The Irish funds industry, through its representative body the Dublin Funds Industry Association (DFIA), is striving to broaden the range of investment fund products that can be established in Ireland and to maintain its position as one of the main investment fund domiciles of choice.
To this end, government ministerial approval was recently obtained for a new piece of legislation, which is expected to be enacted in the first part of 2005. The legislation will facilitate cross-investment among the sub-funds of umbrella investment companies; the establishment of segregated liability umbrella investment companies, being companies the sub-funds of which will not be subject to a cross liability risk from the other sub-funds of the same company; and the establishment of non-Ucits (Undertakings for the Collective Investment of Transferable Securities) common contractual funds (CCFs).
CCFs are one of the more recent investment fund products that have been made available in Ireland and are designed for, and particularly suited to, the pooling of pension fund investments. The tax transparency of CCFs is enshrined in the Irish tax code and the product offers a number of advantages for pension fund investors.
Ireland continues to attract investment fund products from a wide variety of international fund promoters and investment managers. They are attracted by a myriad of factors, including its membership of the EU, the Organisation for Economic Cooperation and Development and the Financial Action Task Force. They are also attracted by Ireland’s tax regime – which ensures that the only Irish taxes suffered by funds authorised in Ireland are taxes they collect on behalf of Irish resident investors in the funds – and by its balanced regulatory regime.
The breadth and depth of experience of establishing and operating investment funds among the service provider community also plays a vital role in Ireland’s attractiveness.
Funds that are established as Ucits in Ireland can be sold pursuant to their Ucits passport throughout the EU. A lot of the Irish funds, and a very significant number of non-Irish funds domiciled in traditional offshore locations, such as the Cayman Islands, obtain a listing on the Irish Stock Exchange. In the course of 2004, this became the world’s leading stock exchange in terms of the number of investment funds listed.
Brian McDermott is head of investment funds at A&L Goodbody