the CBI of PRISM (the CBI’s risk rating) rating will all other third party service providers require at least: • Delegate oversight • Organisational effectiveness such as the management company, (i) 2 directors resident in Ireland, depositary, administrator etc. (ii) half of its directors resident in • Directors time commitments the EEA, and • Managerial functions Please also refer to chapter 1 for the revised (iii) half of its managerial functions • Operational issues framework of rules and guidance regarding performed by at least 2 • Procedural matters the oversight of the designated activities designated persons resident and the 6 key identified management in the EEA. The CBI requires fund management functions for management companies. and investment companies to identify
PAGE 34 CHAPTER 6: FUND OPERATIONS AND GOVERNANCE
Reporting requirements Each quarter, within ten days of the end assets at month end, number of units in of that quarter, all UCITS must submit circulation, NAV per unit, subscriptions, UCITS a Money Market and Investment Fund redemptions and repurchase payments A UCITS must publish annual audited (MMIF) return to the CBI. These ongoing during the month, profit and loss for financial statements within four months reporting requirements are usually the month, management fees and other of the year end and an interim report carried out by the administrator. expenses. within two months of the period end. AIFs Within ten days of the end of each On a monthly basis UCITS must submit An AIF must publish annual audited quarter, the AIF is required to submit an online report to the Statistics financial statements within six months of a survey of collective investment Division of the CBI. This report must the year end. An AIF, which is structured undertaking return to the CBI. On an detail, amongst other things, the fund as a Unit Trust or CCF must publish an annual basis it must submit a Survey currency, gross assets at month end, net interim report within two months of the of Liabilities. These ongoing reporting assets at month end, number of units in period end. requirements are usually carried out by circulation, NAV per unit, subscriptions, the administrator. redemptions and repurchase payments On a monthly basis the AIF must during the month, profit and loss for submit an online report to the Statistics the month, management fees and other Division of the CBI. This report must Below we summarise some of the key expenses. detail, amongst other things, the fund requirements associated with both currency, gross assets at month end, net UCITS and AIFs.
Reporting requirements overview – UCITS and AIFs
Return Applicable Funds Frequency Deadline Method of Filing Annual audited UCITS – within 4 months of year end Online Reporting UCITS/AIF Annual financial statements AIF – within 6 months of year end System
Interim financial UCITS/AIF (unit trusts Online Reporting Annual Within 2 months of period end statements & CCFs only) System
Annual subfund profile Online Reporting UCITS/AIF Annual By 30 June each year return System
Within 35 business days of the Online Reporting Annual KIID update UCITS Annual end of each calendar year System
Annual Financial Online Reporting Derivative Instrument UCITS Annual Within 4 months of year end System (FDI) return Money-Market and 10th business day of the Online Reporting Investment Fund (MMIF) UCITS/AIF Quarterly month following quarter end System return
10th business day of the Online Reporting NAV return UCITS/AIF Monthly month following month end System
PAGE 35 CHAPTER 6: FUND OPERATIONS AND GOVERNANCE
Reporting requirements for The appropriate reporting interval a management company is advised to an AIF Management Company on an individual basis. UCITS management companies Annual Returns Capital requirements Annual audited accounts of UCITS Management Company must be UCITS submitted to the Central Bank within A UCITS management company must four months of the relevant reporting have initial capital equivalent to the period end. The accounts must be higher of: accompanied by the Minimum Capital Requirement Report, which forms part of 1. € 125,000 plus, if applicable, an the UCITS Notices. additional amount of 0.02% of the amount by which net assets exceed Half-Yearly/Quarterly/Monthly Returns €250 million. UCITS Management Companies are Or required to submit certain financial information to the Central Bank. This 2. One quarter of its total expenditure includes financial statements such in its most recent annual accounts. as a Balance Sheet and Profit & Loss account and the Minimum Capital Requirement Report, which forms part AIFMs of the UCITS Notices. The appropriate An AIFM must have initial capital reporting interval is advised to a UCITS equivalent to the larger of: Management Company on an individual basis. 1. €125,000 plus, if applicable, an additional amount of 0.02% of the AIF management companies amount by which net assets exceed €250 million. Annual Returns Or Annual audited accounts of AIF Management Companies must be 2.One quarter of its total expenditure in submitted to the Central Bank within its most recent annual accounts. four months of the relevant reporting period. The accounts must be The minimum capital requirement is accompanied by the Minimum Capital subject to an upper limit of €10 million. Requirement Report, which forms part of the AIF Rulebook.
Half-Yearly / Quarterly / Monthly Returns AIF Management Companies are required to submit certain financial information to the Central Bank. This includes financial statements such as a Balance Sheet and Profit & Loss account and the Minimum Capital Requirement Report which forms part of the AIF Rulebook.
