Investment limited partnerships: Irish government approves new Bill

Out-Law News | 21 Sep 2020 | 3:46 pm | 1 min. read

Legislation approved on Monday will make Ireland a more attractive place for raising capital after the Brexit transition period expires, according to a Dublin-based specialist in the regulation of investment funds.

Gayle Bowen of Pinsent Masons, the law firm behind Out-Law, was commenting after the Irish government published the draft new Investment Limited Partnerships (Amendment) Bill 2020.

Investment limited partnerships (ILPs) are a form of common law partnership structures under which it is possible for sophisticated investors to hold funds in a variety of assets through a limited partnership agreement with others. ILPs are specifically designed for use as a collective investment fund and, depending on how they are created, have no investment or borrowing restrictions. Investors can derive benefit from ILPs in Ireland by, among other things, enjoying limited liability and through the tax treatment of the assets invested in.

Bowen said ILPs are likely to become the preferred vehicle for investment in "real assets", such as real estate, energy, infrastructure, private equity and private debt, once the proposed new legislation is finalised and takes effect.

Bowen said: "The approval by the Irish government of the draft ILP Bill today reaffirms Ireland’s commitment to real asset investing and more generally to investment funds. It is a very exciting development, particularly with Brexit looming in December 2020 and provides managers in this space with interesting options to raise capital across Europe post-Brexit."

ILPs have been provided for in Irish law since 1994, but the Irish government said the fresh legislation would "serve as a means to promote investment, secure Ireland’s competitiveness and enrich our regulatory environment in international financial services" once it is enacted.

The enhancements provided for in the new legislation include the possibility of managing separate portfolios of assets under an ILP umbrella and greater flexibility for asset managers over the type of limited partnerships that the ILP can be used for through the introduction of the ability to create sub-categories of limited partners.

Other changes include new rights to update limited partnership agreements by majority vote, streamlining of the process for the transfer of assets and liabilities from one general partner to another, and enabling ILPs registered in Ireland to a dual foreign translated name when operating in another jurisdiction.

The beneficial owners of funds managed under ILPs will have to be disclosed under the proposed new Bill as part of anti-money laundering safeguarding.

Aongus McCarthy, also of Pinsent Masons, who is a member of the Irish Funds Investment Limited Partnership and 1907 Limited Partnership Working Group, which is actively leading the implementation of the new legislation on behalf of Irish Funds, said: "The proposed enhancements to the ILP legislation will bring this partnership structure in line in many respects with international standards for similar structures in other EU jurisdictions and ensure that Ireland will continue to develop into one of the leading fund domiciles in Europe for partnership structures."