UCITS

1. Irish fund structures for
international distribution
UCITS & Qualifying Investor Funds (QIFs)
First for business. First for people.

3. Contents
Introduction to the Irish funds industry in Arabic 01
Introduction to the Irish funds industry 07
Establishing a fund in Ireland 13
UCITS funds 19
Distribution of Irish UCITS funds 25
Qualifying Investor Funds (QIFs) 31
Taxation of Irish funds 35
Services & contacts 37

4. 1
4

5. Introduction to
the Irish funds
industry in
Arabic
1

6. 3
2

7. 2
3

8. 5
4

9. 4
5

10. Introduction to
the Irish funds
industry
6

11. Overview
Ireland is renowned globally as a premier location for
establishing and servicing investment funds. Fund promoters
can rely on Ireland as a ‘one-stop-shop’ for the domiciliation
of funds and unparalleled experience in servicing all types
of instruments. An abundance of the big players of the fund
servicing world are situated in Ireland, with an extensive range
of services available including fund administrators, lawyers,
custodians etc. As a result, Ireland is the chosen location
for many international fund players. Since its inception as a
centre for investment funds, Ireland has positioned itself as a
location for the establishment of “regulated” investment funds.
As investors seek greater transparency and comfort from
investment products and as greater regulatory oversight of
investment funds becomes imminent, Ireland has a number of
well established suitable products to fit this growing need. The
two most popular regulated products in Ireland are UCITS and
the Qualifying Investor Fund (QIF).
7

12. Scale of the Irish funds market Irish domiciled funds -
Did you know the • In excess of 10,700 funds with a breakdown in assets between
following facts net asset value of over EUR 1.3 UCITS & Non - UCITS
trillion serviced in Ireland as of
about the Irish funds September 2009 according to the
market? Irish Fund Industry Association
(IFIA).
• There are over 5,000 Irish
domiciled funds with assets
under management of EUR 703
billion as of September 2009
according to the IFIA. Source: Central Bank of Ireland, August 2009
• Fastest growing European and
UCITS fund administration centre
Irish domiciled funds -
over the past five years. (Irish
breakdown by type
domiciled net assets grew by 49%
between 2004-2008; the European
average for the same period was
15%, Source: Central Bank of
Ireland & EFAMA)
• 80% of Irish domiciled funds
are UCITS with a Net Asset Value
of EUR 570 billion in over 3,000
funds including subfunds as of
Source: Central Bank of Ireland, June 2009
June 2009 according to the IFIA.
8

13. Product Innovation in Ireland Total assets of Irish domiciled
• A leading European domicile for money market funds
money market funds.
• The leading European domicile for
Exchange Traded Funds (ETFs).
• The largest hedge fund
EUR Billion
administration centre in the world.
• A growing market for Shariah
funds. All of the main parties
in the Irish financial services Source: Central Bank of Ireland
industry have some involvement Ireland as a domicile for
in this growing industry. This European ETFs
can be reflected in number of
service providers − accountancy
firms, law firms, etc. − which
have established dedicated
teams of experts in Islamic
finance. Additionally a Shariah
funds specialist unit has been
established in the Financial
Regulator. According to data
Source: Barclays Global Investors & IFIA July 2009
compiled from the Eurekahedge
Islamic Funds database, 20% of Irish administered alternative
the Islamic funds market outside investment funds
of the Middle East is located in
Ireland, as of September 2009.
Source: Hedge Fund Intelligence & IFIA July 2009
9

14. Irish Regulatory Environment investors. The custodian has a of all the main markets for Irish
• Constructive regulatory duty of care to the unit holders UCITS funds is shown later in
environment – robust and and is liable for any failure to meet the document in the distribution
efficient regulatory environment the requisite standard of care. section.
with a wide variety of investment Such liability will also extend to • Equity is the leading asset
fund vehicles available to suit the custodian’s appointment of class for Irish UCITS funds in
individual investor needs. The any sub-custodians, which is of all the four main regions: Europe,
Financial Regulator regulates on a particular importance to investors Asia, the Middle East and South
‘principles based’ approach rather where assets are likely to be held America. This is also discussed in
than a rigid rules based system. in various jurisdictions outside more detail later in the document
• Speed to market: 24 hour Ireland. in the distribution section.
approval process available for • Irish risk management process • 358 fund promoters from over
Qualifying Investor Funds (QIFs) is based on guidance notes with 50 countries have set up Irish
and an average 4-6 weeks for all built-in flexibility. Risk monitoring domiciled funds. If non -Irish
other fund structures. for non-sophisticated funds in domiciled funds are included, over
• Fast track promoter approval – Ireland is on a daily basis. In 780 fund promoters use Ireland as
within one week of application Ireland the risk management a servicing centre for investment
process is not the responsibility of funds.
• Promoter financial resources any designated individual.
requirement: Irish promoters Promoter origin of Irish domiciled
must have minimum net Distribution of Irish Funds funds - Percentage of total Irish
shareholder’s funds of €635,000, • Irish domiciled funds are domiciled assets by promoter origin
or equivalent in another currency. distributed in over 60 countries
• Promoter liability – Irish across Europe, the Americas, Asia
Promoters not legally responsible and the Pacific, the Middle East
for losses of funds, as long as due and Africa.
care has been provided. • The main target market for
• The Irish custodian model as Irish UCITS in the EU is the UK.
required by the Financial Regulator Switzerland is the main market
provides significant comfort to outside of the EU. A breakdown
Source: Lipper Ireland Fund Encyclopaedia, June 2009
10

