Right place right time Ireland - the domicile of choice for regulated funds ppt

Right place
right time
Ireland - the
domicile of choice
for regulated funds
www.pwc.com/ie
January 2012
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2 Right time, right place 2012
2012 Right time right place 3
1. Foreword 04
2. The Irish Funds Industry 05
3. Regulation 10
4. Distribution of Irish funds 25
5. Listing on the Irish Stock Exchange 34
6. Taxation 39
7. P ro ducts 43
8. Services 51
9. Contacts 54
10. Appendices 57
Contents
4 Right time, right place 2012
Foreword
This achievement underlines the
experience, expertise and global reach of
Ireland as a leading funds domicile and as
a leading centre for the administration of

investment funds.
The funds industry continues to be a
source of high value employment in
Ireland. In the two year period from the
start of 2010 to the end of 2011 the Irish
funds industry will have created 1,143 new
jobs in Ireland – bringing total
employment to 12,500.
The Irish Funds Industry Association
(IFIA) has opened representative offi ces in
the US and the UK in a joint venture with
IDA Ireland, the Irish Government’s
inward investment agency. The move
means that the Irish funds industry will
now have representatives on the ground in
New York, Boston, Chicago, Atlanta and
London for the fi rst time. Offi ces have also
been opened in Asia, Singapore and Tokyo.
Ireland secured the accolade of Best
Offshore Centre at the annual Global
Investor Magazine awards 2010 and has
recieved many other accolades based on its
competitive infrastructure.
I trust that you will fi nd this updated
brochure on the Irish funds industry
benefi cial to your business needs.
The asset management world is in the
middle of major regulatory change and it is
a testing time for the industry. Ireland has
been adapting quickly to this new

landscape. It is now UCITS IV ready with
the Central Bank transposing this
legislation by the 1 July 2011 deadline and
the QIF product is also ‘AIFMD ready’.
The Irish funds industry has proven itself
to be strong, diverse and resilient. It has
emerged relatively unscathed from the
global fi nancial crisis. According to the
Central Bank of Ireland, as of the end of
November 2011, the assets of Irish
domiciled investment funds were EUR 1
trillion, the industry entered 2012 as a
trillion euro industry, a remarkable
achievement. Ireland was the managers’
choice for both UCITS and alternatives
investments in 2011. Recent fi gures from
the Central Bank of Ireland show that the
number of QIFs, the alternative fund
vehicle, is at an all time high of 1,355
funds with assets also reaching a peak of
EUR174 billion. QIF assets grew some 18%
in 2011. On the UCITS side, EFAMA
statistics showed that Ireland attracted the
highest infl ow of UCITS net assets (EUR
41.5 billion) of any domicile for 2011. In
fact, the statistics show that the gains
made by Ireland were almost two and half
times that of the next most successful
domicile.
Damian Neylin

Asset Management Leader
Ireland
January 2012
2012 Right time right place 5
The Irish
funds industry
6 Right time, right place 2012
The Irish funds industry with more than
20 years’ experience and expertise offers
asset managers a ‘one stop shop’ for
domiciliation. Over 50 world class service
providers provide an array of services to
investment funds. An abundance of the
big players of the fund servicing world are
situated in Ireland including
administrators, lawyers, custodians,
auditors, transfer agents etc. There is a
wide range of specialist expertise in fund
structuring, domiciling and administration
available within a 12,500 strong
workforce.
Ireland knows
investment funds
Why Ireland?
Why Ireland
for alternatives?
• The world’s leading centre for
the administrations of hedge
funds
• 40% of global hedge fund

assets are serviced in Ireland
• 7.4% of global hedge funds
are domiciled in Ireland
• Ireland is home to 63% of
all European hedge funds
• 18% growth in the
Qualifying Investor Fund
(“QIF”), the vehicle of choice
for fund promoters wishing
to pursue alternative
strategies such as hedge
funds, in 2011
• 1,355 QIFS now authorised
with AUM of EUR 174 bn
• The QIF is “AIFMD ready” as
it already complies with the
majority of the requirements
Why Ireland for UCITS?
• Almost 80% of the assets
in all Irish domiciled funds
are UCITS
• Approximately 3,000 Irish UCITS
funds approved for cross border
distribution
• Irish UCITS are distributed
in over 70 countries
• Ireland is the fastest growing major
cross border UCITS domicile – over
the past ten years the net assets of
Irish UCITS have grown by 422%

• Ireland has signifi cant market share
in both Money Market Funds (30%
of European market) and ETF’s
(38% of European market)
• UCITS IV Implemented
as of 1 July 2011
Favourable Tax environment
• 12.5% corporate tax
• No subscription or fund taxes
• No transfer taxes
• Generous VAT exemptions for funds
• Extensive tax treaty network with over 60 countries
• Full compliance with international tax standards
Ireland - Your gateway
to the world
• More than 850 fund promoters
from over 50 countries have chosen
Ireland as their international hub
• The main countries of origin for
fund promoters are the US, UK,
Germany, Ireland and Italy. The
others originate from 45 countries
in Europe, Asia, the Middle East
and the America.
• Over $ 2.5 trillion investor assets
are serviced by Irish service
providers from 167 countries
• Ireland service providers support
23 currencies and 28 languages
• Irish funds distribute to over