PAGE 36 CHAPTER 7: DISTRIBUTION: USING IRISH DOMICILED FUNDS AS A BRIDGE TO THE GLOBAL MARKET
The primary objective in developing a cross-border business is to ensure that your firm’s specific investment capabilities can be delivered to a range of potential investors in multiple markets. Irish domiciled funds, operating under recognised product configurations like UCITS are readily accepted in a wide range of markets around the world.
1.Where are Irish funds sold?
Ireland is a major hub for distribution with international recognition. Irish funds are sold to 90 countries in the Americas, Asia and the Pacific, the Middle East and Africa.
Total number of Cross Border Registrations for Irish Funds
Total number of cross border registrations for Irish funds.
IRELAND 37,548
UK GERMANY Top regional markets for distribution. 3,547 3,187
Top regional markets for distribution. SINGAPORE 1,018 CHILE Top regional markets for 232 distribution
Top regional markets for distribution.
SOUTH AFRICA 101
Top regional markets for distribution.
PAGE 37 CHAPTER 7: DISTRIBUTION: USING IRISH DOMICILED FUNDS AS A BRIDGE TO THE GLOBAL MARKET
2. Distributing Irish funds AIF marketing and management that it incurs. In order to be considered in Europe passport a professional client, the client must Any asset managers wishing to market comply with criteria outlined in Annex II and distribute alternative investment of the MiFID Directive. UCITS marketing passport funds (“AIFs”) in Europe will now have UCITS which are authorised in any EU to carefully consider the implications of member state can avail of a marketing National Private Placement Regimes the AIFMD on how they can approach (NPPRs) passport whereby the UCITS may be the distribution of their funds in Europe. distributed in other EU states subject to National Private Placement Regimes a relatively simple notification procedure. principally relates to the marketing of Marketing under the AIFMD covers any non-EEA AIFs and AIFs managed by This notification is submitted to the “direct or indirect offering or placement home member state regulator who will non-EEA AIFMs. As AIFMD has been at the initiative of the AIFM or on behalf implemented in each EU member state review it and forward it to the destination of the AIFM of units or shares in an AIF member state regulator. there have invariably been differences in it manages to or with investors domiciled approach to certain areas. in the EU”. The marketing provisions The process of notification requires that of the directive do not apply to passive if the fund is going to be marketed in a The fund registration process therefore marketing; however, passive marketing is varies from country to country and must host EU member state for the first time not well defined in the AIFMD. (either the umbrella, a sub-fund within be considered on an individual basis when making applications to ensure that that umbrella not previously notified When discussing the various distribution or a single fund), a notification letter, all the requirements of each member options available under the AIFMD the state are met. together with all required attachments, three terms that are frequently used are: must be submitted to the home state i. Passporting Reverse solicitation regulator of the UCITS. Next the UCITS ii. National Private Placement Regimes fund’s home state regulator will review Reverse solicitation or passive marketing (“NPPR”) or Private Placement; which is marketing which is not at the submitted notification file and verify iii. Reverse solicitation whether the documentation submitted by the direct or indirect initiative of the the UCITS or its delegated representative Non-EU fund manager is still permitted How does the AIFMD passport work? under the AIFMD i.e., if an investor is complete before it is transmitted to The passporting procedure under AIFMD the host state regulator. approaches the manager about investing is similar to that which exists for UCITS in a fund without prior solicitation, then funds in the EU. Once an AIFM is The home state regulator has 10 on that basis the manager would not authorised in one EU member state, the need to comply with the AIFMD as such working days from the receipt of the passport permits the AIFM to market notification file to notify the host state marketing would not be at the initiative units or shares of any EU AIF that it of the manager. regulator. Upon the transmission of manages to professional investors in the the documentation, the competent home member state of the AIFM as well There is no firm guidance as to what authorities of the UCITS home state as any of the other 27 EU member states. shall immediately notify the UCITS. constitutes reverse solicitation and a manager intending to rely on reverse The UCITS may then access the host For passporting purposes, a professional state market in question as from the solicitation will need to ensure that investor must meet the definition of procedures and policies are put in place date of that notification. The host state professional investor set out in the regulator has at most 5 working days to to clearly demonstrate that a particular Markets in Financial Instruments EU investor invested in the fund on this confirm to the home state regulator that Directive (MiFID). According to MiFID, the notification file has been received basis. It will also need to ensure that a professional client is a client who follow up communications with such an and the documents are printable and possesses the experience, knowledge and readable. investor do not inadvertently result in expertise to make its own investment active marketing, for example, of another decisions and properly assess the risks fund.
