Out-Law News 3 min. read
22 Dec 2020, 3:34 pm
The Investment Limited Partnerships (ILP) (Amendment) Bill 2020 (the ILP Bill) makes provision for a new ILP structure, which will add to the already extensive choice of fund vehicles available to asset managers including the ICAV, CCF and Unit Trust and also the unregulated 1907 partnership structure.
ILPs are specifically tailored for use as a collective investment scheme and, depending on how they are created, have no investment or borrowing restrictions. The ILP Bill will modernise and enhance the existing partnership framework in Ireland. It:
In conjunction with the ILP Bill, the Central Bank is also in the process of updating and modernising its rules and requirements to accommodate these new structures, as ILPs will be regulated by the Central Bank. The Central Bank has already circulated a consultation paper on the issuance of guidance for closed-ended funds, which generally is how private equity and real asset investments will be structured. Of particular note are the provisions:
This consultation closes on 22 December and new guidance is expected to issue early in the new year. This guidance will apply to all closed-ended funds and not just ILPs.
The Central Bank has also very helpfully clarified that it will not seek to separately authorise the GP as an AIF management company and as such it will not have a capitalisation requirement. Its directors will be subject to the Central Bank's fitness and probity regime, however, it will not require any further authorisation or approval from the Central Bank, which is a very welcome development.
With the legislation now approved by the Irish government and the Central Bank's new guidance expected to issue in January, it is expected that the first ILPs will be established early in the New Year.
Investment funds expert Gayle Bowen of Pinsent Masons, the law firm behind Out-Law, said the ILP structure would be attractive across several asset classes.
“The new legislation forms part of the Irish government's strategic priority for the development of Ireland's international financial services sector to 2025 and will represent a huge step towards making Ireland the domicile of choice for private fund managers looking to access European capital via a partnership structure. A number of clients have already expressed a keen interest in this new structure and we expect it to become the vehicle of choice for investing in this asset class."
Investment funds expert David Young of Pinsent Masons said: “The new ILP structure is an exciting development and should, in time, be a real game changer in terms of Ireland’s position as a domicile for funds targeting private markets and real asset investments.
“It will give managers a valuable option when looking to establish funds of this nature where the well understood benefits of a limited partnership structure set up in a respected jurisdiction can be combined with the ability to utilise the AIFMD passporting regime to raise capital from EU investors,” Young said.
21 Sep 2020