70 countries in Europe, Asia,
the Middle East and the Americas
Source - Irish Funds Industry Information
2012 Right time right place 7
Promoters from countries all over the
world have set up funds in Ireland
Who is here already?
20 largest promoters in Ireland
1. Blackrock
2. PIMCO
2. Goldman Sachs
4. HSBC
5. State Street
6. Insight Investment
7. D rey f us Cor po ra ti on
8. Deutsche Bank/DWS
9. Vanguard Group
10. Russell Investments
11. Scottish Widows
12. Mediolanum
13. Royal Bank of Scotland
14. Ignis Asset Management
15. Legg Mason Group
16. Baring Asset Management
17. Northern Trust
18. Invesco
19. Aviva
20. Legal & General
Source: Lipper Fund Encyclopaedia Ireland 2011-2012
Country of

origin
No of
funds
Assets
US 136 768,907,506,052
UK 375 670,454,473,263
Netherlands 8 65,508,813,300
Germany 7 52,834,514,857
Switzerland 64 38,501,662,569
Italy 10 33,382,009,286
France 19 28,660,298,898
Ireland 41 28,251,543,812
South Africa 10 16,095,831,225
Japan 19 15,183,462,212
Australia 10 14,755,818,614
Sweden 5 11,195,542,170
Liechtenstein 2 9,978,501,845
Brazil 3 8,060,978,831
Norway 12 4,598,983,527
Malta 2 3,808,332,625
Canada 6 3,095,275,534
Hong Kong 15 2,683,835,985
Country of
origin
No of
funds
Assets
Spain 14 1,988,288,599
Belgium 5 1,897,066,635
Singapore 9 1,512,898,006

BVI 5 1,333,554,879
Finland 4 1,192,292,821
Kuwait 2 1,179,162,058
Israel 2 627,935,711
Guernsey 2 384,518,723
Russia 4 305,911,563
India 2 280,964,812
Jersey 2 274,481,942
Egypt 1 272,269,927
Portugal 2 261,211,824
Czech 1 216,476,470
Bahrain 1 207,831,875
Saudi Arabia 2 186,363,682
Greece 3 108,476,013
Cayman 2 106,681,287
Country of
origin
No of
funds
Assets
Barbados 1 105,609,403
Austria 4 103,333,467
Honduras 1 98,745,690
UAE 6 85,562,418
Sri Lanka 1 38,508,262
Bermuda 2 34,851,888
Botswana 1 34,720,296
Korea 1 23,707,649
China 1 23,215,255
Ukraine 1 21,442,001

Turkey 1 19,977,339
Lebanon 1 18,575,878
Gibraltar 1 6,103,593
Promoters originating
from this country have
funds domiciled in Ireland
Origin of promoters of Irish domiciled and non domiciled funds
8 Right time, right place 2012
Funding industry in numbers
Service providers
Promoters of Irish
administered funds
852 Lipper, June 2010
Promoters of Irish
domiciled funds
431 Lipper, June 2011
Promoters of non-Irish
domiciled funds
599
Administrators 46 Lipper, June 2011
Custodians 18 Lipper, June 2011
Law Firms 11 Lipper, June 2011
Auditor s 11 Lipp er, June 2011
Employed in industry 12,500 IFIA, Dec 2011
Funds Industry by %
Growth in domiciled
funds (2009-2010)
29% Dec 2009 – Dec 2010
Global Hedge funds
serviced from Ireland

43% HFM week survey
& IFIA, Oct 2010
European hedge funds
domiciled in Ireland
63% HFR, Oct 2010
European ETFs
domiciled in Ireland
31% Dec 2010
Promoters originating
from the US
43% June 2011
Promoters originating
from the UK
38% June 2011
European cross
border market
30% Lipper FMI, 2010
2012 Right time right place 9
• At the end of 2011, assets of Irish
domiciled investment funds had reached
EUR 1 trillion.
• Ireland was the managers’ choice for
both UCITS and alternatives
investments in 2011.
• Recent fi gures from the Central Bank of
Ireland show that the number of QIFs,
the alternative fund vehicle, is at an all
time high of 1,355 funds with assets also
reaching a peak of EUR174 billion. QIF
assets have grown some 18% in the past

12 months.
• On the UCITS side, EFAMA statistics
showed that Ireland was also the
domicile of choice for UCITS in 2011
attracting the highest infl ow of net
assets of any domicile for the year. In
fact, the statistics show that the gains
made by Ireland were almost two and
half times that of the next most
successful domicile.
• Ireland attracted EUR41.5 billion in net
assets of UCITS in the year to date (Oct
2011). The largest infl ows experienced
by any other jurisdiction was only
EUR17 billion. In fact most jurisdictions
saw signifi cant losses - some of more
than EUR40 billion.
Ireland’s fund
industry continues
to grow - In 2011 …
•
Irish Bank
Guarantee
Scheme begins
•
Global
Financial
Crisis: Lehman
Brothers fi les
for bankruptcy

•
Irish GDP falls
3.5%
•
Funds assets fall
globally by 27.5%
in 2008
•
Net assets of Irish
domiciled funds
fall by 20% in
2008
•
Irish GDP falls
7.6%
•
16% annual
growth in Irish
domiciled funds
•
Funds assets
serviced in
Ireland reach
EUR 1.8 trillion all
time high
•
National Asset
Management
Agency set up to
manage bad

property loans
•
Record highs
for Irish exports
worth EUR
161bn
•
All time high
for Irish UCITS
and QIFs
UCITS = EUR
759bn (+27% on
2009)
QIFs = EUR
153bn (+35% on
2009)
•
Irish GDP falls
1.25%
•
QIF assets grown
by 18%
•
Irish UCITS
receive largest
infl ows in Europe
•
Irish domiciled
fund assets reach
EUR 1 trillion

Sept 2008 Dec 2008 Dec 2009 Nov 2010 Dec 2011May/June 2009
Irish funds industry fared well during challenging economic times
•
Irish GDP growth
average at 0.7%
for year
Source: Irish Funds Industry Association (IFIA), PwC Analysis
10 Right time, right place 2012
Regulation
2012 Right time right place 11
Overview of the Irish funds industry environment
Service Providers
No of
international
administrators
46.
No of
custodians
18.
No of law fi rms 11.
Stock Exchange
Name Irish Stock Exchange.
No of funds
listed
Over 3,000 funds and sub-funds.
Tax
Tax environment
- what taxes are
applicable at
fund level?

