The eagerly awaited legislation introducing the Irish Collective
Asset-management Vehicle ("ICAV") was
published by the Department of Finance today, 29 July 2014, in the
form of the Irish Collective Asset-management Vehicle Bill 2014
(the "Bill"). The partners in
Matheson's Asset Management and Investment Funds Group have
been to the fore in recommending and assisting in the development
and implementation of Ireland's new fund vehicle.
The Bill is now due to pass through the next stages of the Irish legislative process and it is anticipated that it will be enacted during the third quarter of 2014. On that basis, it is expected that ICAVs will become available, as an investment fund specific corporate vehicle, during the last quarter of this year. The Central Bank of Ireland has committed that it will be in a position to accept ICAV applications within two weeks of the legislation being enacted.
What is the ICAV?
The ICAV is a new corporate vehicle designed for Irish investment funds, providing a tailor-made corporate fund vehicle for both UCITS and alternative investment funds ("AIFs"). Conceived specifically with the needs of investment funds in mind, the ICAV, as a bespoke corporate investment fund vehicle, will have the advantage that it will not be automatically impacted by amendments to certain pieces of European and domestic company legislation that are targeted at trading companies rather than investment funds.
What are the benefits of the ICAV?
The ICAV will have a number of benefits over the existing Irish
corporate structure. These will include the ability to
dispense with AGMs in specific circumstances, the ability to
produce more streamlined audited accounts and the ability to more
easily amend constitutive documents. Another important
feature of the ICAV will be its ability to elect its classification
under the US check-the-box taxation rules. The Irish plc is
not currently permitted to check-the-box for US tax purposes,
meaning that it is treated as a separate entity and subject to two
levels of tax: one at the corporate level where the income is
earned and the second at the shareholder level when distributions
are made. An "eligible entity" ie, an entity that
can elect its classification under the check-the-box rules, can
elect for alternative, more favourable tax treatment. The
ICAV will be an eligible entity for these purposes.
A list of frequently asked questions on the ICAV can be accessed here. In addition, information on the key features of the ICAV can be accessed here.
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.