15. Other Key Facts Irish stock exchange listings -
• A recognised EU and OECD, open Nos. of funds and sub-funds listed
and tax transparent jurisdiction
with the lowest headline
corporate tax rate in the OECD.
• Largest number of stock
exchange listed investment funds.
• 12,000 skilled employees with
availability of industry-wide
training (over 9,500 employed
directly by fund administrators
Source: Irish Stock Exchange
and over 2,500 employed in
associated services, e.g. legal, The investment funds industry in Ireland
tax, audit, listing etc.)
45 Administration Companies --------------- 19 Trustee/Custodian Banks
• Ireland is a member of the EU,
Euro zone, OECD and FATF and
is continually ranked highly in
Investment Funds
international surveys of places to Lawyers
carry out business. Ireland is not In excess of 10,700
funds (Incl. sub funds) 358 Fund
included on any international list Promoters
570 billion in domiciled (of Irish funds)
of tax havens (e.g. OECD/G20). Listing assets
• Ireland is a modern, Brokers
153 billion in
international, open economy non-domiciled assets
where business can be conducted 1.3 trillion in assets 786 Fund
with Asia in the morning, the Accountants being serviced Promoters
(including non Irish
funds)
Americas in the afternoon and 12,000 people employed
Europe throughout the day.
Source: IFIA September 2009, Lipper Ireland Fund Encyclopaedia 2009
11

16. Establishing
a fund in
Ireland
12

17. The Irish Financial Services Regulatory Authority (the “Financial
Regulator”) is the competent authority responsible for the
authorisation and supervision of funds in Ireland. The Financial
Regulator operates an “open door” policy with regard to
fund managers and welcomes the opportunity to meet
new managers to discuss potential projects. The Financial
Regulator’s innovative and proactive approach to regulation,
combined with its accessibility, has earned it a deserved
reputation as a first-class regulatory authority.
13

18. Promoter Approval relevant experience in promoting and cross-border throughout Europe and
When deciding to establish a fund managing funds, ownership details, increasingly in areas such as the
in Ireland, one of the first things to latest audited accounts, confirmation Far East, the Middle East and Latin
be determined is the identity of the that the promoter is regulated in its America, without the need for full
promoter. The Financial Regulator home jurisdiction and confirmation authorisation in the target countries.
requires that a promoter be identified that it has at least €635,000 in This makes them particularly
to satisfy it that there is an entity of shareholders’ funds. suitable for managers seeking global
substance backing the project. There distribution. While non-UCITS do
is no legal basis for the concept of If the proposed investment manager not enjoy the same cross-border
promoter and the promoter has no (being the entity with discretionary marketing benefits as UCITS, non-
financial or contractual obligation to authority to manage and invest the UCITS offer greater flexibility in terms
the fund. fund’s assets) is a separate entity to of investment strategy. They are
the promoter, it must also submit an more suited to managers wishing to
The promoter, which may be the same application for approval along the target sophisticated investors and/
entity as the investment manager, same lines. or wishing to pursue more aggressive
is responsible for the application or alternative investment strategies.
to the Financial Regulator for
UCITS and non-UCITS Non-UCITS generally tend to be sold
authorisation of the fund and it (the on a private placement basis.
There are two broad categories of
promoter) must be approved by the
investment funds in Ireland: UCITS
Financial Regulator in advance of
and Non-UCITS. UCITS
submission of the application for fund
authorisation. UCITS operate on the basis of their
The essential difference between the
availability to retail investors, although
two regulatory frameworks is that
The approval process for the promoter many are institutional funds. Their
UCITS funds are established pursuant
normally takes approximately four investment and borrowing restrictions
to European legislation whereas non-
weeks and, once obtained, this are generally not negotiable. The
UCITS are established pursuant to
approval is valid for any further basic investment restriction for
indigenous Irish legislation. UCITS
funds established in Ireland by that UCITS is that at least 90% of net
funds must invest in accordance
promoter. assets must be invested in listed
with the investment and borrowing
or soon to be listed (max 10%)
The Financial Regulator will require restrictions imposed by UCITS
transferable securities or securities
information to be provided, outlining legislation. UCITS can be marketed
14

19. issued by sovereign states or their Non - UCITS
local authorities, with no more than Non-UCITS funds can generally be
a 10% exposure to any one issuer. divided into three main categories.
Borrowings are restricted to 10% These are Retail Funds, Professional
of NAV and may only be made on a Investor Funds and Qualifying Investor
temporary basis. Funds.
Since 13 February 2002 (the Retail Funds must comply in full with
implementation of amending UCITS the Non-UCITS investment restrictions
Directives referred to as UCITS III), as contained in the Financial
UCITS are no longer restricted to Regulator’s NU Series of Notices.
investing principally in transferable
securities and the main objective of a Professional Investor Funds (“PIFs”)
harmonised UCITS may now consist have a minimum initial subscription
of investing in other financial assets requirement per investor of €125,000
such as: or the equivalent. PIFs enjoy
considerably more relaxed borrowing
• money market instruments; and investment restrictions compared
• units in collective investment to UCITS and retail non-UCITS
schemes; funds and are therefore suitable for
funds aimed at more sophisticated
• deposits with credit institutions; investors.
• financial derivative instruments;
and Qualifying Investor Funds (“QIFs”)
are designed for high net-worth
• index tracker funds. individuals or institutional investors.
More detail on UCITS and the No borrowing or investment
flexibility of the product is provided restrictions apply. The basis for
later in the document, in the UCITS QIFs is that investors in these funds
funds section. have a high degree of knowledge
and experience of relevant markets
and a detailed understanding of the
15