•
Tax exempt on income and capital gains.
•
No withholding tax on distributions made
to non-resident or exempt Irish resident
investors.
•
No net asset tax.
What is the
Corporate
tax rate for a
management
company?
12.5%.
Treaty access
- How many
double taxation
treaties are in
place?
•
69 treaties (55 of which in effect).
•
See Appendix 3 for full details, page 60.
Memoranda of
Understanding
(MoU) with non-
EU countries
MoU’s signed with:
Bahrain, China, Dubai, Hong Kong, Isle
of Man, Jersey, Qatar, South Africa,

Switzerland, Taiwan, UAE and USA.
In addition to the above bilateral
Memoranda of Understanding there are
also a number of multilateral agreements
in place, having been signed into effect on
various dates from March 1996 to date.
Is the Saving
Directive
applicable in
your domicile?
Yes. No With Holding Tax (WHT) on
investor payments. Ireland has fully
implemented the EU Savings Directive.
Tax (continued)
Is stamp duty
applicable in
your domicile?
No stamp duty or capital duty is payable
on issue, transfer, repurchase or
redemption of units in a fund.
VAT treatment-
What is the VAT
treatment for
funds?
•
Fund activities VAT exempt.
•
Funds must self account for VAT on
reverse charge services received.
•

Possibility of Fund recouping VAT
based on proportions of investments (or
investors) outside EU.
Regulation
Name of
regulatory body
Central Bank of Ireland.
Available fund/
legal structures
(Unit trust,
investment
company etc)
•
Unit Trust.
•
Common Contractual Fund (CCF).
•
Investment Company.
•
Investment Limited Partnership.
Categories of
regulated funds
(i.e. UCITS, QIF
etc)
•
UCITS funds.
•
Non UCITS.
•
Professional Investor Funds (PIF).

•
Qualifying Investor Funds (QIF).
•
Closed-ended Funds.
Average set
up time per
structure
(UCITS, QIF etc)
UCITS – 4-6 Weeks
Overall establishment including approval
of service providers – 3 months.
Non - UCITS
Qualifying Investor Fund (QIF) – 24 hours.
Overall establishment including approval
of service providers – 4-6 weeks.
Professional Investor Fund (PIF) – 4 weeks.
Overall establishment including approval
of service providers – 6-8 weeks.
Retail Non –UCITS - 4 weeks.
Overall establishment including approval
of service providers – 6-8 weeks.
Overview of the Irish funds
industry environment
12 Right time, right place 2012
Regulation (continued)
What are
the basic
documents
required for
setting up a

fund in your
jurisdiction?
Note: Depends
on number
of service
providers and
type of legal
structure.
•
Letter of application (All legal structures).
•
Prospectus (All legal structures).
•
Simplifi ed Prospectus /Key Investor
Information Document (KIID) (All legal
structures).
•
Risk Management Process (All legal
structures).
•
Memorandum & Articles of Association
(Investment Company).
•
Trust Deed (Unit Trust).
•
Deed of Constitution Common Contractual
Fund (CCF).
•
Custody Agreement (All legal structures
except the Unit Trust).

•
Partnership Agreement (Investment
Limited Partnership).
•
Management Agreement (Optional for
Investment Company).
•
Investment Advisory Agreement (All legal
structures).
•
Administration Agreement (All legal
structures).
•
Transfer Agency Agreement (All legal
structures).
•
Distribution Agreement (If applicable).
•
Paying Agent/Facilities Agent Agreement
(If applicable).
•
Prime Brokerage Agreement (If applicable).
Is promoter
approval
required?
Yes.
What are
the capital
requirements
for a fund

promoter?
EUR 635,000.
Regulation (continued)
Is there a
regulatory
obligation on a
fund promoter to
make good any
losses suffered
by fund?
Irish Promoters not legally responsible for
losses of funds, as long as due care has
been provided.
What are
the capital
requirements for
a self managed
company?
EUR 300,000.
What are the
requirements/
procedures
for a fund
redomiciling into
your domicile?
Ability for a foreign incorporated fund to
effectively be re-registered as an Irish
Corporate is subject to meeting the Central
Bank’s requirements.
The process does not require transfer

of ownership of assets to the newly
incorporated fund or cause any tax charge
to the fund or underlying investors for
doing so.
Outline the Risk
Management
Process for
funds in your
jurisdiction
•
Irish risk management process is based
on the Central Bank’s guidance notes
with fl exibility.
•
Risk monitoring for non-sophisticated
funds in Ireland is on a daily basis.
•
Risk management process is not
the responsibility of any designated
individual. Collectively the responsibility
of the board of the management
company.
What is the level
of supervision
required over
a custodian
in your
jurisdiction?
Custodian has a duty of care to the unit
holders and is liable for any failure to meet

the requisite standard of care.
Can fund be
exempt from
regulation?
No.
2012 Right time right place 13
Regulation (continued)
Marketing
Restrictions
UCITS:
Passporting in: – UCITS wishing to market into Ireland
must submit the following documents to their home
regulator who will in turn send onto the host regulator, the
Central Bank of Ireland.
•
The trust deed, the deed of constitution or the
memorandum and articles of association;
•
The latest prospectus;
•
The standard notifi cation letter;
•
The latest annual report and any subsequent half-yearly
report; and
•
The Key Investor Information Document (KIID)/Simplifi ed
Prospectus.
Non – UCITS:
Passporting in – Funds which propose to market their units
in Ireland:

