Investment Limited Partnerships

The Investment Limited Partnership ("ILP") is an Irish regulated partnership structure that offers a structuring solution for private equity, private credit, real asset, infrastructure, venture capital and other private fund strategies.

The ILP can accommodate all the typical features of a private fund partnership structure and is a comparable vehicle to the Luxembourg SCSp.

Typical Structure Diagram

What is an Investment Limited Partnership?

An investment limited partnership ("ILP") is a partnership structure established under the Investment Limited Partnerships Act 1994 (as amended) and regulated by the Central Bank of Ireland. An ILP is typically established as a Qualifying Investor AIF ("QIAIF") which is a flexible regulatory regime with limited investment restrictions. ILPs are particularly suited for use in private equity, private credit, real estate and infrastructure, venture capital and other private fund structures as they can accommodate all the typical features of a private fund partnership structure.

ILP structure:

Key Features

Key features of an Investment Limited Partnership

FLEXIBLE STRUCTURE

The ILP incorporates standard private fund features including but not limited to: the ability to have a closed-ended structure; excuse and exclude provisions; capital accounts; commitments, capital contributions and drawdowns; defaulting investor provisions; distribution waterfalls and carried interest mechanisms and advisory committees. There are no investment or borrowing restrictions applicable to an ILP structured as a QIAIF (except for loan origination funds and funds that invest in crypto and Irish real estate).

EU MARKETING PASSPORT

Where an ILP has appointed an authorised EEA alternative investment fund manager (AIFM), it can avail of the AIFMD marketing passport to market to professional investors throughout the EEA.

An ILP may also appoint a non-EEA AIFM or an Irish registered AIFM, in which case it may be sold in relevant EEA member states under applicable national private placement regimes, if applicable.

LP LIMITED LIABILITY

In general, a limited partner's liability will not exceed the amount of its capital contribution or commitment to the ILP unless the limited partner participates in the conduct of the business or management of an ILP. The ILP Act specifies certain activities (safe harbours) which are deemed not to constitute participation by a limited partner in the management of the ILP. This allows limited partners to sit on advisory committees, approve changes to the limited partnership agreement and consult with and advise the GP with respect to the business of the ILP, for example.

SPEED TO MARKET

ILPs structured as QIAIFs[1] can avail of the Central Bank's 24-hour approval process. The fund documents are submitted to the Central Bank but are not reviewed. Instead of undertaking a detailed review, the Central Bank relies on confirmations provided by the directors/manager and legal advisers of the ILP to ensure compliance with applicable Irish regulations. In general, the establishment of an ILP takes 8 to 12 weeks (including drafting the fund documents, negotiation of service provider contracts and completion of KYC).

[1] ILPs investing in Irish property are subject to a pre-submission process.

UMBRELLA FUND

An ILP may be established as a single fund or as an umbrella fund with segregated liability between sub-funds. Each sub-fund may be structured as an open-ended, closed-ended or open-ended with limited liquidity fund and have different investment strategies and terms.

EXCUSE AND EXCLUDE PROVISIONS

It is possible to provide for excuse (where an investor can be excused from an investment) and exclude (where the ILP can exclude an investor from an investment) provisions in a closed-ended ILP. Excuse and exclude provisions are permitted subject to the following conditions:

the excuse and/or exclude provisions are predetermined and documented by the fund (in respect of excuse provisions by way of a written document between the ILP and the investor prior to an investment being made in the ILP and, in respect of exclude provisions, by providing for the circumstances in which this may occur in the prospectus and/or limited partnership agreement (LPA));
a formal legal opinion (opinions of internal counsel are accepted) must be provided by the investor or the ILP (depending on the party invoking the provision) outlining the basis on which the excuse or exclude provision is being invoked; and
the board of the GP and AIFM must document (i) whether or not it accepts the formal legal opinion so provided, and (ii) the consequences of accepting or disagreeing with such opinion.

STAGED CLOSING

Limited partners may invest in an ILP at staged closings. The terms of the ILP can provide that limited partnerss admitted at later closings may participate in existing and future investments of the ILP or in future investments only. In order to facilitate equalisation, the limited partners admitted at a later closing are typically placed in a new class of interests and an equalisation factor is applied.