20. investment risks involved. Investment and investment limited partnership. The Irish Stock Exchange
in these funds are confined to Consideration should be given to Should a fund wish to list its units/
Qualifying Investors, namely:- investment strategy, target investor shares on the Irish Stock Exchange
market, distribution plans and tax (“ISE”), it will need to appoint Irish
• an individual who has a minimum consequences in choosing the listing agent/stockbroker. A stock
net worth (excluding main optimum vehicle and structure. exchange quote on the ISE is
residence and household goods) available to Irish and foreign funds.
in excess of €1,250,000;
Fund Authorisation Due to the close working relationship
or Once the promoter and investment between the ISE and the Financial
• an institution, which owns or manager have been approved, the Regulator, the ISE automatically
invests on a discretionary basis at next step is obtaining approval for the accepts the suitability of the
least the equivalent of €25 million fund documentation. An application investment manager and custodian
or where its beneficial owners are for authorisation of an investment of funds authorised by the Financial
Qualifying Investors in their own fund is made by lodging fund Regulator.
right. documentation, in draft form, with the
Financial Regulator.
The minimum initial subscription per Taxation
investor in a QIF is €250,000. The The Financial Regulator will usually Irish investment funds are exempt
minimum amount of subsequent respond with its initial comments from any Irish tax on income and
subscriptions is not limited. within three to four weeks of receipt gains derived from their investment
of an application. Depending on its portfolios irrespective of where their
More detail is provided on the QIF nature and complexity, a typical fund investors are resident.
later in the document in the Qualifying should be capable of authorisation
Investor Funds (QIFs) section. within a four to six week period upon As the Irish vehicle is tax neutral,
submission of all documentation. generally the tax consequences
for investors of acquiring, holding,
Fund Vehicles
The exception to this is the QIF converting, redeeming or disposing
There are several legal forms through
which avails of a one day fast-track of units/shares in an Irish fund will
which an investment fund can
authorisation procedure. depend on the relevant laws of the
be established including variable
jurisdiction to which the investor is
capital investment company, unit
subject.
trust, common contractual fund
16

21. There is a detailed table on Irish tax This, effectively, means that the
later in the document in the taxation fund appoints an Irish-based fund
of Irish funds section. administrator.
The fund is specifically required
Directors to have an Irish-based custodian,
All Irish domiciled investment which cannot be the same entity as
companies and Irish domiciled the administrator. The fund must
management companies of Irish funds also have auditors, who will also be
must have at least two Irish resident Irish-based. Certain fund vehicles
directors. The Financial Regulator require a management company to be
must satisfy itself as to the reputation appointed.
and experience of all directors by
applying its Fitness and Probity test. A substantial amount of the world’s
leading financial institutions operating
in the fund administration industry are
Service Providers
based in Dublin and thus the sourcing
In an Irish domiciled fund, certain
of appropriate service providers for
minimum activities must be carried
Irish domiciled funds presents no
out in Ireland, including the following:-
difficulty.
• safekeeping and custody function;
• net asset value calculations;
• fund accounting;
• maintenance of members register;
• preparation of financial reports;
and
• retention of all investor
correspondence and original
documentation received.
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22. UCITS
funds
18

23. What are UCITS?
UCITS are Undertakings for Collective Investment in
Transferable Securities. Having their origin in European
legislation, UCITS benefit from an EU-wide “passport” which
means that once they are authorised in one EU member state,
they can be sold in any other EU member state without the
need for additional authorisation. Because of the necessity to
comply with a common European standard, UCITS are now
regarded globally as very well regulated funds, with robust
risk management procedures, a strong emphasis on investor
protection and coming from a stable environment. As a result,
the UCITS brand is recognised beyond the EU and UCITS
products are accepted for sale in Asia, the Middle East and
Latin America.
19

24. Total assets of Irish domiciled UCITS What can UCITS invest in?
funds - EUR billion While UCITS funds must invest in
accordance with the investment and
UCITS are now borrowing restrictions imposed by
distributed in over UCITS legislation, advances in the
UCITS product have broadened the
140 countries, so the range of assets into which UCITS
UCITS product is ideal can invest. In summary, UCITS are
permitted, subject to certain criteria,
for asset managers to invest in: -
seeking access to • transferable securities;
Source: Central Bank of Ireland
multiple markets. Total number of Irish domiciled UCITS • money market instruments;
The distribution of funds - Funds including sub-funds • other open ended funds;
Irish UCITS funds is • closed ended funds;
• cash deposits with credit
discussed in detail institutions;
later in the document • structured financial instruments;
• financial derivative instruments;
in the distribution
– swaps
section. – options
– futures
Source: Financial Regulator
– forwards
– OTC derivatives
– CFDs
– derivatives on commodities
indices
– derivatives on hedge fund
indices
– repos
20