•
Must be authorised by a supervisory authority to ensure
the protection of unit holders which provides a similar
level of investor protection to that provided in Ireland.
•
Must make application to the Central Bank in writing,
enclosing the information and documentation as outlined
by the Central Bank.
•
Must comply with the provisions of the Code of
Advertising Standards for Ireland.
The Central Bank is the competent
authority for the authorisation of regulated
funds in Ireland. Their duties include:
• Approval of the fund promoter,
investment manager and Management
Company.
• Approval for the marketing of non-Irish
investment funds into Ireland.
• Specifi cation and approval of the fund
administrator and custodian.
• Specifi cation and approval of the prime
broker in the case of hedge funds.
• Authorisation and ongoing supervision
of Irish funds.
The regulatory authority in Ireland has
continuously adopted an “open door”
policy in their willingness to meet with
project promoters and discuss issues
directly with them. The Central Bank of

Ireland is seen to be innovative and
proactive to the needs of the Irish Funds
Industry whilst maintaining a reputation
as a fi rst-rate regulatory authority.
Obtaining approval
Investment funds seeking authorisation to
be domiciled in Ireland must obtain
authorisation from the Central Bank and
undergo a two stage process in which the
promoter and the fund itself, including
details of the service providers, is
approved. The Central Bank will only
consider approval of the fund once the
promoter approval has been granted,
which must be taken into consideration in
terms of timing. However, if a promoter is
authorised in another jurisdiction and
meets the principal criteria required by the
Central Bank, the Central Bank may run
the fund approval process in parallel with
the promoter approval.
Setting up a fund
in Ireland
14 Right time, right place 2012
Stage 1: Promoter Approval
The promoter is the party responsible
for lodging the application of the fund
authorisation with the Central Bank and
will appoint a legal/regulatory counsel
to draw up the agreements establishing

the fund liaising with the Central
Bank throughout the course of the
authorisation process.
To obtain promoter approval, a promoter
must submit a standard application
providing details of:
•
The type of funds it intends to promote.
•
Shareholders holding 10% or more
(whether directly or indirectly) of the
capital or voting rights of the promoter.
•
Background description of the
applicant.
•
The value of assets under management
and the number of clients.
•
Latest audited fi nancial statements.
•
Regulatory status in applicant’s domicile
country.
•
The proposed service providers.
•
Proposed distribution network for retail
funds only.
•
Proposed intention of promoter to act

as investment manager/advisor to the
proposed fund.
•
Any other relevant information.
•
References.
The Central Bank must be satisfi ed as
to the promoter’s expertise, integrity
and adequacy of fi nancial resources.
The promoter must have minimum
shareholders’ funds of EUR 635,000.
Fast track approval of one week is
available for fund promoters.
If the proposed investment manager is a
separate entity to the promoter, it must
also submit an application for approval
along the same lines. The investment
manager must provide suffi cient
information to enable the Central Bank to
be satisfi ed as to the expertise, integrity
and adequacy of fi nancial resources.
The Central Bank provides standard
application forms for the approval of the
fund and the promoter and the fund’s
investment advisor/manager on its
website – www.centralbank.ie
Stage 2: Fund Approval
Once the promoter and investment
manager have been approved, the
next step in obtaining approval is

approval for the fund documentation.
An application for authorisation of an
investment fund is made by lodging
fund documentation, in draft form, with
the Central Bank. The Central Bank will
usually respond with its initial comments
within three to four weeks of receipt of
application. Depending on its nature
and complexity, a typical fund should be
capable of authorisation within a four to
six week period upon submission of all
documentation. The exception to this
is the QIF which avails of a one day fast
track authorisation process.
To obtain approval an investment fund
must submit a standard application to the
Central Bank comprising of the following
information:
•
Details of the custodian/trustee and
Management Company (if applicable)
and administration company (if
applicable).
•
Details of the proposed directors of
the fund (if an investment company,
including their curriculum vitae).
•
Details of the investment manager,
advisor, distributor or placing agent of

the fund.
•
Details of all agreements entered into
by the fund, including investment
management/advisory agreements,
management agreement, administration
and distribution agreements.
•
Details of the fund and company
secretary (if a company).
Approval of service providers
For all Irish investment funds the principal
service providers to the fund must be
approved in advance. This applies to the
promoter (as discussed above), the
Management Company (if any), the
directors, the investment manager (as
discussed above) and the Irish
administrator and custodian.
Management Company
All Unit Trusts and Common Contractual
Funds (CCFs) must appoint a Management
Company. Although an investment
company does not require a Management
Company, one can be established if
necessary.
UCITS IV introduces the “full management
company passport”, (“MCP”). This MCP
will allow a UCITS fund in one domicile to
be managed by a Management Company

located in another jurisdiction.
Irish UCITS Management Companies and
Self-Managed UCITS must comply with
the Central Bank’s UCITS notices and
guidance note in relation to the
Management Company, see below:
• UCITS 2, 10 & 16 of the UCITS notices.
• Guidance note - organisation
of Management Companies.
• Non UCITS Management Companies are
subject to the Central Bank’s non-UCITS
notices.
These documents are available on the
Central Bank website.
2012 Right time right place 15
Directors
The directors and managers of the fund
are required to meet certain standards of
competence and probity which requires
them to submit a detailed questionnaire to
the Central Bank seeking approval for that
appointment. The Central Bank must
satisfy itself as to the reputation and
experience of all directors by applying its
Fitness and Probity test. This is to ensure
that the Directors and Managers have the
proper skills to manage a fi rm. “Fitness”
requires that a person appointed as a
Director or Manager has the necessary
qualifi cations, skills and experience to

perform the duties of that position.
“Probity” requires that a person is honest,
fair and ethical.
The Central Bank of Ireland recently
published its Regulations and Standards of
Fitness and Probity under Part 3 of the
Central Bank Reform Act 2010.
From December 1, 2011 existing and new
staff in Pre-Approval Controlled Functions
(“PCFs”) will be subject to the Regulations
and Standards. Firms are required to
notify the Central Bank of each individual
in the organisation in a PCF by 31
December 2011.
From March 1, 2012 new appointments to
less senior positions Controlled Functions
(“CFs”) will be subject to the Regulations
and Standards. From 1 December 2012
the Regulations and Standards will apply
to all staff in existing CFs.
The Central Bank also published Draft
Guidance for industry which, among other
things, indicates the type of due diligence
that regulated fi nancial service providers
should carry out in relation to persons
proposed for or holding PCFs or CFs.
Details on the new fi tness and probity
regime are available on the Central Bank’s
website.
Corporate Governance Code