MANAGEMENT PARTICIPATION AND CARRIED INTEREST

Members of the investment management team may participate in an ILP on the basis of terms that differ from other LPs. This is typically facilitated by placing investment management members in a separate class from other classes. The terms and conditions applicable to the management class must be described in the LPA.

Carried interest mechanisms can generally be facilitated within an ILP in the same manner as in other partnership and corporate structures.

ISSUE OF INTERESTS AT A PRICE OTHER THAN NET ASSET VALUE

An ILP is permitted to issue interests at a price other than net asset value without prior Central Bank approval.

SIDE LETTERS

Side letters may be agreed with limited partners in the same way as other alternative investment funds in Europe. It is not necessary to disclose specific details of preferential treatment agreed with LPs, provided the types of preferential treatment that may be agreed with LPs are generally disclosed.

AMENDMENTS TO THE LIMITED PARTNERSHIP AGREEMENT

The limited partnership agreement of an ILP may be amended by a majority of LPs and GPs. The LPA can define what constitutes a major of LPs (e.g. by commitment, number, contributions). The LPA may be amended without LP consent if the depositary certifies that the alteration does not prejudice the interests of the LPs.

FUND DOCUMENTS AND DISCLOSURE

AIFMD and the Central Bank rules require that certain disclosures are made to investors in relation to the ILP and its terms. An ILP will require a limited partnership agreement and a prospectus or offering document. The prospectus is required to include information on the ILP's investment objective and policy and investment restrictions, the use of leverage (including the types permitted and maximum leverage permitted), valuation provisions, information on the services providers, conflicts of interest and fees and expenses associated with the ILP.

TAXATION OF ILP

The ILP structure is tax transparent for Irish tax purposes and therefore the tax analysis will depend on the domicile of the investor and tax advice will be required on a case-by-case basis. No Irish stamp duty applies to the transfer, exchange or redemption of interests in ILPs.

Service providers to an Investment Limited Partnership

Service Providers to an ILP

GENERAL PARTNER	The GP of an ILP is responsible for the management of the ILP. The GP has unlimited liability and is responsible for the debts and liabilities of the ILP. The GP of an ILP may be a corporate entity, a natural person or a partnership. The GP can be based in any jurisdiction. The board of directors of a corporate GP based in Ireland must include at least two Irish resident directors and one independent director (which may be one of the Irish directors). The GP is not regulated by the Central Bank but the directors of the GP are subject to the Central Bank's fitness and probity regime and must be approved by the Central Bank to perform a pre-approval controlled function. Information in respect of all directors (including personal details, qualifications and experience, other business interests, and any shareholdings held by them in the proposing entity) must be submitted to the Central Bank by the directors themselves via the Central Bank's portal. A change of the GP is subject to CBI approval.
AIFM	An ILP is required, pursuant to AIFMD, to appoint an AIFM. The AIFM is responsible for risk management, portfolio management, and also generally, administration and marketing. An AIFM may delegate risk management or portfolio management but not both.
INVESTMENT MANAGER	The AIFM may perform the investment management role but in many cases an investment manager is appointed by the AIFM. The investment manager has discretionary authority to invest and manage the assets of the ILP in accordance with the investment objective and policy of the ILP. If an investment manager proposes to manage an Irish collective investment scheme, such as an ILP, for the first time, the investment manager will need to be cleared by the Central Bank. For a non-EEA investment manager, it must submit a short application to the Central Bank and must satisfy the Central Bank of its experience and expertise and provide certain information including financial statements and proof of existing regulatory licenses. This process typically takes 4-8 weeks.
ADMINISTRATOR	The administrator is responsible for maintaining the books and records of the ILP, calculating the net asset value of the ILP and maintaining the limited partner register.
DEPOSITARY	The depositary provides custodial services and is responsible for "safekeeping" the assets of the ILP. A depositary also has certain oversight responsibilities with respect to the ILP.
INVESTMENT ADVISER	An investment adviser appointed by the investment manager provides non-discretionary investment advice in respect of the ILP.
AUDITOR	An ILP must appoint an auditor to audit the financial statements of the ILP.
MLRO	An ILP must appoint a money-laundering reporting officer.
COMPANY SECRETARY	If the GP is a corporate entity domiciled in Ireland, it will need a company secretary to maintain the books and records of the GP.

