Following a process of consultation between the Irish
Financial Regulator and the Irish Funds Industry Association
("IFIA"), a number of important positive changes have
now been introduced to the regime for the authorisation and
regulation of Qualifying Investor Funds ("QIFs").
QIFs - Background
A QIF is a non-UCITS product regulated in Ireland by the
Financial Regulator which can be structured as an investment
company, unit trust, investment limited partnership or common
contractual fund (single portfolio or umbrella with segregated
liability). QIFs have a minimum subscription requirement per
investor of €250,000 (or equivalent) and can be sold only
to qualifying investor individuals with a minimum net worth of
€1.25 million (excluding principal private
residence/contents) or institutions who own or invest on a
discretionary basis at least €25 million (or are
themselves owned by qualifying investors).
The Financial Regulator will authorise a QIF for marketing
to investors one business day after the submission of formal
approval documents. The approval documents are submitted on a
self-certification basis and promoters and their legal advisors
must confirm they meet legal and regulatory criteria.
QIFs structures give promoters the opportunity to use Irish
regulated investment vehicles for a complete range of different
fund types depending on the requirements of their targeted
investors. The absence of investment and borrowing restrictions
and immediate authorisation process means that QIFs are the
vehicles which are most frequently used in the alternative
investment space - hedge funds, fund of hedge funds, venture
capital/private equity, real estate funds, etc - and are a
mainstay of the non-UCITS Irish domiciled product offering.
These latest changes to the regime and revised regulatory
provisions relating to QIFs are further evidence of the ongoing
steps being made by the Irish investment funds industry to
provide a dynamic environment for regulated funds.
It is anticipated that these changes, which are summarised
below, will enhance Ireland's appeal as a domicile for a
broad range of investment funds.
Summary of Changes
Investment in Collective Investment Schemes -
Increased Limits and Changes to Disclosure Requirements
A QIF fund of funds is now permitted to invest up to 50% of
its net assets in any one unregulated collective investment
scheme. This represents an increase from the previous 40%
limit, contained in Guidance Note 1/01. Consequently, a QIF
which is a fund of funds may invest up to 100% in unregulated
collective investment schemes, subject to a limit of up to 50%
of its net assets in any one unregulated collective investment
Additionally, a QIF will only be considered to be a feeder
fund (and therefore subject to the prospectus disclosure
requirements, outlined in Non-UCITS Notice 22, paragraphs 2 and
3) if it has as its principal objective the investment in
another single fund.
The net effect of this is that a QIF will be permitted to
invest above 50% in a regulated collective investment scheme
and, provided investment in such scheme is not its principal
investment objective, it will be able to do so without being
required to (i) give details on the underlying fund in its
prospectus; (ii) attach the underlying fund's accounts to
the fund's accounts; (iii) disclose in the prospectus
details of the...
Changes To The Irish Qualifying Investor Fund Regime
|Author:||Mr Stephen Carty|
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