The IFIA recently release the “Corporate
Governance Code; Collective Investment
Schemes and Management Companies”
and a questions and answers paper (FAQ’s)
to compliment the Code and support its
introduction. While the Code is a
voluntary industry code its adoption is
strongly recommended and it will be
effective from the 1 January 2012 with a
transitional period of 12 months till the 1st
January 2013.
The preparation of the Code followed an
invitation from the Central Bank to the
industry, through the IFIA, to develop a
voluntary Corporate Governance Code for
the funds industry in Ireland. Following
considerable engagement with and input
from the Central Bank a draft code was
prepared and earlier in the year circulated
for consultation. During the consultation
process a signifi cant amount of feedback
was received, this feedback was discussed
with the Central Bank following which the
now fi nalised Code was agreed. The Code
and the FAQ’s are available from:
www.irishfunds.ie
Administrator / Trustee / Custodian
All Irish investment funds must have an
Irish based administrator and an Irish
based custodian / trustee. The

administrator is responsible for the
calculation of the NAV, the maintenance of
the accounting books and records, the
maintenance of the share register etc. The
custodian / trustee are responsible for
safekeeping of the assets and for certain
fi duciary / trustee type functions. The
custodian cannot be the same entity as the
administrator. From a prudential and
supervision prospective and to
demonstrate substance the Central Bank
requires the following administrative
activities are performed in Ireland:
1. Finalisation of the NAV
2. Access to the accounting books and
records
3. Maintenance of the share register
For further details please see annex II in
the UCITS notices.
16 Right time, right place 2012
An Irish fund can be established
as one of the following legal
structures:
• Investment Company.
• Unit Trust.
• Common Contractual Fund.
• Investment Limited Partnership.
Irish funds are most commonly established
as either investment companies or unit
trusts.

The main service providers to an Irish fund
are its administrator, custodian and
investment manager. The investment
manager can be based outside of Ireland
but it is a requirement from the Central
Bank that the administrator and the
custodian must be based in Ireland.
The Irish custodian model as required by
the Central Bank provides signifi cant
comfort to investors as they specifi cally
require the custodian to act in the interests
of the unit holders in the funds. The
custodian will be directly liable to the unit
holders for any unjustifi able failure to
perform its obligations or improper
performance of them. Such duties will also
extend to the custodian’s appointment of
any sub-custodians, which is of particular
importance to investors where assets are
likely to be held in various jurisdictions
outside Ireland.
There are two main fund regimes in
Ireland; UCITS and non-UCITS. There are
a number of factors to take into
consideration when deciding whether to
structure an investment fund under either
the UCITS or the non-UCITS regime such
as; location of target investors, investment
policy of the fund etc.
The non-UCITS regime is more suitable to

fund managers who wish to target
sophisticated investors namely
institutional and high net worth
individuals. Additionally, certain funds
which employ more complex investment
strategies posing greater risk in return for
potentially greater reward may not be
permissible under the UCITS regime but
can be set up as non-UCITS funds. The
most popular fund structure under the
non-UCITS regime is the Qualifying
Investor Fund (QIF). The QIF is seen as a
fl exible fund structure and has no
investment restrictions.
On the other hand, the UCITS product is
suited to managers who would like to
distribute their funds to shareholders on a
worldwide basis. The aim of the EU’s
UCITS Directive was to create a pan-
European funds market as part of the EU’s
fi nancial services action plan, the objective
of which, to allow for open-ended funds
investing in transferable securities to be
subject to the same regulation in every
Member State. It was hoped that once such
legislative uniformity was established
throughout Europe, funds authorised in
one Member State could be sold to the
public in each Member State without the
requirement for further authorisation,

thereby furthering the EU’s goal of a single
market for fi nancial services in Europe.
This is commonly referred to as a
“European Passport” and is available only
to funds under the UCITS regime. Once a
UCITS fund is approved in one EU country,
application may be made to have the fund
registered for marketing to the public in
any other EU country.
Furthermore the success of the UCITS
brand has now transcended beyond the
borders of the EU and the UCITS regime is
now recognised globally as a well
regulated investment product. 358 fund
promoters from over 50 countries have set
up Irish domiciled funds which are
distributed to over 70 countries across
Europe, Asia, the Americas, the Middle
East and Africa.
2012 Right time right place 17
UCITS QIF
Defi nition UCITS are Undertakings for Collective Investment
in Transferable Securities. Having their origin in
European legislation, UCITS benefi t from an EU-
wide “passport” which means that once they are
authorised in one EU member state, they can be sold
in any other EU member state without the need for
additional authorisation. Due to of the necessity to
comply with a common European standard, UCITS
are now regarded globally as very well regulated

funds, with robust risk management procedures, a
strong emphasis on investor protection and coming
from a stable environment. As a result, the UCITS
brand is recognised beyond the EU and UCITS
products are accepted for sale in Asia, the Middle
East and Latin America.
The Qualifying Investor Fund (“QIF”), the most successful
non-UCITS fund in Ireland, is the vehicle of choice for
fund promoters wishing to pursue alternative strategies
such as hedge funds, private equity/venture capital
funds and real-estate funds.
Legal structures
•
Investment Company.
•
Unit Trust.
•
Common Contractual Fund.
•
Investment Limited Partnership.
•
Investment Company.
•
Unit Trust.
•
Common Contractual Fund.
•
Investment Limited Partnership.
Investors There is no limit as to the type of investors in a UCITS
fund. Originally created as a true retail product,

