Investment limited partnerships law highlights Ireland’s funds strengths

Dublin-based Gayle Bowen of Pinsent Masons, the law firm behind Out-Law, was commenting after the new Act began to apply earlier this year and in the aftermath of a major conference, ‘UCITS & AIFMD Dublin 2021, a new era for asset management in Dublin’, at which ILPs were a major point of discussion. Pinsent Masons was the lead sponsor of the 27 April event, which was organised by Informa.

The majority of the Investment Limited Partnerships (Amendment) Act 2020 came into force on 1 February 2021, apart from sections containing new provisions on beneficial ownership for ILPs and common contractual funds (CCFs). These sections began to apply on 1 March 2021, after the Central Bank of Ireland (CBI) had established registers of beneficial ownership.

The ILP Act was approved by the Irish government in December 2020, modernising Ireland’s existing partnership framework. The aim is to position the jurisdiction as a leading international fund domicile for investment in assets such as real estate, private equity, energy, infrastructure, sustainable finance, credit and loan origination.

ILPs are specifically tailored for use as a collective investment scheme and, depending on how they are created, have no investment or borrowing restrictions. Among other provisions, the ILP Act permits the establishment of ILPs as umbrella funds with segregated liability between sub-funds, simplifies requirements for amendments to limited partnership agreements, and allows ILPs to be migrated in and out of Ireland by way of continuation.

The CBI will act as the registrar of beneficial ownership for ILPs and CCFs, maintaining a register of beneficial owners that ultimately own or control, directly or indirectly, 25% of the capital or profit or 25% of the voting rights in an ILP.

Bowen said: “Ireland is already a leading domicile for European alternative fund structures.  The new ILP structure adds to the vast array of fund vehicles available to asset managers and will be of particular interest to managers in the closed-ended, illiquid space or that want a modern flexible vehicle that facilitates the payment of carry and waterfalls. The Central Bank has also recently clarified that other than compliance with its fitness and probity requirements, it will not seek to impose any further regulation on the general partners of these structures, so they do not have any regulatory requirements to be capitalised, have Irish resident or independent directors nor are there any ‘know your asset’ anti-money laundering requirements that exist in other fund domiciles such as Luxembourg. ”