PAGE 38 CHAPTER 7: DISTRIBUTION: USING IRISH DOMICILED FUNDS AS A BRIDGE TO THE GLOBAL MARKET
If a manager is unwilling to rely on Key European Fund Distribution Channels reverse solicitation, then the only alternative at present for such managers is to market in accordance with existing Banks Insurance / Fund Of IFA / Other private placement regimes. Private & Wrappers Funds Platforms Financial Retail (Fofs) Distribution Institutions Co’s i.e. Pensions Key European fund distribution channels The table below outlines the main Austria distribution channels in the key fund distribution countries in Europe. Banks Belgium are the largest channel by far. It remains to be seen whether this route to investors Denmark will be replaced by other channels. Finland
France
Germany
Gibraltar
Guernsey
Ireland
Isle of Man
Jersey
Italy
Luxembourg
Malta
Netherlands
Portugal
Spain
Sweden
Switzerland
UK
PAGE 39 CHAPTER 7: DISTRIBUTION: USING IRISH DOMICILED FUNDS AS A BRIDGE TO THE GLOBAL MARKET
Cross-border distribution changes Directive”) gave EU Member States are burdensome and of limited value in Important new EU developments discretion over whether to require practice, given that local facilities are relating to the cross-border distribution the appointment of a local agent by rarely used by investors in the manner of investment funds under the Capital a UCITS to provide facilities to local intended by the UCITS Directive. Markets Union (“CMU”) are imminent. investors, e.g. facilities for payment The EU is about to finalise new rules to of subscriptions and redemptions, Against this background, the Directive facilitate and encourage cross-border availability of fund documents, etc. amending Directives 2009/65/EC and fund distribution by removing regulatory In many cases, EU Member States 2011/61/EU with regard to cross-border barriers and improving cost efficiency. It exercised this discretion and require distribution of collective investment is also intended to allow EU AIFMs to a local agent to be appointed; thereby undertakings (the “New Directive”) test market interest in an EU jurisdiction increasing the costs associated with will amend the UCITS Directive and before incurring the expense of passporting a UCITS fund into those harmonise EU rules on the provision passporting an AIF into that jurisdiction. jurisdictions. In proposing the New of facilities. In summary, the following Directive, the European Commission requirements will apply: Directive 2009/65/EC (the “UCITS noted that the local agent requirements
• A UCITS will be required to • The UCITS may appoint a third • Finally the New Directive provide certain facilities in all party to perform some or all of the introduces the concept of Member States where its shares tasks concerned; however, such “pre-marketing” to enable the are registered for marketing, appointment must be in writing. test market interest before e.g. facilities for processing of establishing an AIF. This is a subscriptions and redemptions; • The New Directive also changes welcome enhancement. handling of investor complaints; the process by which certain making available fund documents; update notifications are filed with and acting as a point of contact host Member State NCAs - the for competent authorities. New Directive states that these changes must be notified to • Crucially, Member States will not both the UCITS home and host be permitted to require a UCITS Member State NCAs at least one to have a physical presence in month before implementing the the provision of such facilities, change. This will also apply to meaning it should be possible the registration of new share to provide the facilities remotely classes, meaning that both the from another Member State. home and host Member State NCAs must be notified at least • A UCITS must ensure that the one month in advance of the new facilities are provided in the share classes being marketed. official language (or one of the official languages) of a Member • The New Directive also includes State where its shares are changes for de-registration marketed, or in another language for marketing and marketing which is approved by that Member communications. State’s national competent authority (“NCA”).
PAGE 40 CHAPTER 7: DISTRIBUTION: USING IRISH DOMICILED FUNDS AS A BRIDGE TO THE GLOBAL MARKET
3. Distributing Irish funds globally 4. Listing a fund on the Euronext Dublin Irish funds are sold to 90 countries in the Euronext Dublin is recognised worldwide Americas, Asia and the Pacific, the Middle as the leading centre for listing East and Africa. Wherever your fund is investment funds with over 4,000 fund domiciled, it can be serviced out of Ireland share classes currently listed. Euronext – 30 languages and 28 currencies are fully Dublin is part of Euronext, the pan- supported. European exchange operator.
Why list? Investment managers from over 40 global locations list their funds on Euronext Dublin to:
NO. OF PROMOTERS BY REGION • Satisfy investor requirements; • Increase visibility and transparency of 336 Europe funds to a global audience; 161 North America • Access trading on Euronext Fund Services (EFS); 43 Asia • Grow the AUM of the fund; 14 Middle East & Africa • Publish NAV’s and market 6 Latin America announcements; • Access a broad range of retail and Grand total 564 institutional investors across Europe; • Increase tax efficiencies for certain product types; and • ETF listing provides a cost efficient and fast access to other European markets. Process • Appoint a Sponsor who will advise you during the listing process with a direct submission available from ManCos. • List all fund types from every major fund domicile. • Guaranteed timelines and straightforward listing process. • Choice of Markets: MSM (EU Regulated) & GEM (Exchange Regulated) • Competitive fees applied per fund not per share class.
Further detail can be found at the official website of Euronext Dublin.