25. What are the principal investment • a UCITS can invest up to 20 per • the Financial Regulator may
restrictions? cent of its net assets in deposits authorise a UCITS to invest
• a UCITS may invest no more made with the same credit up to 100% of its net assets in
than 10% of its net assets in one institution. This limit is raised to different transferable securities
issuer, with the aggregate of all 20% for deposits made with the and money market instruments
investments in excess of 5% not fund’s custodian. issued or guaranteed by any
to exceed 40% of the net assets. • the risk exposure of a UCITS to a government, local authority or
The 10% limit is raised to 25% counterparty to an OTC derivative public international body subject
for bonds issued by EU credit may not exceed 5% of net asset to certain conditions.
institutions that are subject to value. This limit is raised to 10%
laws protecting bondholders. in the case of credit institutions What strategies can be pursued?
The aggregate of any such in the EEA or other specified Recent market difficulties have led
investments in excess of 5% may countries. to dramatic changes in investors’
comprise up to 80% of the UCITS appetite for risk. This revision of asset
net assets. • a combination of two or more of allocation strategies has resulted in
the following issued by, or made an increased demand by investors for
• the limit of 10 per cent above or undertaken with, the same
is further raised to 35 per cent regulated products. More and more,
body may not exceed 20% of the this has led hedge fund managers to
if the securities or instruments net asset value of a UCITS:
are issued or guaranteed by a move into the regulated fund arena,
government or its local authorities – investments in transferable either as a result of their investor
or by a public international body. securities or money market base wishing to move away from
instruments; unregulated hedge funds or as those
• a UCITS can invest up to 10% managers seek to attract new money.
of its net assets in unlisted – deposits; and/or
transferable securities and money – counterparty risk exposures UCITS funds, in particular, are seen
market instruments. arising from OTC derivatives as the product of choice, due to their
transactions. liquidity, transparency, high level of
• a UCITS can invest up to 20%
of its net assets in any one CIS. investor protection and distribution
Investment in non-UCITS CIS may opportunities. Also, flexibility: the
not, in aggregate, exceed 30% of UCITS product enables hedge fund
net assets. managers to mirror many of their
21

26. hedge fund strategies through the • absolute return
use of an appropriate mix of leverage, • long/short equity (e.g. 130/30)
shorting and derivatives.
• statistical arbitrage
UCITS III significantly widened the • convertible arbitrage
range of investment possibilities for
UCITS funds. Of major significance • global macro
is the ability of managers to use • market neutral
financial derivative instruments (“FDI”)
• fixed income arbitrage
to access strategies which were
previously the preserve of hedge • convertible bond
fund managers. The opportunity • credit funds
to structure alternative investment
• hedge fund index funds
strategies within the robust regulatory
framework of a UCITS has been • commodities index funds
critical to the growth of the product. • synthetic ETFs
Examples of strategies that are being
• fund of funds
pursued by UCITS include:
• enhanced fixed income
• structured products
• managed futures
22

27. 23

28. Distribution
of Irish UCITS
funds
24

29. Overview
UCITS funds are the ideal vehicle for promoters who wish
to distribute their funds throughout the EU without having to
obtain authorisation from each Member State. Although, the
success of the UCITS structure has extended beyond the
borders of the EU and the UCITS brand is now recognised
globally as a well regulated investment product. Distribution
is paramount to the success of the UCITS product. Ireland is
renowned as a centre of excellence for UCITS products. Irish
UCITS funds are distributed heavily in Asia, the Middle East and
South America as well as in Europe.
25

30. Many different types of strategies Breakdown of the main markets for Top markets for Irish UCITS funds
and products have been set up as Irish UCITS funds
EU
UCITS funds. The UCITS framework Our research on the distribution of
Switzerland
has become increasingly diverse over Irish UCITS funds focused on fund
the last few years. Most investment groups in Ireland where the number of Singapore
strategies are now allowed under the countries which they distribute to is Chile
UCITS regime. As we have mentioned, greater than 5. (58 fund groups match Hong Kong
even alternative strategies may now this criteria). All fund groups sell to Other
be achieved within the UCITS regime. one or more EU countries i.e. 100%. Channel
Islands
An increasing number of hedge As shown in the chart opposite, Bahrain
Countries
fund managers are looking to set up top markets for Irish UCITS funds Peru
their funds under the UCITS regime. include countries in all main regions
Additionally, many Exchange Traded including Europe, the Americas (Peru
Funds and Money Market Funds in and Chile), Asia (Singapore and Hong 0 20 40 60 80 100
Ireland have been set up under the Kong) and the Middle East (Bahrain). % of fund groups
UCITS regime, benefitting from the Source: Lipper Hindsight, PwC analysis, July 2009
principle of mutual recognition within Other countries includes: Australia, Bahamas, Cyprus, Gibraltar,
the EU and a high level of acceptance Isle of Man, Japan, Macau, Mauritius, Mexico, Panama, South
Africa & the United Arab Emirates.
by regulators worldwide as well as
the advantage of a global distribution
network.
26