The Formation of an Investment Limited Partnership and Life Cycle – How Arthur Cox can help

Our fund establishment team advises on all types of funds including private equity, private credit, real estate, infrastructure, venture capital and many more. The team is fully equipped to advise clients throughout the entire life cycle of a fund from establishment to liquidation and everything in between.

STEPS
1. STRUCTURING	Advising on the choice of vehicle Tax structuring advice Advising on distribution strategy in light of target investors Analysis of the investment policy and advising on any regulatory requirements Introductions to service providers (including AIFMs, depositaries and administrators) and directors Establishing subsidiaries Establishment of carried interest vehicles, alternative vehicles and parallel funds
2. DOCUMENTS/NEGOTIATION	Drafting limited partnership agreement Drafting prospectus and supplements Negotiation with investors including side letters Drafting or reviewing financing documents Drafting general partner policies (if the general partner is incorporated in Ireland)
3. OBTAINING AUTHORISATION	Preparation of Central Bank application Submission of application to Central Bank (authorisation received in 24 hours) Obtaining marketing passport Assisting with any registrations
4. LAUNCH	Coordination of closings AML advice Closing any financings
5. DAY-TO-DAY OPERATIONS	Maintenance of regulatory compliance calendar Fund company secretarial services Assistance with quarterly board meetings Preparation of board packs Review of annual and semi annual accounts Board training Advice on regulatory changes Assistance with subsequent closings Advice in relation to change of service providers
6. WINDING UP/LIQUIDATION	Drafting liquidation step plan Liaising with liquidators Assisting with de-registrations

Comparison Table

ITEM	IRISH INVESTMENT LIMITED PARTNERSHIP	LUXEMBOURG SCSp
Legal Structure	Partnership - at least one general partner and one limited partner	Partnership - at least one GP & one LP
Separate Legal Personality	No	No
Regulatory Status	Regulated	Unregulated or Regulated
Legal Framework	Common law	Civil law
Applicable Legislation	European Union (Alternative Investment Fund Managers) Regulations, 2013, Investment Limited Partnerships Act 1994, Central Bank AIF Rulebook	Law of 12 July 2013 on alternative investment fund managers, Law of 10 August 1915 on commercial companies
Umbrella Fund/Protected Cell Structure Possible	Yes	No
Governance Structure	Unregulated general partner. Directors of general partner subject to Central Bank of Ireland fitness & probity regime	Unregulated
Irish Resident Directors Required	Only required if the general partner is Irish. Two Irish resident directors and One independent (which can be one of the Irish directors)	N/A
Location of General Partner	Possible to establish general partner outside of Ireland (e.g. US)	The partnership manager (gérant) (which is typically also the GP) must be in Luxembourg
Open/Closed-Ended	Both possible	Both possible
Maximum Number of Investors	Unlimited	Unlimited
Ability to Offer Preferential Terms to Certain Investors	Yes	Yes
Possible to Structure as a "non-AIF"	No	Yes
Required Service Providers	General Partner, AIFM, Depositary & Auditor	General Partner, AIFM, depositary & auditor
Speed to Market	24 hour regulatory approval by Central Bank Passports: One month (if Irish AIFM) two months (if no Irish AIFM)	No regulatory approval. Formed as soon as the LPA is finalised and entered into Passports: One month (if Lux AIFM) two months (if no Lux AIFM)
EEA Marketing Passport	Yes	Yes
Investor Eligibility	Qualifying Investors (i.e. professional investors, certain types of semi-professional/retail investors) & employees. €100,000 minimum commitment	Unrestricted[3]
Method of Investment	Capital commitments & capital contributions	Capital commitments & capital contributions
Investment Restrictions	Unrestricted (except for direct exposure to crypto assets and certain loan origination fund restrictions)	Unrestricted (except for certain loan origination fund restrictions)
Loan Origination Fund Requirements	Pre-2026: Certain Irish domestic rules 2026 onwards: Harmonised across all EU countries	Pre-2026: None
Borrowing/Leverage Limits	None (except for loan origination funds – currently 200% gross assets but to be harmonised across the EU from April 2026 (1) closed-ended 300% net ass value ("NAV"), (2) open-ended: 175% NAV)	None (except for loan origination funds – to be harmonised across the EU from April 2026 (1) closed-ended 300% NAV, (2) open-ended: 175% NAV)
Diversification Requirements	None (except for loan origination funds)	None (except for loan origination funds)
Tax – Fund/Entity Level	No Irish tax on income or gains from its underlying investments (assuming no assets related to Irish land). For tax purposes, income or gains are generally allocated to the partners VAT exemptions for provision of management services Treaty access may be available depending on investor profile. Couple with s.110 DAC below the fund for treaty access. Usual structuring considerations for an orphan S.110 No Irish WHT on interest payments paid in Ireland to an ILP Not considered to be 'acting together' solely on the basis of being partners in the same partnership. Revenue guidance and legislation to support this For private equity structures only, additional dividend withholding tax analysis needed if underlying structure/target is Irish	Under current law, a Luxembourg SCSp (the "Lux Fund") is transparent for Luxembourg corporate income tax (subject to the possible application of the anti-hybrid rules) and net wealth tax (NWT) purposes Provided certain conditions are satisfied, the Lux Fund will not be subject to Luxembourg municipal business tax (MBT) The Lux Fund could be subject to reverse hybrid rules unless it falls under the collective investment vehicle exemption applies. Majority of investor countries see the SCSp as tax transparent A non-regulated Lux Fund is not subject to any Luxembourg subscription taxes No stamp duty or other tax is payable in Luxembourg on the issue or transfer of interests by the Lux Fund
Tax – Investor Level	There is a withholding tax exemption available for distributions from an Irish ICAV to an ILP The ILP is tax transparent for Irish tax purposes and is not subject to Irish tax on its investment income and gains The ILP is subject to reverse hybrid rules. However, as a regulated fund, there are exemptions, particularly the collective investment vehicle exemption, and investors typically represent that they treat the entity as transparent. In practice, reverse hybrid issues can be navigated Typically no stamp duty on transfer of units	No Luxembourg WHT on any distribution (non-liquidating or liquidating), redemption or other payments made by a Lux Fund to non-Luxembourg resident investors Non-Luxembourg resident investors with no PE in Luxembourg are generally not liable to any Luxembourg income tax on income received and capital gains realized upon the sale, disposal or redemption of Lux Fund interests, assuming the Lux Fund does not directly or indirectly (through other tax transparent entities) invest in real estate located in Luxembourg or hold any significant shareholding in Luxembourg resident companies

