IRELAND: Guidance on Share Class Features of Closed-Ended QIAIFs

Monday November 23 2020

The Central Bank has published the Consultation Paper 132 “Guidance on share class features of closed ended QIAIFs.”

The consultation seeks stakeholder’s views on the establishment of regulatory guidance in relation to the scope of permissible features for share classes of closed ended AIFs as well as associated protections that are necessary to safeguard the interests of shareholders.

Scope – the Central Bank is proposing to limit availability of these features to closed-ended AIFs authorised as Qualifying Investor AIFs (“CE QIAIFs”) with strategies which are generally described as relating to private equity, venture capital and real estate and which generally do not invest in assets that must be held in custody in accordance with the AIFMD or which generally invest in issuers or non-listed companies in order potentially to acquire control over such companies in accordance with the AIFMD. This takes account of the nature of closed ended AIFs, in particular the commitment made by investors in terms of capital drawdowns.

Investor protections – The Central Bank considers that the availability of the share class features outlined in this Consultation should be subject to certain investor protections. These are described in detail in the draft Guidance.

Share class features – the consultation proposes to permit a CE QIAIF to issue share classes which permit

(i) the profit, loss and capital of certain assets to be allocated to certain share classes,

(ii) subject to certain conditions, investors to participate in some, but not all the assets of the CE QIAIF and

(iii) management share classes to participate in the CE QIAIF and receive returns which are greater than, but subordinate to the returns to which other share classes are entitled.

Responses to the CP must be submitted to the Central Bank by 22 December 2020.

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