31. The chart opposite highlights the main Breakdown of leading markets for Irish
markets by region. Europe is the most UCITS
popular region for Irish UCITS funds 100
with the greatest number of the 58
fund groups selling Irish UCITS funds
into this region as might be expected. 80
Asia is the next largest market for
Irish UCITS funds, followed by South 60
America and then the Middle East.
40
% of fund groups
20
Netherlands
Hong Kong
Singapore
Germany
Sweden
Bahrain
Austria
France
Taiwan
Spain
Chile
Peru
Italy
UK
0
EU Asia/ME South
America
Source: Lipper Hindsight, PwC analysis, July 2009
Breakdown of EU countries for Irish
UCITS
UK
Germany
France
Netherlands
Austria
Spain
Italy
Sweden
Luxembourg
Norway
Belguim
Finland
Countries
Denmark
Source: Lipper Hindsight, PwC analysis, July 2009
Note: Other EU countries that Irish UCITS distribute to include: 0 20 40 60 80 100
Czech Republic, Greece, Poland, Portugal, Slovakia & Slovenia. % of fund groups
27

32. What are the main asset classes for are bond funds. This is followed
Irish UCITS per region? by 29% in South America and
Our research here is focused on fund 25% for both Europe and the
groups in Ireland where the number Middle East.
of countries to which they distribute • The breakdown for the money
is greater than 5. According to the market asset class is as follows.
Lipper Hindsight database, 58 fund In both the Middle East and South
groups match this criteria as of July America 19% of Irish UCITS funds
2009. The main asset classes focused sold into these regions are money
on include: equity, bond, money market funds. This is followed
market funds, mixed assets and other. closely by 17% in Asia and 15%
• Equity is the leading asset class in Europe.
for all the four main regions: • The mixed assets class
Europe, Asia, the Middle East breakdown for each region is
and South America. In the Middle as follows: Europe (12%) and
East, 50% of Irish UCITS funds Asia (10%). This asset class only
sold into this region are equities. accounts for 4% in South America
The percentage breakdown for and no Irish UCITS that sell into
the equity asset class in the the Middle East are classified
other regions is as follows: South under the mixed assets class.
America (48%), Europe (43%) and • All other asset classes fall under
then Asia (37%). the other category with the
• Bonds are the next most popular following breakdown: the Middle
asset class in all the regions. 31% East (6%), Europe (5%), Asia (5%)
of Irish UCITS funds sold into Asia and South America (0%).
28

33. Key domiciles where Irish UCITS are distributed
Top 5 countries in the EU where each Irish UCITS asset class/product offering is distributed
Rank Equities Bonds Money market funds Exchange traded funds
1 UK UK UK UK
2 Germany Germany Germany Germany
3 France/Netherlands France France Italy
4 Austria Austria/Spain Spain Netherlands
5 Italy Italy Austria/Italy Luxembourg
Top 5 countries outside the EU where each Irish UCITS asset class/product offering is distributed
Rank Equities Bonds Money market funds Exchange traded funds
1 Switzerland Switzerland Singapore Switzerland
2 Singapore Singapore Hong Kong Singapore
3 Chile Taiwan Chile Chile
4 Hong Kong Hong Kong Bahrain/Switzerland Peru
5 Taiwan Chile Macau/Taiwan N/A
Source: Lipper hindsignt, PwC analysis, July 2009
29

34. Qualifying
Investor Funds
(QIFs)
30

35. The Qualifying Investor Fund (“QIF”), the most successful
non-UCITS fund in Ireland, is the vehicle of choice for fund
promoters wishing to pursue alternative strategies such as
hedge funds, private equity/venture capital funds and real
estate funds. The significant investment flexibility which the
Irish regulatory regime offers to QIFs together with the fact that
they can be authorised within 24 hours of filing documentation
with the Financial Regulator, has made them one of the most
successful Irish fund products . The QIF now competes in terms
of flexibility and speed-to-market with products in offshore
centres such as Cayman and BVI but with the added advantage
of being located within a robust regulatory framework.
31

36. Total assets of Irish Qualifying Investor Flexibility Qualifying as a QIF
Funds (QIFs) - Total assets (Eur billion) The general investment and borrowing In order to qualify as a QIF, the fund
restrictions imposed by the Financial may only accept investors who satisfy
Regulator on investment funds are certain eligibility criteria (“Qualifying
automatically avoided by structuring Investors”) and who subscribe a
the fund as a QIF. minimum of €250,000 into the fund.
QIFs can pursue investment strategies A Qualifying Investor is,
which include short selling, significant
borrowings and leverage, derivatives • in the case of a natural person,
and investments in other funds, an individual with a minimum net
Source: Central Bank of Ireland without restriction. Similarly, the limits worth (excluding his/her main
on the level of investment in any given residence and household goods)
market or securities which apply to all of €1,250,000; or
other types of funds in Ireland do not • in the case of an institution,
apply to QIFs.
Total number of Irish domiciled – one which owns or invests on
Qualifying Investor Funds (QIFs) - Accordingly, QIFs are particularly a discretionary basis at least
Funds including sub-funds suitable for sale to sophisticated €25,000,000 or its equivalent
investors such as high net-worth in other currencies; or
individuals and institutions. More – where its beneficial owners are
aggressive investment strategies can Qualifying Investors in their
be pursued, such as: own right.
• hedge funds 24 Hour Authorisation
• real estate funds QIFs are authorised to launch within
one day of filing the prescribed
• infrastructure funds
documentation with the Financial
Source: Central Bank of Ireland • private equity funds Regulator. An application for
• venture capital funds authorisation as a QIF can be made
where the:
32