[1] A professional client within the meaning of Annex II of Directive 2014/65/EC (Markets in Financial Instruments Directive)

[2] A knowledgeable investor/employee means (a) a company appointed to provide investment management or investment advisory services to the ILP; (b) a director of the GP or a director of a company appointed to provide investment management or investment advisory services to the ILP; or (c) an employee of a company appointed to provide investment management or investment advisory services to the ILP and is directly involved in the investment activities of the ILP or is a senior employee of the company and has experience in the provision of investment management services; and, in each case, the LP must certify that they are availing of the relevant exemption and that they are aware that the ILP is normally marketed to qualifying investors who are subject to a minimum commitment of €100,000 and they are aware of the risks involved in the investment.

[3] Marketing to professional investors is by way of the AIFMD marketing passport. Marketing to any investor other than a professional investor (e.g. semi-professional or retail investors) is via private placement

Why Ireland

Ireland is a highly attractive leading global fund domicile. Since the establishment of the funds and asset management industry in Ireland over 30 years ago, the industry has grown exponentially. Ireland is a renowned fund jurisdiction due to its:

Regulatory Environment: Ireland has a robust regulatory environment

Tax Benefits: internationally recognised, open and tax-efficient jurisdiction. Regulated Irish funds are generally exempt from tax on their profits. Favourable tax status for debt issuers/minimal corporate tax leakage. No withholding tax and limited VAT leakage

Skilled Workforce: extensive and skilled fund service provider industry and well-established financial services infrastructure

Strategic position within the European Union

Distribution: the EEA marketing passport facilitates cross-border distribution

International recognition: Irish funds can be sold in countries across Europe, the Americas, Asia and the Pacific, the Middle East and Africa

Easy to do business in

Common law legal system, similar to the US and UK

Sophisticated legal market

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.