New provisions in relation to the migration of offshore funds to Ireland

It has been an eventful decade for Ireland in the Funds Sector. Over the past number of years, Ireland has built up and enjoyed a highly regarded reputation as a leading jurisdiction in fund expertise with a competitive tax environment. With the current economic climate, it is of utmost importance for Ireland to continue promoting itself as a key location to hold funds and encourage investment companies to relocate to Ireland.

Recent developments

New provisions have recently been introduced by the Companies (Miscellaneous Provisions) Act 2009 to simplify the method in which fund companies from certain jurisdictions migrate into Ireland. The new provisions will now enable the fund company to migrate without having to change its legal entity and the investors will retain the same interests or shares. This is a very welcome development as, previously, methods such as amalgamation and transferring assets to a new fund in Ireland could prove complicated, tax inefficient and problematic in regulatory and administrative areas. The fact that there will be no change to the existing corporate entity will certainly provide comfort to investors and should prove to be a popular development.

How does this work?

Under the new provisions, the non Irish fund company can migrate by registering as an Irish company and obtaining authorisation to set up as either a UCIT or non UCIT investment company once certain criteria is met. Currently, the jurisdictions from which the funds can migrate from are Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands and Bermuda.

Steps to migrate

In order to migrate as effectively as possible, both the legal and regulatory criteria need to be fulfilled simultaneously. As noted above, an application along with supporting documentation must be filed with the Companies Registration Office (“CRO”) in order to be registered. A number of the key documentation items that need to be submitted in relation to the migrating company are as follows:

• Certified copy of the original Certificate of Incorporation from the offshore jurisdiction;
• Certified copy of the Memorandum and Articles of Association;
• List of particulars of the Directors and Secretary;
• Statutory declaration of one of the Directors with a number of statements including a statement that there is no petition to wind up or liquidate the company;
• Declaration of solvency;
• Schedule of security interests created by the company that require registration in Ireland under the Irish Companies Acts.

While preparing the above legal criteria, it will also be necessary to apply to the Financial Regulator for the fund to be authorised as a UCIT or non UCIT. This involves steps such as obtaining promoter approval and appointing two Irish directors. Fund documentation such as the prospectus and the custodian agreement will also need to be reviewed by the Financial Regulator.

Approval stage

Once satisfied with all of the legal documentation received, the CRO will need to obtain confirmation from the Financial Regulator that it proposes to authorise the migrating company to carry on business in Ireland as an Irish domiciled fund. This is necessary before the CRO can issue the company with a certificate of registration. It is envisaged that the two processes will be carried out efficiently and that the CRO and Financial Regulator will be able to register the company and authorise the fund on the same day. From the date of registration in Ireland, the company must then apply to be de-registered in the jurisdiction that it migrated from.

Overview

It is anticipated that the new provisions will further enhance and strengthen Ireland’s position in the Funds Industry. Already seen as an attractive centre for fund investment companies due to the high level of expertise and robust regulatory regime, the simplification of how to migrate will hopefully be a deciding factor in enticing new investors to Ireland.

For more information contact Úna Wrynn on +353 1 675 3151 or email unawrynn@citytrust.ie