37. • promoter; Fund Vehicles expenditure. As a tax exempt vehicle,
• management company (if A QIF can be established as a variable the QIF will not suffer any Irish tax
applicable); capital investment company, unit on interest income and dividends
trust, common contractual fund received from the SPV.
• directors in the case of an or investment limited partnership.
investment company; Consideration should be given to
Other Key Features of QIFs
• trustee / custodian; and investment strategy, target investor
• audited annual accounts must be
market, distribution plans and tax
• other service providers (fund sent to the Financial Regulator
consequences in choosing the
administrator, investment and shareholders within four
optimum vehicle and structure.
manager) months of the year end;
have been approved/cleared by the • semi annual accounts are not
Financial Regulator in advance of Use of SPVs required;
the application and where the fund QIFs can invest in underlying assets
through wholly owned special • any amendments to the QIF’s
reflects the agreed parameters. prospectus or material contracts
purpose vehicles (“SPVs”). This is
The relevant application form for of particular interest, for example, need to be filed with the Financial
a QIF, which must be completed for real estate funds where each Regulator one business day prior
and submitted to the Financial real estate investment can be made to coming into effect;
Regulator, is designed to establish through an SPV in order to ringfence • QIFs can issue a separate
the parameters within which a QIF liability relating to each project. The prospectus for a share class
can operate. A certification must SPV structure can also be used within a QIF or within a sub-fund
accompany the application form for tax efficiency purposes, by of an umbrella QIF, provided the
confirming that the application form holding underlying assets through existence of other share classes is
is correct, complete and accurately an Irish SPV. Although the SPV disclosed to investors; and
reflects the material documentation of will be subject to Irish corporation
• a QIF may issue notes, on
the QIF and that the prospectus etc. tax at a rate of 25% on its taxable
a private basis, to lending
complies with the relevant regulations. profits, its transactions are generally
institutions to facilitate financing
Once all necessary documents are structured so that the level of taxable
arrangements, provided that
completed and submitted to the profit is negligible or zero. This is
details of the note issue is clearly
Financial Regulator by 3pm, the QIF done by ensuring that the SPV’s
disclosed in the prospectus.
will be authorised the following day. income is matched by tax deductible
33

38. Taxation of
Irish funds
34

39. Tax treatment Irish management company Irish fund
Corporation Tax Rate 12.5% on trading income Tax exempt on income and capital gains
25% on non trading income
No net assets tax
One of the lowest headline corporation tax
rates in the OECD
Treatment of Losses Trading losses can be carried back one year Capital losses cannot be offset against
against trading income, offset against income capital gains
and gains of the current year (and set against non
trading income on value basis in current year), and
carried forward indefinitely against income of the
same trade
Filing Requirements Corporation Tax Return filed nine months after Investment Undertaking Returns filed semi
accounting year end. Preliminary tax obligations annually- nil returns filed when no taxable
payable in two instalments event arises.
Double Taxation Treaties 46 countries and 9 under negotiation 46 countries and 9 under negotiation.
Ireland recently signed an agreement with
Bahrain and treaties with Saudi Arabia, the
United Arab Emirates (UAE) and Kuwait are
expected to be signed shortly. (Treaty access
is dependent on fund structure and relevant
jurisdiction).
Withholding Taxes on Non Applicable No withholding taxes apply, under domestic
Distributions legislation, on income distributions or
redemption payments made by a fund to non
Irish resident investors once an appropriate
non resident declaration is in place.
Transaction Taxes No capital duty on issue of shares in Irish Man No capital and stamp duty on issue or
Co. 1% stamp duty applies to transfer of shares acquisition of fund units
although relief from charge may apply
VAT treatment Investment Management activities VAT exempt. Fund activities VAT exempt. Fourth Schedule
Fourth schedule services (professional services services (professional services from abroad)
from abroad) require Man Co of Fund to self require Funds to self account for VAT on
account for VAT on reverse charge basis. reverse charge basis.
Possibility of Man Co recouping VAT based on Possibility of Fund recouping VAT based
proportions of investments outside EU of funds on proportions of investments outside
under management. Possible to recover VAT even EU. Possible to recover VAT even if not
if not required to register for VAT (through VAT60E required to register for VAT (through VAT60E
procedure). procedure).
Controlled Foreign Company No No
(CFC) Legislation
Banking Secrecy No banking secrecy or exchange of information No banking secrecy or exchange of
blockages information blockages
Thin Capitalisation Legislation No No
Transfer Pricing Legislation No No 35

