Cayman Islands: Setting Up A Manco In Ireland – Key Considerations

Like many EU Directives in the area of financial services, AIFMD and UCITS provide for certain passporting rights allowing properly authorised entities established in one EEA Member State the facility to carry out their services in other EEA Member States without the need for a separate authorisation.

Ireland has a long-established reputation as one of the EEA's leading fund domiciles for cross-border distribution. However, increasingly international fund sponsors are looking to Ireland for cross-border management company solutions in addition to fund products.

As a result, and to support the operation of EEA authorised UCITS and AIFs, many international fund sponsors establish management companies ("mancos") in Ireland. It is notable that 16 of the top 20 sponsors of Irish authorised funds (ranked by AUM) (i.e. 80%) operate or are currently in the process of establishing a manco in Ireland.

There are a range of factors driving the preference to use an Irish manco (rather than establish a self-managed/internally managed fund or use a UCITS management company/AIFM located outside Ireland). Some of these are considered below:

Irish Mancos (UCITS Management Companies or AIFMs) – Key Factors to Consider

Wide scope of permitted activities

An Irish manco can obtain authorisation as: (i) a UCITS management company; or (ii) an AIFM; or (iii) a dual authorisation, i.e. both UCITS management company and AIFM.

The manco can also extend its licence to perform MiFID individual portfolio management functions (management of non-fund portfolios, investment advice etc.).

Services can be passported pan-EEA All the above authorisations (UCITS management company/AIFM (management and marketing) and MiFID services) can be passported throughout the EEA on either a freedom of services or branch basis.
Ability to service all major fund types and investment strategies They can also cover the full scope of AIF and UCITS strategies (from retail equity and bond funds to sophisticated hedge, real estate and private equity strategies).
Efficient and dependable regulatory approval process Approximate three to four month authorisation timeframe from initial submission of draft documents.
Tax

Irish mancos which qualify as trading companies are generally subject to corporation tax at 12.5% (positions Ireland well for the passporting of services by such companies pan-EEA).

Ireland has a "substance" focused transparent tax regime aligned to the OECD BEPS principles and therefore robust from a European and Global Tax perspective.

Capital requirements

Regulatory capital requirements apply to the manco but will not then apply to the funds managed.

Minimum regulatory capital required: the greater of (i) €125,000 plus the greater plus 0.02% of AUM over €250m; and (ii) one quarter of fixed annual overheads. Amount is subject to a maximum of €10m – or €5m where the firm is subject to a suitable guarantee.

Additional professional indemnity cover required for AIFs managed.

Fully regulated investment firm Organisational requirements and conduct of business rules apply, akin to MiFID.
Substance/delegation

Substance/delegation No express requirements on type of staffing model to be applied.

Discharge of functions and delegation structure considered on the basis of qualitative criteria.

Irish mancos are permitted to delegate key functions out of Ireland to EEA and global based entities. It is common for such delegation to include tasks such as portfolio management, risk management, certain administration activities and distribution.

The Central Bank of Ireland ("Central Bank") has a clear and fast-track procedure for approving delegates who are authorised by other EEA competent authorities or globally recognised counterparts (including the major regulators in the US, Asia, EMEA region, LatAm and Australia).

The manco structure can also easily facilitate adding future substance, if required, where there are business/commercial reasons to do so.
Draft new rules on location (the Central Bank's corporate governance consultation,"CP86"): propose the flexibility to have directors based outside Ireland, but certain Irish/EEA residence requirements are expected to apply for a portion of directors and designated persons.

Fee model flexibility

The manco may assist in developing a fee model for a fixed ongoing charges amount with the balance of the fee retained (after fees/expenses of other service providers discharged).

 

Specific Factors Supporting a Super Manco

Multi-fund and/or dual authorised One manco can support a range of different fund structures, avoiding the need to have a separate manco or internally managed aspect to each fund range.
Also, as mentioned above, one entity (referred to as a 'super manco') can obtain dual AIFM and UCITS management company authorisations and also extend its licence to perform MiFID individual portfolio management functions.
Timing not affected No additional timing factors when seeking dual authorisation (relative to an application for a UCITS management company or AIFM only).

Single regulatory manual and framework

Super mancos only need to produce one regulatory manual (combined UCITS business plan/AIFMD programme of activity) across UCITS/AIF business lines, and are subject to a consistent regulatory framework based on the Central Bank's (now aligned) six key management functions1
Operational efficiencies (ongoing) Mancos which service multiple fund ranges can centralise functions at manco board level – although corporate funds still require a board (but can have directors in common with the manco) and have certain reserved powers, for example, approving accounts.
Regulatory efficiency (ongoing)  Having a manco servicing multiple fund ranges means there needs to be only one regulated entity (rather than one per fund range). This centralises the Irish governance obligations – requiring one single set of 'designated persons' to assist in discharging the Central Bank's six key management functions. There will also be efficiencies when updating the single UCITS/AIFMD regulatory manual or making other required regulatory changes.
New product approval efficiency Extremely efficient model for launching new product ranges: only product approval required, no need for any further manco-related approval.

Central Bank Authorisation Process

The information required in order to apply for authorisation includes detailed information on:

(a) Ownership details – standard type due diligence on all group entities with a direct/indirect holding of more than 10% in the applicant manco (with specific requirements depending on the type of entity).

(b) Financial projections – three-year projections reflecting fees/revenue, all costs and expense and demonstrating financial viability to be sustained.

(c) Regulatory capital – to be calculated based on AUM and amount to be placed on account for the applicant manco.

(d) Regulatory manual, compliance and operations – along with regulatory manual (combined UCITS business plan/AIFMD programme of activity), UCITS/AIFMD policies and procedures are required. Maples and Calder can provide tailored templates.

(e) Board composition, board support and designated persons to be determined in light of finalised CP86 measures and the client's own governance protocols.

How Can Maples and Calder Help?

We have extensive experience advising on the establishment, ongoing operation and passporting of Irish authorised mancos.

We have recently obtained authorisation for a number of dual authorised super mancos under the Central Bank's new six key management functions and have developed framework documents in line with the Central Bank's new requirements.

We have developed a range of Central Bank-endorsed AIFMD/UCITS compliant policies and procedures to supplement the terms of a typical business plan/programme of activity. Policies include those relating to: remuneration; delegation; valuations; anti-money laundering; best execution; order handling and order aggregation; complaints handling; inducements; personal transactions; accounting procedures; business continuity; recordkeeping; electronic data processing; risk management; exercise of voting rights; and conflicts of interest.

We have acted on some key firsts in this area, including:

(a) The establishment of the first UCITS management company authorised following the introduction of the enhanced management company regime in the UCITS IV Management Company Directive;

(b) The first UCITS management company passport approved by the Central Bank;

(c) The authorisation of the first Irish AIFM to successfully apply for a cross-border AIFM management passport; and

(d) The authorisation of the first Irish super manco to operate with a single regulatory manual across both UCITS and AIF business lines.

The Maples group offers a range of ancillary services to support mancos – including registered office/company secretarial, money laundering reporting officer, compliance officer outsourcing, tax registrations and ongoing filings, and provision of designated person support to mancos.

Footnotes

1 Regulatory compliance; fund risk management; operational risk management; investment management; capital and financial management; distribution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Peter Stapleton
Stephen Carty
Ian Conlon
Emma Conaty
Pádraig Brosnan
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.