Irish Collective Asset-Management Vehicle (ICAV)
The ICAV is a corporate vehicle tailored specifically for Irish investment funds. Since its introduction in March 2015 the ICAV has established itself as the default structure for Irish investment funds in both the retail and professional investor space.
The ICAV is similar to existing Irish funds established as investment companies but with the significant advantage that the ICAV was specifically created for the Irish funds industry, enabling it to be more flexible than the investment company. The ICAV legislation essentially drew upon the best and most successful aspects of Irish company law, improving it in several material respects. The advantage of this is that with its own specific legislative code, the ICAV will not be impacted by amendments to European/Irish company law (which are targeted at ordinary companies and not funds), which will protect the ICAV from any unintended consequences of such legislative changes. The result of which is a more straightforward set of legal rules applicable to the ICAV with the potential for lower running costs.
The ICAV can be structured to suit all asset types and can accommodate traditional as well as alternative investment policies. It can also avail of a full suite of liquidity options making it suitable for mutual funds, hedge, real estate, infrastructure, lending vehicles, private equity, managed accounts and hybrid funds. The ICAV is available to both new and existing corporate structures, and is available to both UCITS and AIFs.
Across our global funds practice, we see many ICAVs being set up as parallel funds to Cayman Islands and British Virgin Islands structures for managers looking to offer leading offshore and onshore fund solutions to their investors. We have advised on some pairing of onshore and offshore vehicles in combined structures.
Maples' ICAV Expertise
Our Irish Funds Group has unrivalled expertise in the structuring, establishment, ongoing operation and distribution of ICAVs. We advised on the very first ICAV registered and authorised by the Central Bank and also worked on a number of other innovative ICAV launches (including the first UCITS ICAV and first private client ICAV structure). Since then we have retained our position as the leading Irish counsel on ICAVs and to date have advised on approximately 32% of all ICAV sub-funds authorised by the Central Bank, which is over twice as many as our nearest rival.*
*Source: Central Bank of Ireland Register, 30 September 2016
Key Features of the ICAV
- No Risk Spreading Rules - ICAVs are not subject to risk spreading obligations, making them extremely useful for single asset funds and funds with very concentrated positions. However ICAVs structured as UCITS are still subject to the principle of risk spreading and the diversification requirements under the UCITS Directives.
- EEA Passport - As the ICAV can be established as either a UCITS or an AIF structure, the ICAV can avail of the EEA UCITS and/or AIFMD marketing passports respectively.
- Separate Sub-Fund Accounts - Umbrella ICAVs can produce separate financial reports and accounts for sub-funds with differing year end dates (as opposed to one consolidated set of accounts for the entire umbrella). This has proven attractive for promoters of multi-manager or hosted platforms concerned by sensitivities in disclosing differing fee arrangements or portfolio compositions of individual managers within the same platform.
- Tax Efficiencies - The ICAV will constitute an investment undertaking for Irish tax purposes and will be subject to the same gross roll-up regime that currently applies to existing Irish investment funds.
- Ability to "check-the-box" for US tax purposes - An ICAV may elect to "check the box" and be treated as a pass-through entity for U.S. federal tax purposes.
- Efficient Constitutional Changes - There is no requirement to obtain prior shareholder approval for changes to constitutional document of an ICAV, the Instrument of Incorporation, where the depositary of the ICAV certifies that the changes to the Instrument of Incorporation do not prejudice the interests of shareholders.
- Ability to Dispense with AGMs - To reduce the administrative burden on funds, directors of an ICAV are permitted to elect to dispense with the holding of an annual general meeting (AGM) by giving written notice to all of the ICAV’s shareholders. There is a safeguard in that shareholders in the ICAV holding 10% or greater of shares can demand an AGM.
For more information about ICAV, contact our Dublin office on +353 1 619 2000.