40. Services
& contacts
36

41. How PwC Ireland can help...
Audit Services services regulation. The regulatory
Our audit approach is tailored to and compliance services team
suit the size and nature of your provides support and advice to help
organisation and draws upon our you identify, manage and control
extensive industry knowledge. In any existing and future regulatory
addition to the independent audit we risks. Our services can be broadly
offer advisory services in the areas categorised under three main
of financial reporting, corporate headings:
governance, regulatory compliance,
independent controls and risk • Market entry; feasibility
assessment. studies, authorisation services,
governance arrangements,
compliance frameworks, capital
Tax & Legal Services adequacy arrangements &
Our Tax and Legal Services formulates notification assistance
effective strategies for optimising
taxes, implementing innovative tax • Regulatory risk management
planning and effectively maintaining • New regulatory obligations
compliance.
Advisory Services
In recognition of the international tax PwC also provides a full range of
issues to be considered in structuring business advisory services for both
funds, our specialised tax team works large organisations and independent
extensively with our global investment advisors entering the investment fund
management teams on an ongoing business. Our business advisory
basis. services team can assist clients in
making strategic assessments of
Regulatory Advisory Services the investment business, preparing
PwC has a dedicated regulatory and business plans and economic
compliance service team to assist analyses as well as advising on the
you with all aspects of financial structure of both the investment
37

42. advisor and the underlying fund. The maintain cross-border distribution
team can also offer advice on systems strategies. Today, through our unique Contacts:
and operational needs, identifying Global Fund Distribution (GFD)
and selecting outside vendors and service, PwC remains the market Ken Owens
preparation of full documentation of leader of solutions for cross-border Partner
policies and procedures. fund distribution. Our service includes: PricewaterhouseCoopers
1 Spencer Dock
• Market Strategy
Global Fund Distribution Services North Wall Quay, Dublin 1, Ireland
• Market Entry
PwC has an integrated global network Tel: +353 1 792 8542
• Market Reporting Email: ken.owens@ie.pwc.com
of local experts coordinated by a • ETF Listing
dedicated central team supporting Pat Candon
• Market Publication
all aspects of your cross-border fund Partner
• Market Intelligence Monitor
distribution strategy. PricewaterhouseCoopers
• Distributor Analysis
1 Spencer Dock
Designing, implementing and • Distribution Model Optimisation
maintaining a multi-jurisdictional North Wall Quay, Dublin 1, Ireland
Tel: +353 1 792 8538
distribution strategy involves a unique Our Market Share
set of challenges. PwC can help with Email: pat.candon@ie.pwc.com
these challenges. We understand the Combined market share by subfund
assets Omer Khan
interconnected processes and specific Manager
local and international resources PricewaterhouseCoopers
required for a cross-border strategy 1 Spencer Dock
to be sustainable. More than 10 years North Wall Quay, Dublin 1, Ireland
ago, PwC pioneered a revolutionary Tel: +353 1 792 8171
and unique service supporting fund Email: omer.khan@ie.pwc.com
promoters to develop, implement and
Source: Ireland Funds Encyclopaedia June 2009
38

43. Mason Hayes+Curran -
Irish law firm for investment funds
Mason Hayes+Curran is a full service funds), their regulatory classification
business law firm with offices in (UCITS or non-UCITS) and specialist Contacts:
Dublin, New York and London. vehicles such as professional investor
funds, qualifying investor funds, Fionán Breathnach
Mason Hayes+Curran’s Investment hedge funds, funds of funds, feeder Partner
Funds and Regulatory Unit advises on funds etc. We are currently advising South Bank House,
all aspects of investment fund law and one of the first Abu Dhabi-based fund Barrow Street, Dublin 4, Ireland.
regulation in Ireland. In particular, we promoters to establish an Irish UCITS Tel +353 1 614 5000
advise fund promoters on structuring, fund. Fax +353 1 614 5001
establishing and listing investment DDI +353 1 614 5080
funds in Ireland and we advise and We have expertise not only in Email: fbreathnach@mhc.ie
assist fund service providers in the regulation of investment fund
establishing operations in Ireland and products but also in the transactions John Kettle
provide ongoing legal advice as their entered into by such funds and the Partner
business develops. increasingly sophisticated financial 60 Lombard Street,
instruments and techniques being London EC3V 9EA
Our lawyers in the Investment Funds utilized by asset managers. We Tel : 0044 20 3178 3368 (direct)
and Regulatory Unit have a wealth have particular expertise in the Tel: 0044 20 3178 3366
experience in the investment funds area of alternative investments and Fax: 0044 20 3178 3367
industry and have been involved in the are committed to seeing Ireland’s Email: jkettle@mhc.ie
development of policy and regulation continued development as a domicile
on behalf of the industry. Our lawyers for regulated hedge funds, to David O’Donnell
have advised a wide variety of clients complement its now firmly established Partner
on structuring and promoting funds reputation as a jurisdiction of choice South Bank House,
authorised by the Irish Financial for the servicing of hedge funds. Barrow Street, Dublin 4, Ireland.
Services Regulatory Authority Tel +353 1 614 5000
including funds targeted at the retail At Mason Hayes+Curran we recognise Fax +353 1 614 5001
sector and at a more sophisticated the need for responsive, innovative DDI +353 1 614 5065
investor level. We advise on the and strategic legal advice in this Email: dodonnell@mhc.ie
legal structure of funds (investment dynamic industry and our success in
companies, unit trusts, limited growing our practice in this area is
partnerships and common contractual representative of this.
39

