Singapore Launch VCC and announce Grant Scheme for fund managers
15 January 2020
Ireland’s new Investment Limited Partnerships (Amendment) Bill 2019 should appeal to both investors and managers, by SANNE’s James Kay-Hards, Associate Director, AIFM Services. Click here to download the PDF.
Ireland's finance minister Paschal Donohoe recently published the Investment Limited Partnerships (ILP) (Amendment) Bill 2019. The Bill includes changes to the existing legislation that will increase Ireland’s attractiveness as a jurisdiction of choice for closed-ended strategies such as real estate, private equity, venture capital and infrastructure. These highly anticipated changes will close the gap between Ireland and other leading European jurisdictions where funds are domiciled.
The Act provides for the establishment and operation of a regulated ILP structure. The ILP can be used in conjunction with the Alternative Investment Fund Managers Directive (AIFMD), which allows managers registered under AIFMD, to market their funds across the EU and EEA using the European funds marketing passport license/mechanism.
An ILP is a limited partnership fund structure. It is constituted pursuant to a Limited Partnership Agreement, whereby one or more General Partners (GPs), enter into an agreement, with any number of Limited Partners (LPs). An ILP must have an Irish domiciled GP, who will conduct the day-to-day business of the partnership.
The assets and liabilities of the partnership are owned proportionately by the LPs, with their liability being limited to the extent of their capital account. The GP is liable for any debt, liability, or obligation greater than the value of the partnership.
An ILP must appoint a licensed AIFM, which may be Irish or EU domiciled. In addition, the ILP must appoint an Irish domiciled administrator and depository to perform the respective functions required under AIFMD.
Motives behind the amendments
The proposed amendments are set to reflect the significant changes in the global closed-ended environment, in terms of modernisation of the ILP in terms of the relevant EU legislation. The Irish Government stated, in the Ireland for Finance: Strategy for the development of Ireland’s international financial services sector to 2025, that the modernisation of the existing ILP legislation, was a key strategic priority to enhancing Ireland’s position as a leading global fund domicile.
It is expected that the changes will greatly enhance Ireland's attractiveness as one of the leading international fund domiciles for both investment managers and investors. The ILP structure can cater for all major investment strategies, and is a suitable vehicle for alternative assets, credit, lending vehicles, managed accounts, hybrid funds and hedge funds.
Coupled with the potential removal of the national private placement regime, this will become an intriguing option for Non-EU managers seeking access to capital in Europe.
The reform proposed by the Irish Government is part of its action plan to promote Ireland as a centre for international finance and support the continuous growth of the Irish funds industry. The industry anticipates that the bill, once it has been adopted, will provide certain other changes that will strengthen the operation of an ILP. These changes may include the ability to migrate a partnership into and out of Ireland on a statutory basis.
Key highlights of the Amendment Bill