PAGE 41 CHAPTER 8 – TAXATION OF IRISH FUNDS
For more than a quarter of a century, to Irish Revenue by 30 June with respect IREFs must deduct a 20% withholding Ireland has been a leading regulated to the proceeding calendar year. tax on certain property distributions to domicile for internationally distributed non-resident investors. The withholding investment funds. The Irish tax regime 3.Common Reporting Standard tax will not apply to certain categories has been, and continues to be, one of the (CRS) of investors such as pension funds, life key growth drivers of the funds industry in CRS came into operation in Ireland on 1 assurance companies and other collective Ireland as it offers a clear and certain tax January 2016 and reporting is required investment undertakings. environment for investment funds and is in respect of relevant financial accounts fully compliant with OECD guidelines and from that date. CRS imposes obligations As mentioned previously an Irish fund EU law. The Irish framework is legislation- on Irish Financial Institutions to review can be structured as a tax transparent based and does not rely on rulings. and collect information in an effort to vehicle resulting in the retention of the identify an account holder’s tax residence tax benefits (e.g. reduced withholding 1. Tax treaty network in a CRS participating country and then in taxes) enjoyed by investors through direct Ireland has an extensive and growing turn, to provide certain specified account ownership. Tax transparency applies to the network of double taxation treaties with information to Irish Revenue on an annual Common Contractual Fund as mentioned over seventy countries, including with basis. Financial Institutions are required above however professional advice should Hong Kong and China, providing access to to report annually to Irish Revenue by be taken in relation to target investor favourable tax reclaim rates.27 30 June with respect to the preceding and investment markets to ensure the calendar year. principle of transparency is retained. The availability of treaty benefits in a The Investment Limited Partnership is particular case will ultimately depend on 4.Tax implications for funds also regarded as tax transparent for tax the provisions contained in the relevant The normal tax treatment afforded to Irish purposes. tax treaty between Ireland and the collective investment funds is that the treaty partner jurisdiction, as well as the funds invested are allowed to grow on a approach of the tax authorities in the tax-free basis within the fund. The income 5.Tax implications for investors treaty country. Consequently, access to is taxed at the level of the investor rather No Irish withholding taxes apply on double tax treaties and their potential than the fund, as is standard international income distributions and redemption benefits should be reviewed on a practice. payments made by an Irish fund to non- case-by-case basis. Irish resident investors, provided that In order to ensure that appropriate tax is no IREF assets are held by the fund. 2.FATCA (Foreign Account Tax collected from Irish investors, funds are Investors in Irish funds are subject to Compliance Act) obliged to operate an exit tax regime and the taxing provisions and codes of their The regime came into effect on 1 July remit the tax deducted in this manner home jurisdiction in relation to income 2014 and reporting is required in to Revenue. This charge to tax does not or capital gains derived from their respect of relevant financial accounts apply in the case of unit holders who are investment in an Irish fund. from that date. Ireland has signed a non-resident. In the case of non-resident Model 1 InterGovernmental Agreement investors, their liability to tax on gains 6.Value Added Tax (VAT) (“IGA”) with the US. Ireland was one from the fund will be determined in their As provided under EU law, the provision of the first jurisdictions to sign an IGA home jurisdiction. of management, administration and with the US. Financial Institutions in custody services to an Irish regulated fund Ireland are required to register with the The rules in relation to Irish Property is exempt from Irish VAT. Other services, Internal Revenue Service to obtain a funds however are more complex and such as legal and accounting services, Global Intermediary Identification Number where a fund is determined to be an can result in an Irish VAT liability, but but are governed by Irish regulations Irish Real Estate Fund (IREF). IREFs may be offset, depending on the fund’s and guidance notes and report to the are investment undertakings (excluding VAT recovery position. Irish government, who will then share UCITS) where 25% of the value of that the information with the IRS. Financial undertaking is made up of Irish real Find out more about taxation in the Getting Institutions are required to report annually estate assets. Started in Ireland section on irishfunds.ie.
27 See appendix 2 for the full list
PAGE 42 CHAPTER 9 – SETTING UP A BUSINESS IN IRELAND
For managers who are interested in setting up in Ireland, there are a number of support services available. Below is some of the key information surrounding employment permits and visas, however you can contact IDA Ireland (idaireland.com) for more extensive and tailored guidance.