UCITS funds are sold to the public but also to
corporate and institutions. As UCITS funds may be
easily marketed across the EU and beyond, investors
originate from many parts of the world.
In order to qualify as a QIF, the fund may only accept
investors who satisfy certain eligibility criteria (“Qualifying
Investors”) and who subscribe a minimum of EUR
100,000 into the fund. Investors will need to be either
MiFID professional investors or certify that they have the
knowledge and experience necessary to understand the
investment in the fund.
Eligible
investments
While UCITS funds must invest in accordance with
the investment and borrowing restrictions imposed
by UCITS legislation, advances in the UCITS product
have broadened the range of assets into which
UCITS can invest. In summary, UCITS are permitted,
subject to certain criteria, to invest in:
•
Transferable securities;
•
Money market instruments;
•
Other open ended funds;
•
Closed ended funds;
•
Cash deposits with credit institutions;
•

Structured fi nancial instruments; and
•
Financial derivative instruments(swaps, options,
futures, forwards, OTC derivatives, CFDs,
derivatives on commodities indices, derivatives on
hedge fund indices and repos).
As a result the range of assets eligible for the QIF is very
fl exible, making it is an ideal product for structuring many
different types of funds including the following:
•
Sovereign Wealth Funds;
•
Infrastructure Funds;
•
Property Funds;
•
Hedge Funds; and
•
Venture Capital/Private Equity Funds.
18 Right time, right place 2012
UCITS QIF
Investment
restrictions
A UCITS may invest no more than 10% of its net
assets in one issuer, with the aggregate of all
investments in excess of 5% not to exceed 40% of
the net assets. The 10% limit is raised to 25% for
bonds issued by EU credit institutions that are subject
to laws protecting bondholders. The aggregate of any
such investments in excess of 5% may comprise up

to 80% of the UCITS net assets.
•
The limit of 10% above is further raised to 35% if the
securities or instruments are issued or guaranteed
by a government or its local authorities or by a
public international body.
•
A UCITS can invest up to 10% of its net assets in
unlisted transferable securities and money market
instruments.
•
A UCITS can invest up to 20% of its net assets in
any one CIS. Investment in non-UCITS CIS may not,
in aggregate, exceed 30% of net assets.
•
A UCITS can invest up to 20% of its net assets in
deposits made with the same credit institution. This
limit is raised to 20% for deposits made with the
fund’s custodian.
•
The risk exposure of a UCITS to a counterparty to
an OTC derivative may not exceed 5% of net asset
value. This limit is raised to 10% in the case of credit
institutions in the EEA or other specifi ed countries.
•
A combination of two or more of the following
issued by, or made or undertaken with, the same
body may not exceed 20% of the net asset value of
a UCITS:
- investments in transferable securities or money

market instruments;
- deposits; and/or
- counterparty risk exposures arising from OTC
derivatives transactions.
•
The Central Bank may authorise a UCITS to invest
up to 100% of its net assets in different transferable
securities and money market instruments issued
or guaranteed by any government, local authority
or public international body subject to certain
conditions.
All investment and borrowing restrictions which apply
to retail funds are automatically disapplied in the case
of the QIF. QIFs can pursue investment strategies
which include short selling, signifi cant borrowings and
leverage, derivatives and investments in other funds,
without restriction. Similarly, the limits on the level of
investment in any given market or securities which
apply to all other types of funds in Ireland do not apply
to QIFs. Accordingly, QIFs are particularly suitable for
sale to sophisticated investors such as high net-worth
individuals and institutions. More aggressive investment
strategies can be pursued, such as: hedge funds, real
estate funds, infrastructure funds, private equity funds
and venture capital funds.
•
Where a QIF invests more than 50% of its assets in
another scheme the QIF is regarded as a feeder type
investment.
•

QIFs established as fund of funds may invest up to
100% in unregulated schemes subject to a maximum
of 50% in any one unregulated scheme.
•
The Central Bank does not impose risk diversifi cation
requirements. It is the responsibility of the directors
of the investment company to ensure that the QIF
complies with the legislative requirement.
•
Debt securities - A QIF may not raise capital from the
public through the issue of debt securities. However,
the Central Bank does not object to the issue of
notes by authorised collective investment schemes,
on a private basis, to a lending institution to facilitate
fi nancing arrangements. Details of the note issue
should be clearly provided in the prospectus.
2012 Right time right place 19
UCITS QIF
Authorisation UCITS – 4-6 Weeks
Overall establishment including approval of service
providers - 3 months.
All the below parties must be approved /cleared by
the Central Bank;
•
promoter;
•
management company
(in the case of a Unit Trust and CCF);
•
trustee / custodian; and

•
other service providers
(fund administrator, investment manager, directors).
QIFs are authorised to launch within one day of fi ling the
prescribed documentation with the Central Bank. An
application for authorisation as a QIF can be made
where the:
•
promoter;
•
management company
(in the case of a Unit Trust and CCF);
•
trustee / custodian; and
•
other service providers
(fund administrator, investment
manager, directors).
have been approved/cleared by the Central Bank in
advance of the application and where the fund refl ects
the agreed parameters. The relevant application form for
a QIF, which must be completed and submitted to the
Central Bank is designed to establish the parameters
within which a QIF can operate. A certifi cation must
accompany the application form confi rming that the
application form is correct, complete and accurately
refl ects the material documentation of the QIF and
that the prospectus etc. complies with the relevant
regulations. Once all necessary documents are
completed and submitted to the Central Bank by 3pm,

the QIF will be authorised the following day.
Required
service
providers
•
Irish based custodian/trustee.
•
Irish regulated external auditor.
•
Irish based administrator must be responsible
for the central administration - responsible for
accounting, NAV calculation, keeping register of
shareholders.
•
Management Company if set up
as a Unit Trust or CCF.
•
Two Irish resident directors.
•
Irish based custodian/trustee.
•
Irish regulated external auditor.
•
Irish based administrator must
be responsible for the central administration -
responsible for accounting, NAV calculation,
keeping register of shareholders.
•
Management Company if set up
as a Unit Trust or CCF.

