On 17 December 2013, the Irish Minister for Finance published the General Scheme of the Irish Collective Asset-management Vehicle (ICAV) Bill which will allow for a new corporate structure to be used within the Irish fund industry, sitting alongside the existing public limited company ("PLC") structure. This new structure, which will provide a greater choice for fund sponsors, will be known as the Irish Collective Asset-management Vehicle or "ICAV".
Although subject to change during the legislative process, the General Scheme provides a good indication of what the ICAV legislation will look like. As the Minister has stated that he will prioritise the drafting of the legislation, our hope is that the ICAV legislation will be enacted later this year.
Publication of the ICAV Bill is part of the Irish Government's commitment - see its IFSC Strategy Statement 2011 - 2016 - to the development of proposals designed to enhance the attractiveness of Ireland as a domicile for investment funds.
Introduction to ICAVs
The ICAV will be a new corporate vehicle for Irish corporate investment funds which will not replace the current PLC regime but will, instead, sit alongside the PLC regime. Establishing an ICAV will be a more simple process than for a PLC as the ICAV will be incorporated once it is authorised by the Central Bank of Ireland ("Central Bank"), rather than the current position for PLCs which requires them to be first incorporated at the Companies Registration Office and subsequently authorised by the Central Bank. ICAVs will be able to be established as UCITS or as AIFs. AIF type ICAVs will be able to be open ended, open ended with limited liquidity or closed ended.
Key Driver for ICAVs
The key driver behind the creation of ICAVs is to create a separate and distinct corporate fund regime that will simplify the establishment and maintenance of corporate funds in Ireland and overcome two particular difficulties faced by investment funds established as PLCs (which exist by way of legislative provisions that are bolted onto existing company law, much of which is more applicable to trading companies rather than corporate investment funds), namely:
ICAV will be able to elect its classification under the US "check-the-box" taxation rules. If the ICAV elects to "check-the-box" to be treated as a partnership for US tax purposes, it will avoid certain adverse tax consequences for US taxable investors which arise if the structure is deemed to be a...