IRELAND: Investment Limited Partnerships (Amendment) Bill 2020

Friday December 18 2020

The Investment Limited Partnerships (Amendment) Bill 2020, passed in the Dáil, is set to accelerate Irish fund industry growth, help firms facilitate the green recovery, and open the door for new global private fund market entrants to domicile in Ireland as a key base for European capital raises.

Ireland’s Investment Partnership Bill has passed though all stages of the parliamentary process and is expected to be now sent forward for signing by the President. The Investment Limited Partnerships Act, 1994 Bill governs the establishment and operation of regulated investment limited partnerships (ILP) in Ireland,

The Bill is intended to modernise the law governing investment limited partnerships, so as to make the ILP the vehicle of choice for implementing private equity, venture capital, private debt and real assets investment strategies in Europe. As well as modernising the ILP in line with other types of Irish investment fund vehicles, the amendments to the existing ILP regime are intended to incorporate “best in class” features for this type of vehicle.

Some of the key features

Formation of ILPs

The formation of ILPs is subject to the approval of the Central Bank of Ireland (the “Central Bank“) and ILPs are regulated by the Central Bank in accordance with the provisions of the Central Bank’s AIF Rulebook. An ILP can only be considered formed when a certificate of authorisation has been issued by the Central Bank in accordance with the requirements of ILP Act.

Regulation of ILPs as alternative investment funds

All ILPs are required by be authorised and regulated by the Central Bank. ILPs are regulated in accordance with the requirements of the Central Bank’s AIF Rulebook and are categorised as either Retail Alternative Investment Funds (“RIAIFs“) or Qualifying Investor Alternative Investment Funds (“QIAIFs“). For RIAIF ILPs, the main offering documents are required to be submitted to the Central Bank for prior review and comment. However, QIAIF ILPs can avail of a fast-track procedure under which the constitutional documents, main offering documents and material contracts are simply filed the day before approval is required. RIAIFs and QIAIFs are capable of being open-ended, limited liquidity or closed-ended in terms their liquidity profile.

Beneficial Ownership Requirements – ILPs and Common Contractual Funds

The Bill requires the GP of an ILP to establish and maintain a register of beneficial ownership of the ILP and to submit that information to the Central Bank for inclusion on the Central Bank’s central register of beneficial ownership of certain financial vehicles.

A “beneficial owner” in relation to an ILP means: any individual who (a) ultimately is entitled to or controls, whether the entitlement or control is direct or indirect, more than a 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership, or (b) otherwise controls the partnership.

Irish Funds Association Response: Game-changing’ Irish funds legislation to create 3,000 jobs

Irish Funds has welcomed completion of a key financial services bill that has been in the works for over five years and is expected to create 3,000 jobs by 2025 while attracting up to €20bn per annum in global private capital.

Firms will now have the potential to expand their Private Equity, Infrastructure, Renewables, and Real Estate offerings with a positive knock-on effect expected for local employment and Ireland’s position as a sustainable finance hub.

Funds industry centres across Ireland such as Cork, Limerick, Wexford, Kilkenny and Galway are also primed for increased business.

As the Irish Funds’ industry marks 40% growth over the two-year period from 2018 to November 2020, with an additional 119 firms entering or expanding in the market during the Brexit transition, it anticipates that the new offer will particularly appeal to fund promoters and managers from other common law countries, such as the US, UK, Hong Kong and Australia. This is due to Ireland’s position as the only common law country in the EU post-Brexit on 31 December and its importance as a global English-speaking gateway to Europe.

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