1. Employment permits The most relevant type of visa is likely 2. Visas to be the Critical Skills Employment In order to work in Ireland a non-EEA Permit. Eligible occupations under this Chinese nationals must apply for a visa National, unless they are exempted, type of permit are deemed to be critically before setting up operations or working in must hold a valid Employment Permit. important to growing Ireland’s economy, Ireland. Immigration and other relevant The Department’s Employment Permits are highly demanded and highly skilled, regulations and policies are constantly Section administers the Employment and in significant shortage of supply in changing. Companies which plan to Permits system. our labour market. set up financial services in the Ireland should consult in advance to obtain the There are a number of permit types, The Department for Jobs, Enterprise and relevant information. There are different including: Innovation are responsible for issuing visas required depending on the purpose • Critical Skills Employment Permit employment permits. and the length of stay – less than three • Intra-Company Transfer Employment months, more than three months, or in Find out more in the Employment Permit Permit transit. section of djei.ie. • Exchange Agreement Employment Permit The Irish Naturalisation and Immigration Service are responsible for processing • Dependant/Partner/Spouse visas. Employment Permit • Contract for Services Employment Find out more about visas at inis.gov.ie. Permit • Sport & Cultural Employment Permit You can also find information about • General Employment Permit visas on the Embassy of Ireland in China • Reactivation Employment Permit website: www.dfa.ie/zh/aierlandashiguan/ • Internship Employment Permit zhong-guo/qian-zheng/
PAGE 43 CHAPTER 10: RELEVANT GOVERNMENT DEPARTMENTS, AGENCIES AND OTHER BODIES
The Government and its team in China the dedicated IFS sector from 44,000 As part of Ireland’s financial services are continuing to drive hard in order to (at the end of 2018) to 50,000 by strategy, the Irish Government, through continue to grow a two-way, mutually 2025. IFS2025 is a five year, whole- IDA Ireland, annually host the European beneficial Ireland/China relationship. of-Government strategy underpinned Financial Forum. The Forum has become There are regular Trade & Investment by annual action plans and quarterly the European platform for top decision- Missions to China led by Irish Ministers reviews, supported by both industry and makers and influencers, in the public, and the Government have essentially the public sector to drive the growth and private and regulatory fields of financial doubled the staffing at Embassy in development of the IFS sector in Ireland. services to explore the disruptive forces Beijing and have strengthened the The IFS 2025 strategy’s dynamic and that are shaping the financial sector Consulate General in Shanghai. The evolving structures provide the toolkit into the future and discuss where Consulate General in Hong Kong, to drive growth and development in the opportunities lie. established in 2014, is operating IFS sector in Ireland and to react to strongly and effectively. In addition, domestic and international challenges For more information on the International another embassy is to be opened as and opportunities arising over the next Financial Services Strategy 2025 – part of the Irish Government’s Asia 12 months and beyond. Ireland for Finance please go to Pacific 2025 strategy. There are also www.gov.ie/en/publication/Ireland-For- a number of associations and bodies The Strategy is structured around the Finance-strategy. that work alongside Government to help following four pillars: develop and support the Ireland-China 2. Central Bank of Ireland relationship. • Operating Environment - focused (CBI) on ensuring the policy, culture and 1. Department of Finance legislative conditions underpinning IFS will support growth. As mentioned earlier, the CBI is responsible for the supervision of most In addition to its other responsibilities • Technology and Innovation - focused financial institutions in Ireland including (for the public finances, assessing on providing a collaborative approach banks, a broad range of non-bank and advising on economic and fiscal to addressing emerging challenges firms, exchanges, asset managers and developments, developing tax policy and and opportunities in technological collective investment schemes. representing Ireland’s interests across on developments. a range of EU and international bodies) • Talent - which seeks to ensure that Given the longevity and size of