Re-Domiciling Funds to Ireland - Key Elements to Consider

Author:Mr Stephen Carty
Profession:Eversheds O'Donnell Sweeney
 
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Legal measures are now in place for corporate investment funds to re-domicile to Ireland. This paper considers some of the more practical questions facing asset managers considering re-domiciling funds to Ireland under the new regime and provides a guide as to how the process shall work in practice.

INTRODUCTION

The Companies (Miscellaneous Provisions) Act, 2009 (the "2009 Act") was signed into law on 23 December, 2009. A commencement order has now been signed into law giving full immediate effect to the measures within the 2009 Act relating to the re-domiciliation of corporate investment funds.

The 2009 Act introduces a procedure for corporate investment funds to relocate to Ireland from elsewhere or vice versa. This legislation was driven by an Irish funds industry initiative to simplify the way funds located elsewhere can relocate to Ireland.

Ireland is widely regarded as the jurisdiction of choice for asset managers seeking to establish regulated fund products for global distribution. The introduction of the corporate migration regime under the 2009 Act strengthens this position and further enhances the efficiencies of the Irish regulatory framework.

WHY CONSIDER MOVING A FUND'S DOMICILE?

For a variety of reasons, there is an increased interest in investment funds being domiciled in regulated jurisdictions. In many cases, this will be a factor when asset managers consider new products to add to their existing range. However, there are also factors driving asset managers to consider moving existing products to a new domicile and restructuring these funds within a new regulatory regime. Some of these factors are considered below.

Retaining Investors

On a macro level, the recent financial crisis has left investors risk-averse. This has led to an increased demand for regulated funds, which are considered better suited to addressing investor concerns. Existing investors may seek assurances that the product they are invested in has adequate investor protections.

Potential New Lines of Capital

The decision to move to a new domicile and regulatory regime is designed to make the fund more marketable. The perception is that investors will be more inclined to invest in regulated funds than unregulated. UCITS (Undertakings for Collective Investment in Transferable Securities), in particular, are benefiting from this strong marketing message.

UCITS is now recognised worldwide as a robust, regulated fund product. Within the EU, UCITS can be offered to the public across the EU under a passporting regime. UCITS also offer distinct distribution opportunities beyond the EU. UCITS presently hold more than €4.5 trillion in assets.

For further details on UCITS, see "Product range" below.

WHY CHOOSE IRELAND?

Ireland is the largest centre for hedge fund administration worldwide and one of the world's leading regulated fund domiciles, offering a wide range of products to international asset managers. Being able to promote a structure as Irish-based will have positive implications from a global marketing perspective.

While the robust regulatory regime and the independent administration and custody requirements are likely to be the key elements in the promotional message, there are a range of factors that make Ireland a compelling prospect when considering choice of domicile for a fund. Some of these are considered below.

HOW DOES THE PROCESS WORK?

The 2009 Act permits any non-Irish corporate fund, established in a prescribed jurisdiction that has a corresponding corporate migration regime, to apply to be registered with the Companies Registration Office (the CRO) and continue in existence as an Irish company and...

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