Happy Birthday ICAV...............

Over the past 20 years, Ireland has established itself as one of the leading regulated domiciles for internationally distributed investment funds.  The attractiveness of the jurisdiction for fund promoters has been accredited to its open, transparent, innovative and well -regulated investment environment.

The introduction of the Irish Collective Asset-management Vehicle (ICAV) Act 2015 in March 2015 was a further example of how Ireland continues to deliver innovation to strengthen its position as a leading domicile for international funds.

What is an ICAV?

An ICAV is a bespoke Irish corporate fund structure specifically tailored for investment funds and their investors.  The ICAV was designed with a greater level of flexibility and so has several advantages over existing Irish investment companies established as Public Limited Companies, which had previously been the most successful and popular of the Irish fund structures.

 Benefits of an ICAV

• The ICAV has the ability to make an election under US tax rules (the “check the box” rules) to be treated as a “flow-through” for US tax purposes. This is widely seen as the main advantage of the ICAV. The “check the box” provision has the potential to allow US taxable investors to avoid tax consequences that are usually associated with an investment in passive foreign investment companies.
• The ICAV does not have to comply with certain Irish and European company law and accounting requirements which are more appropriate for trading companies than investment funds. This means ICAVs avoid some of the administrative costs which currently apply to Investment Companies.
• ICAVs have the ability to prepare separate audited accounts for each sub-fund in an umbrella structure.
• An ICAV does not have a Memorandum and Articles of Association. The ICAV constitutional document is called an Instrument of Incorporation (IOI). Shareholder consent is not needed to amend the IOI so long as the Central Bank and the appointed depositary agree that any proposed changes to the IOI would not prejudice shareholders.
• ICAVs can be used to establish both alternative investment funds (AIFs) and retail investment funds (UCITS)
• ICAVs are both incorporated and supervised by the Central Bank of Ireland.

What does this mean for the public limited company?

There are no changes for established plcs although the Act provides the option of a straightforward process for plcs to convert to ICAV status.

In addition, certain non –Irish funds can now easily re-domicile to Ireland as ICAVs by way of continuation.

Impact of the ICAV

Since the Act came into legislation, some 146 ICAVs (comprising 265 sub-funds) have been authorised by the Central Bank of Ireland, establishing the ICAV as the most popular vehicle for forming Irish funds over the 12 month period. Due to rising investor demand for more regulated vehicles and the migration of large funds from other less regulated domiciles, the ICAV looks set to enhance Ireland’s reputation as a world-leading domicile for investment funds.

In summary

• Flexible
• Passportable
• No risk spreading rules
• Checks the “Box”
• Tax efficiences
• Separate Sub-Fund Accounts
• Dedicated legislation

If we can help you then let me know

Regards

Stuart Alexander

Chief Executive