the the Department of Finance ensures that we continue to have skilled people to asset management and funds industry Ireland has a well-regulated and stable meet the demands of the IFS sector, in Ireland the CBI has significant financial sector and works to continue including meeting new and changing experience and is an active participant the development of Ireland as a centre skills. in international regulatory co-operation, for International Financial Services. • Communications and Promotion - including holding a seat on the Board of focused on ensuring that Ireland’s IOSCO. The continued successful development IFS offering is communicated to all of the IFS Sector in Ireland is a those who are or may be attracted to Find out more in the Regulation section priority for the Irish Government. The investing in Ireland. at centralbank.ie. appointment of a dedicated Minister of State with responsibility for financial As part of the strategy, the Government services is a clear signal of this brand for Ireland’s IFS sector, IFS Government’s commitment to the IFS Ireland, will continue to be developed industry. Following on from IFS 2020, and embodies the proposition and values the Department of Finance recently of Ireland’s unique capability, our global launched the International Financial offer and the success and confidence Services Strategy 2025 – Ireland for of an exciting, growing and visionary Finance. This new strategy aims to industry. continue to grow direct employment in
PAGE 44 CHAPTER 10: RELEVANT GOVERNMENT DEPARTMENTS, AGENCIES AND OTHER BODIES
3. Department of Foreign hand to work with asset managers and managers that have entered the Irish Affairs and Trade/Irish other companies on their international market or are looking to enter the Irish expansion plans. This includes providing market. Similar events are also held on Embassy and Consular network a wide range of information, business an annual basis in Beijing, Shanghai, support services and identifying if Singapore and Tokyo. Details of all The Irish Government’s representatives funding or grants are available. upcoming Irish Funds events can be in China are continuing to work closely idaireland.com. found at irishfunds.ie. with all parts of Chinese industry in order to grow two-way, mutually beneficial An asset managers group has also been Ireland/China ties. The Embassy works 5. Irish Funds established in Hong Kong which provides to pursue opportunities to enhance the Irish Funds (the Irish Funds Industry a forum to facilitate open dialogue political and economic relationship Association) is the representative body between asset managers on matters between Ireland and China that will of the international investment funds related to Irish domiciled funds and deliver economic growth and jobs; community in Ireland. It represents fund Europe generally. promote Ireland and the Irish Arts; and promoters/managers, administrators, maintain and enhance links with Irish custodians, transfer agents and Asset managers are welcome to join diaspora. It works closely with State professional advisory firms involved these quarterly meetings by contacting Agencies in China (Bord Bia, Enterprise in the international funds industry in [email protected]. Ireland, IDA Ireland and Tourism Ireland) Ireland, with more than 14,000 funds € to promote trade, tourism and inward and net assets of more that 5.2 trillion. investment. 6. Euronext Dublin The objective of Irish Funds is to support Euronext Dublin is recognised worldwide All are available to provide support and and complement the development of the as the leading centre for listing answer queries from firms looking at international funds industry in Ireland, investment funds with over 4,000 fund doing business in Ireland. ensuring it continues to be the location share classes currently listed. Euronext of choice for the domiciling and servicing Dublin is part of Euronext, the pan- Embassy of Ireland in China - www.dfa.ie/ of investment funds. European exchange operator. zh/aierlandashiguan/zhong-guo/ Through its work with governmental and Investment managers from over 40 Irish Consulate Shanghai - www.dfa.ie/zh/ industry committees and working groups, global locations list their funds on aierlanlingshiguan/shang-hai/ Irish Funds contributes to and influences Euronext Dublin to: the development of Ireland’s regulatory • Satisfy investor requirements Irish Consulate Hong Kong - www.dfa.ie/ and legislative framework. Irish Funds is • Increase visibility and transparency of irish-consulate/hong-kong/ also involved in defining market practice funds to a global audience