44. Apex Fund Services Limited -
A truly global offering.
Our Ethics and business model to be granted a license in the DIFC in investors from the Middle East we can
When Apex Fund Services launched July 2006 and have steadily built up maintain the Anti-Money Laundering
in 2003 we set-out to address the our business and relationships in that documentation in our offices in that
service issues that existed within region opening in Bahrain in 2007, region. This gives additional comfort
the industry and held at our core a with offices opening in Saudi Arabia to investors that their personal
dedication to ensure that our offering and Abu Dhabi in the early part of information does not travel outside of
was client focused. The standards we 2010. the gulf states.
laid down were designed to ensure a
swift response consistently and with Ancillary services:
Our Services
the highest levels of service protected •
Core Services: Pre launch advice and
by SAS 70 Type II independent audits. assistance with fund structuring
Fund Accounting Services and establishment, including
In 6 years we have grown to a group
Apex Fund Services administers recommendation and liaison with
of 12 separate offices around the
over 250 funds globally ranging from key service providers.
world and have held our principles
Irish UCITS and non-UCITS funds to
true maintaining our service standards
offshore products and private equity • Reviewing and commenting
and ensuring a global reputation of upon the relevant client offering
funds. We prepare daily, weekly,
excellence. documents, agreements and
monthly NAV’s and provide same day
reporting where required which can subscription forms.
Strategy also be accessed by the investment • Setting up bank and custody
The funds industry through 2003 to manager through our web-portal accounts.
2006 was going through explosive www.apexfundsnet.com • Liaising with key service providers
growth and it was clear that the Asian, throughout the process.
Indian and Middle East would emerge Transfer Agency
as powerful centres in the emergence We manage the subscription/ • Preparing clients and funds for
of new funds and investment redemption process for all of our regulatory approval.
management centres. funds and ensure anti-money • Establishing Service Level
laundering checks are carried out in Agreements and Key Performance
Given this we were quick to ensure full and maintained on our systems. Indicators to monitor performance.
that we began to develop strong
presences in these regions. We were Within the Middle East we have
the first fund administration company the added benefit that for Irish
funds with investment managers or
40

45. Specialist Services of Individual There are over 170 reports available
Offices: on our core system from financial, Contacts:
portfolio, transfer agency and
• Bermuda – Stock Exchange performance reporting. In addition, John Bohan
Listing Sponsor. we have worked closely with our Managing Director
• Dubai and Bahrain – Acceptance client base in providing an online Apex Fund Services (Ireland) Ltd.
web-reporting access to view a large Enterprise House, Watersedge,
of Arabic subscription and
selection of these reports that our Midleton, Co.Cork
redemption documents. Tel: 353 21 46 333 66
clients felt would be most beneficial
• Dubai and Bahrain – Expertise Mobile: 353 87 656 0096
to them. Fax: 353 21 46 333 77
with Shari’ah products.
Email: john@apexfunds.ie
• Ireland and Malta – Meeting Website: www.apexfundservices.com
of SICAV and UCITS reporting www.apexfundsnet.com
requirements. • A secure global operations Craig Roberts
network, including 24/7 support Managing Director
• Mauritius – Formation of Special operations ensuring a web-based Apex Fund Services (Dubai) Ltd
Purpose Vehicles for Private platform is available and reliable. Dubai International Financial Centre
Equity Funds as well as tax It is supported with extensive Dubai, United Arab Emirates
reporting and advice. disaster recovery and encrypted Tel: +971 (0)4 352 5659
• China – Consulting on the systems security features. Mobile: 971 (0)50 535 0692
structuring and valuation of private Fax : +971 (0)4 352 5662
• Fund Reporting Solutions www.apexfundservices.com
equity transactions. consolidate data from our Paxus
system into a user-friendly Nicolas Angio
Systems and technology format for our fund managers to Head of Operations
Apex Fund Services continues to use and automates the delivery Apex Fund Services Bahrain WLL
focus on technology and delivering on of accounting and portfolio Office #55,Building #44, Road #1701
our clients ongoing needs. information to our fund managers. Diplomatic Area,
Bahrain Tourism Company Building,
Our technology allows us to fully • Investor Reporting Solutions Manama 317, Bahrain
automate every distinct fund type provides continuous on-line Tel: (973) 17 530217
access to investor statements, Mobile: (973) 39 690427
from Private equity capital calls and
historical transaction activity, fund Fax: (973) 17 531817
commitments, to master feeder
documents and performance www.apexfundservices.com
structures for offshore funds, to Irish
UCITS and non-UCITS. reporting that are continuously
available to investors via a secure
web platform.
41

46. 42

47. © 2009 PricewaterhouseCoopers/Mason Hayes+Curran/Apex. All rights reserved.
“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers
International Limited, each of which is a sepa-rate and independent legal entity
PricewaterhouseCoopers, One Spencer Dock, North Wall Quay, Dublin 1 is authorised by the
Institute of Chartered Accountants in Ireland to carry on investment business.
Disclaimer While every care has been taken in the production of this publication,
PricewaterhouseCoopers, Mason Hayes+Curran and Apex do not accept any responsibility in
respect of anyone or any organisation acting or refraining to act as a result of this publication.
In all cases, appropriate professional advice should be sought (02210).

48. First for business. First for people.