•
Two Irish resident directors.
Min NAV
frequency
Bi-monthly. Yearly.
Min capital EUR 635,000. EUR 635,000.
20 Right time, right place 2012
UCITS QIF
Documents
•
Letter of application.
•
Prospectus.
•
Key Investor Information Document (KIID).
•
Risk Management Process.
•
Memorandum & Articles of Association
(Investment Company).
•
Trust Deed (Unit Trust).
•
Deed of Constitution (CCF).
•
Custody Agreement (All legal structures except
the Unit Trust).
•
Partnership Agreement
(Investment LimitedPartnership).

•
Management Agreement
(Optional for Investment Company).
•
Investment Advisory Agreement.
•
Administration Agreement.
•
Transfer Agency Agreement.
•
Distribution Agreement.
•
Paying Agent/Facilities Agent Agreement
(If applicable).
•
Prime Brokerage Agreement
(If applicable).
•
Letter of application/ application form.
•
Fund profi le.
•
Prospectus.
•
Memorandum & Articles of Association
(Investment Company).
•
Trust Deed (Unit Trust).
•
Deed of Constitution (CCF).

•
Custody Agreement (All legal
structures except the Unit Trust).
•
Partnership Agreement
(Investment Limited Partnership).
•
Management Agreement
(Optional for Investment Company).
•
Investment Advisory Agreement.
•
Administration Agreement.
•
Transfer Agency Agreement.
•
Prime Brokerage Agreement
(If applicable).
2012 Right time right place 21
Ongoing obligations for Funds
The reporting requirements for each
authorised collective investment scheme
are set out in the letter of authorisation
issued to each scheme. The following
reports must be submitted to the Central
Bank:
• Monthly, half-yearly and annual reports
of the authorised scheme.
• Annual audited accounts of the related
fund management company.

The quarterly OFII return must be
submitted to the Statistics Department of
the Central Bank of Ireland within ten
working days of the end-quarter to which
it refers. This data should be consistent
with what is reported on the equivalent
monthly NAV return. For more
information, please visit the Central Bank
website
The monthly return should be submitted
to: The Funds Team, Statistics
Department, Central Bank of Ireland,
within ten working days of each month
end from authorisation date.
A reporting code is assigned to each
scheme on authorisation.
The UCITS/ Non UCITS notices set out
further details of the reporting
requirements applicable to each scheme.
• UCITS Part 7.1 sets out information to be
included in monthly returns to the
Central Bank on the UCITS.
• UCITS Part 8.2 and Appendices A and B
sets out information on the publication
of annual and half-yearly reports.
• NU 10 sets out information to be
included in monthly returns to the
Central Bank.
• NU 11 and Appendices A and B sets out
information on the publication of annual

and half-yearly reports.
Ongoing obligations for
Management Companies
Annual Returns
Annual audited accounts of the
management company must be submitted
to the Central Bank within four months of
the relevant reporting period and must be
accompanied by the Minimum Capital
Requirement Report, which forms part of
the UCITS/ non UCITS Notices. Annual
audited accounts of the direct parents of
the management company must also be
submitted together with the accounts of
any company within the group specifi ed by
the Central Bank.
Half Yearly Returns
Half-yearly fi nancial accounts must be
submitted within two months of the
relevant reporting period and must be
accompanied by the Minimum Capital
Requirement Report, which forms part of
the UCITS/ non UCITS Notices.
Online Submission of Financial Returns
From the 1 September 2011 UCITS/non
UCITS Management Companies must
submit a number of returns in an
electronic format.
These fi nancial returns are submitted
through a web-based electronic reporting

system.
The following will assist you in completing
your returns:
• Online Reporting System User Manual -
Fund Service Providers.
• FINREP for Fund Service Providers -
Guidance Note.
• FINREP for Fund Service Providers -
Guidance Note - Appendix 1.
Internal Audit Reports
Copies of reports from Internal Audits
carried out on UCITS/non UCITS
Management Companies are required to
be submitted to the Central Bank.
22 Right time, right place 2012
Management Company
In relation to the Management Company
aspect, all Management Companies must
ensure that they are now compliant with
the Markets in Financial Investment
Directive (MiFID) provisions with have
been added to UCITS IV. The Markets in
Financial Investment Directive (MiFID) is
a European Union Law that provides
harmonised regulation for investment
services across the Member States of the
European Economic Area (EEA). This also
applies to self managed UCITS.
Requirements in relation to Irish
Management Companies are outlined in

the following documents available on the
Central Bank website.
• UCITS 2, 10 and 16 of the UCITS notices.
• Guidance Note – Organisation of
Management Company.
Key Investor Information Document
The Key Investor Information Document,
(“KIID”) replaces the current Simplifi ed
Prospectus and is another mandatory
requirement of UCITS IV for clients. The
KID is a short two page, clear, concise
information document.
From 1 July 2011, all newly authorised
UCITS must publish a KIID per UCITS/
sub-fund. Following 30 June 2012 all
UCITS/sub-funds must publish a KIID.
There is a grandfathering provision
available between 30 June 2011 and 30
June 2012 where all existing funds can
still use a Simplifi ed Prospectus.
Requirements in relation to the KIID are
outlined in the following documents on
the Central Bank website:
• UCITS 19 of the UCITS notices.
• Policy Document – Transition from
Simplifi ed Prospectus to KIID.
• Guidance Note – Publication
of the KIID.
Breaches, Pricing Errors and
Compensation Payments