through the development of policy and • Access trading on Euronext Fund guidance papers and the promotion of Services (EFS) 4. IDA Ireland industry-specific training. • Grow the AUM of the fund Ireland’s inward investment promotion Irish Funds has an established • Publish NAVs and market agency, the IDA, is a non-commercial, relationship with the Asset Management announcements semi-state body promoting Foreign Direct Association of China (AMAC) having • Access a broad range of retail and Investment into Ireland through a wide signed a Memorandum of Understanding institutional investors across Europe range of services. IDA Ireland partner in 2014. • Increase tax efficiencies for certain with potential and existing investors product types to help them establish or expand their The Hong Kong chapter of Irish Funds • ETF listing provides a cost efficient and operations in Ireland. With offices holds three events in Hong Kong each fast access to other European markets in Beijing, Shanghai and Shenzhen year which provide technical, regulatory locally based industry experts are on and practical advice and insights to asset Euronext.com
PAGE 45 APPENDIX 1
There are a number of documents required by the Central Bank of Ireland to set up a fund here.
1. Letter of application (UCITS/AIF) 2. Prospectus/offering memorandum (UCITS/AIF) 3. Key investor information document (for UCITS only) 4. Constitutional Documents 5. Depositary agreement (UCITS/AIF) 6. Management company agreement (UCITS/AIF) 7. AIFM agreement (AIF only) 8. Administration agreement (All legal structures) 9. Distribution agreement (if applicable) 10. Paying agent/facilities agent agreement (if applicable) 11. Prime brokerage agreement (if applicable) 12. Individual Questionnaires of each director and senior manager
PAGE 46 APPENDIX 2
Double Taxation Treaties entered into by Ireland28
COUNTRY DATE OF SIGNING INCOME TAX CORPORATION TAX CAPITAL GAINS TAX Albania 16 Oct 2009 01 Jan 2012 01 Jan 2012 01 Jan 2012 Armenia 14 July 2011 01 Jan 2013 01 Jan 2013 01 Jan 2013 Australia 31 May 1983 06 Apr 1984 01 Jan 1984 06 Apr 1984 Austria 24 May 1966 06 Apr 1964 01 Apr 1964* Austria Protocol 19 Jun 1987 06 Apr 1976 01 Jan 1974 06 Apr 1974 Austria Protocol 16 Dec 2009 01 May 2011 01 May 2011 01 May 2011 Bahrain 29 Oct 2009 01 Jan 2010 01 Jan 2010 01 Jan 2010 Belarus 03 Nov 2009 01 Jan 2010 01 Jan 2010 01 Jan 2010 Belgium 24 Jun 1970 24 Jun 1970 01 Apr 1973* Belgium Protocol 14 Apr 2014 Not yet in effect Not yet in effect Not yet in effect Bosnia Herzegovina 03 Nov 2009 01 Jan 2012 01 Jan 2012 01 Jan 2012 Botswana 10 Jun 2014 01 Jan 2017 01 Jan 2017 01 Jan 2017 Bulgaria 05 Oct 2000 01 Jan 2003 01 Jan 2002 01 Jan 2003 Canada 08 Oct 2003 01 Jan 2006 01 Jan 2006 01 Jan 2006 Chile 02 Jun 2005 01 Jan 2009 01 Jan 2009 01 Jan 2009 China 19 Apr 2000 06 Apr 2001 01 Apr 2001 06 Apr 2001 Croatia 21 Jun 2002 01 Jan 2004 01 Jan 2004 01 Jan 2004 Cyprus 24 Sep 1968 06 Apr 1962 01 Apr 1962* Czech Republic 14 Nov 1995 06 Apr 1997 01 Jan 1997 06 Apr 1997 Denmark 26 Mar 1993 06 Apr 1994 01 Jan 1994 06 Apr 1994 Denmark Protocol 22 Jul 2014 01 Jan 2015 01 Jan 2015 01 Jan 2015 Egypt 09 Apr 2012 01 Jan 2014 01 Jan 2014 01 Jan 2014 Estonia 16 Dec 1997 06 Apr 1999 01 Jan 1999 06 Apr 1999 Ethiopia 03 Nov 2014 01 Jan 2017 01 Jan 2017 01 Jan 2017 Finland 27 Mar 1992 06 Apr 1990 01 Jan 1990 06 Apr 1990 France 21 Mar 1968 06 Apr 1966 01 Apr 1966* Georgia 20 Nov 2008 01 Jan 2011 01 Jan 2011 01 Jan 2011 Germany 30 Mar 2011 01 Jan 2013 01 Jan 2013 01 Jan 2013 Germany Protocol 25 May 2010 01 Jan 2011 01 Jan 2011 Germany Protocol 03 Dec 2014 01 Jan 2016 01 Jan 2016 01 Jan 2016 Germany 17 Oct 1962 06 April 1959 01 April 1959 Greece 24 Nov 2003 01 Jan 2005 01 Jan 2005 01 Jan 2005 Hong Kong 22 Jun 2010 01 Jan 2012 01 Jan 2012 01 Jan 2012 Hungary 25 Apr 1995 06 Apr 1997 01 Jan 1997 06 Apr 1997 Iceland 17 Dec 2003 01 Jan 2005 01 Jan 2005 01 Jan 2005 India 06 Nov 2000 01 Jan 2002 01 Jan 2002 01 Jan 2002 Israel 20 Nov 1995 06 Apr 1996 01 Jan 1996 06 Apr 1996 Italy 11 Jun 1971 06 Apr 1967 01 Apr 1967* Japan 18 Jan 1974 06 Apr 1974 01 Apr 1974* Korea (Rep. of) 18 Jul 1990 06 Apr 1992 01 Jan 1992 06 Apr 1992 Kuwait 23 Nov 2010 1 Jan 2014 1 Jan 2013 1 Jan 2013 Latvia 13 Nov 1997 06 Apr 1999 01 Jan 1999 06 Apr 1999 Lithuania 18 Nov 1997 06 Apr 1999 01 Jan 1999 06 Apr 1999 Luxembourg 14 Jan 1972 06 Apr 1968 01 Apr 1968* Luxembourg Protocol 27 May 2014 01 Jan 2016 01 Jan 2016 01 Jan 2016
28 www.revenue.ie/en/practitioner/law/double/double-taxation-agreements.html
PAGE 47 APPENDIX 2
COUNTRY DATE OF SIGNING INCOME TAX CORPORATION TAX CAPITAL GAINS TAX Macedonia 14 Apr 2008 01 Jan 2010 01 Jan 2010 01 Jan 2010 Malaysia 28 Nov 1998 06 Apr 2000 01 Jan 2000 06 Apr 2000 Malaysia Protocol 16 Dec 2009 01 Jan 2012 01 Jan 2012 01 Jan 2012 Malta 14 Nov 2008 01 Jan 2010 01 Jan 2010 01 Jan 2010 Mexico 22 Oct 1998 06 Apr 1999 01 Jan 1999 06 Apr 1999 Moldova 28 May 2009 01 Jan 2011 01 Jan 2011 01 Jan 2011 Montenegro 07 Oct 2010 01 Jan 2012 01 Jan 2012 01 Jan 2012 Morocco 22 Jun 2010 01 Jan 2012 01 Jan 2012 01 Jan 2012 Netherlands 11 Feb 1969 06 Apr 1965 01 Apr 1965* New Zealand 19 Sep 1986 06 Apr 1989 01 Jan 1989 06 Apr 1989 Norway 22 Nov 2000 01 Jan 2002 01 Jan 2002 01 Jan 2002 Pakistan 13 Apr 1973 06 Apr 1968 01 Apr 1968* Pakistan 16 April 2015 01 Jan 2017 01 Jan 2017 01 Jan 2017 Panama 28 Nov 2011 01 Jan 2013 01 Jan 2013 01 Jan 2013 Poland 13 Nov 1995 06 Apr 1996 01 Jan 1996 06 Apr 1996 Portugal 01 Jun 1993 06 Apr 1995 01 Jan 1995 06 Apr 1995 Portugal Prot. 11 Nov 2005 01 Jan 2007 01 Jan 2007 01 Jan 2007 Qatar 21 Jun 2012 1 Jan 2014 1 Jan 2014 1 Jan 2014 Romania 21 Oct 1999 06 Apr 2001 01 Jan 2001 06 Apr 2001 Russia 29 Apr 1994 06 Apr 1996 01 Jan 1996 06 Apr 1996 Saudi Arabia 19 Oct 2011 01 Jan 2013 01 Jan 2013 01 Jan 2013 Serbia 23 Sept 2009 01 Jan 2011 01 Jan 2011 01 Jan 2011 Singapore 28 Oct 2010 01 Jan 2011 01 Jan 2011 01 Jan 2011 Slovak Rep. 08 Jun 1999 06 Apr 2000 01 Jan 2000 06 Apr 2000 Slovenia 12 Mar 2002 01 Jan 2003 01 Jan 2003 01 Jan 2003 South Africa 07 Oct 1997 06 Apr 1998 01 Jan 1998 06 Apr 1998 South Africa Protocol 17 Mar 2010** 01 Jan 2013** 01 Jan 2013** 01 Jan 2013** Spain 10 Feb 1994 06 Apr 1995 01 Jan 1995 06 Apr 1995 Sweden 08 Oct 1986 06 Apr 1988 01 Jan 1989 06 Apr 1988 Swedish Prot. 01 Jul 1993 20 Jan 1994 20 Jan 1994 20 Jan 1994 Switzerland 08 Nov 1966 06 Apr 1965 01 Apr 1965* Swiss Prot. 24 Oct 1980 06 Apr 1976 01 Jan 1974 06 Apr 1974 Swiss Prot. 26 Jan 2012 1 Jan 2014 1 Jan 2014 1 Jan 2014 Thailand 04 Nov 2013 01 Jan 2016 01 Jan 2016 01 Jan 2016 Turkey 24 Oct 2008 01 Jan 2011 01 Jan 2011 01 Jan 2011 UAE 01 Jul 2010 01 Jan 2011 01 Jan 2011 01 Jan 2011 Ukraine 19 Apr 2013 01 Jan 2016 01 Jan 2016 01 Jan 2016 United Kingdom 02 Jun 1976 06 Apr 1976 01 Jan 1974 06 Apr 1976 UK Protocol 07 Nov 1994 06 Apr 1994 01 Apr 1994 UK Protocol 04 Nov 1998 06 Apr 1999 01 Jan 1999 01 Jan 1999 USA 28 Jul 1997 06 Apr 1998 01 Jan 1998 01 Jan 1998 USA Protocol 24 Sep 1999 1 Sep 2000 01 Sep 2000 01 Sep 2000 Uzbekistan 11 July 2012 01 Jan 2014 01 Jan 2014 01 Jan 2014 Vietnam 10 Mar 2008 01 Jan 2009 01 Jan 2009 01 Jan 2009 Zambia 29 Mar 1971 06 Apr 1967 01 Apr 1967* Zambia 31 Mar 2015 01 Jan 2016 01 Jan 2016 01 Jan 2016
PAGE 48 APPENDIX 3
Irish Funds provides a wide range of publications on key topics in the Irish Funds industry.
Irish Funds provides a wide range of publications on key topics in the Irish Funds industry. These include:
• Why Ireland 2020 • Why Ireland (Chinese Language) • Why Ireland for Management Companies and Investment Firms • Ireland: Europe’s Centre of Excellence for Exchange Traded Funds • Ireland: A Guide to International Fund Distribution • EU Sustainable Finance Regulatory Overview - The impacts for Irish funds • Fintech Ecosystem: Funds Industry in Ireland • Fund Governance: Navigating Liquidity Challenges • Funds Wrapper Matrix: Central Bank of Ireland Regulated Products • Irish AIFs: A Guide to establishing Alternative Investment Funds in Ireland • Irish Funds Country Distribution Guides – Hong Kong, Singapore, Taiwan, Japan, United States, Austria, Switzerland, France, Norway, Italy, Sweden, Spain, South Africa • Liquid Alternatives: Why Ireland for Alternative UCITS • Guide to Establishing Loan Originating Funds in Ireland • Guide to Establishing Money Market Funds in Ireland • CCFs: The Tax Efficiency in Asset Pooling
View any of the above as well as other resources in the Publications area on irishfunds.ie.
PAGE 49 Irish Funds Ashford House, 18-22 Tara Street, Dublin 2
t: +353 (0) 1 675 3200
e: [email protected] w: irishfunds.ie
August 2020
Disclaimer: The material contained in this document is for marketing, general information and reference purposes only and is not intended to provide legal, tax, accounting, investment, financial or other professional advice on any matter, and is not to be used as such. Further, this document is not intended to be, and should not be taken as, a definitive statement of either industry views or operational practice.
The contents of this document may not be comprehensive or up-to-date, and neither Irish Funds, nor any of its member firms, shall be responsible for updating any information contained within this document. PAGE 50 - Ireland: A Guidebook for Chinese Asset Managers