UCITS/ non UCITS Management
Companies are required to report any
material breaches, pricing errors and
compensation payments to the Central
Bank.
The application of UCITS IV in
Ireland
UCITS IV introduces changes in the
following areas: Notifi cation procedure,
Management companies, Key Investor
Document, Mergers and Master Feeder
structures.
Not all of the above are mandatory, the
changes in relation to mergers & master
feeder structures will only impact clients
who chose to use them.
On the 29 June 2011, the Minister for
Finance signed legislation that transposes
UCITS IV into Irish law. The Statutory
Instrument 352 of 2011 consolidates all
previous UCITS legislation and includes
the provisions of the UCITS IV Directive
including: the management company
passport, the Key Investor Information
Document, simplifi ed notifi cation
procedures for cross-border marketing, as
well as provisions for cross-border mergers
and master-feeder structures.
The Central Bank of Ireland has issued
revised Notices and Guidance Notes to

refl ect the UCITS IV legislation. The
Central Bank has also revised and updated
its NU Notices. The updated UCITS and
non-UCITS Notices and Guidance Notes
are available on the Central Bank’s website
www.centralbank.ie/regulation/industry-
sectors/funds.
2012 Right time right place 23
Requirements in relation to the new
notifi cation procedure are outlined in the
following documents on the Central Bank
website:
• UCITS I5 of the UCITS notices.
• Policy Note: UCITS authorised in
another Member State intending
to market in Ireland.
Master Feeder Structure/ Mergers
These are the two non-mandatory aspects
of UCITS IV, the Central Bank
requirements for these provisions are
outlined in the below documents.
• Master Feeder – UCITS 18 of UCITS
notices.
• Mergers - Amalgamation of Irish
authorised collective investment
schemes with other collective
investment schemes.
The above documents are available on the
Central Bank website.
Re-domiciling a fund to Ireland

Irish company law enacted in September
2010 introduced new provisions
enhancing the effi ciency and simplifying
the process of offshore corporate
investment fund re-domiciliation to
Ireland.
Pursuant to the legislation, existing
offshore funds in the following approved
jurisdictions can redomicile to Ireland: the
Cayman Islands, the British Virgin Islands,
Jersey, Guernesy and the Isle of Man.
Other jurisdictions may be added by order
of the Irish Minister for Enterprise Trade
and Innovation.
Notifi cation Procedure- Inward
marketing
The new notifi cation procedure for the
cross border marketing UCITS funds in the
European Union will be regulator-to-
regulator. The UCITS home Member State
regulator will have only a maximum of 10
working days to review a notifi cation fi le
(standardised in form and content) and to
transmit it to the host Member State
regulator, thereby triggering the
immediate right to start marketing
activities in that country. Upon sending of
the notifi cation email including the UCITS
documentation, the home Member State
regulator shall inform the UCITS of its

right to access the host country market
immediately. The host Member State
regulators shall confi rm receipt /
completeness of the notifi cation request
within 5 working days. The home Member
State regulator must ensure that the
transmission of the complete
documentation to the host Member State
regulators has taken place before it notifi es
the UCITS about its transmission. Member
States regulators shall accept transmission
and fi ling of notifi cation documents by
e-mail. The Irish email address is

UCITS wishing to market in a foreign EU
country must submit the following
documents to their home regulator who
will in turn send onto the host regulator
using the above mentioned procedure;
• The trust deed, the deed of constitution
or the memorandum and articles of
association;
• The latest prospectus;
• The standard notifi cation letter;
• The latest annual report and any
subsequent half-yearly report; and
• The Key Investor Information
Document(KIID)/Simplifi ed Prospectus.
24 Right time, right place 2012
The new re-domiciliation regime provides

a clear framework ensuring minimal
disruption to day-to-day management and
distribution of the funds whilst preserving
their legal identity. The legal (registering
with the Companies Registration Offi ce
(CRO)) and regulatory (approval by the
Central Bank), processes involved in
re-domiciliation are relatively
straightforward minimising the
administrative burden of migration. The
Central Bank of Ireland issued a “Guidance
Letter” outlining the practical steps
involved for both corporate funds and unit
trusts. Where a fund is a unit trust there is
no need to fi le with the CRO, however
additional documentation will be required
for submission to the Central Bank.
Post migration, there is an obligation on
the migrating company to submit, within 3
days of registration in Ireland,
confi rmation of de- registration from its
original domicile to the Central Bank and
to comply with applicable Irish corporate
and regulatory requirements on an
ongoing basis.
Re-domiciliation allows offshore corporate
funds to maintain its legal entity whilst
existing shareholders’ shares remain
unaffected. However some changes will be
required including change of registered

offi ce address and addition of plc (or Public
Limited Company) to the name and
amendment of fund documentation to
refl ect migration and applicable Irish law.
Further to recent lobbying by the funds
industry, there is a current review
underway concerning fund re-
domiciliation which is looking at
extending the scope of the Investment
Limited Partnership Act 1994, to enable
limited partnerships to migrate to Ireland.
Additionally, the Irish Funds Industry
Association has been devoting resources to
having legislation put in place (the OEIC
proposal) to enable funds to be set up
outside the remit of company law which
would result in the fund not having a ‘plc’
designation (as it would not consist as a
‘per se corporation’ for US tax purposes)
and as such could be in a position to ‘check
the box’. This proposal would undoubtedly
be a welcome development, signifi cantly
enhancing the attractiveness of Irish funds
to investment managers seeking to market
in the U.S.
2012 Right time right place 25
Distribution of
Irish funds