Setting Up An Investment Fund In Ireland: Where To Start?

Starting an investment fund in Ireland involves several steps, and the process may vary depending on the fund structure and legal structure chosen. Here's an introduction to guide you through the key considerations and steps involved in establishing an investment fund in Ireland.

Firstly, you need to choose between two main types of fund structures: AIF (Alternative Investment Fund) or UCITS (Undertakings for Collective Investment in Transferable Securities). This decision is influenced by factors such as the location of target investors and the investment policy of the fund. Once the fund structure is selected, you must choose the legal structure, which could be a Unit Trust, ICAV, Common Contractual Fund (CCF), or other options outlined by the Irish Funds Industry Association.

The next crucial step is to obtain approval from the Central Bank of Ireland (CBI), which is responsible for authorising and supervising all collective investment schemes. The approval process involves engaging with specific service providers, submitting documentation, and ensuring compliance with regulatory requirements.

Additionally, it's important to consider the regulatory landscape and tax implications specific to Ireland. Seeking expert advice from organisations like PwC Ireland, which has a dedicated Asset and Wealth Management team, can provide valuable guidance on navigating the Irish regulatory and tax environment.

Moreover, establishing an investment fund requires careful planning, including creating a comprehensive business plan, branding and marketing considerations, opening a business bank account, ensuring compliance with tax authorities, and raising capital and finance.

By following these initial steps and seeking professional advice, you can be well on your way to successfully launching an investment fund in Ireland.

Choose a fund structure: AIF or UCITS

When setting up an investment fund in Ireland, one of the first steps is to choose a fund structure: AIF or UCITS. This decision will depend on several factors, including the location of target investors and the investment policy of the fund.

UCITS

Undertakings for Collective Investment in Transferable Securities (UCITS) are highly regulated retail products with liquidity constraints, strict investment and borrowing rules, and concentration limits concerning investments in any one issuer. The key common aspects of UCITS funds are that they must be open-ended and liquid. They may be set up as a single fund or as an umbrella fund with several ring-fenced sub-funds, each with distinct investment objectives and policies. UCITS funds are designed with the retail consumer in mind, ensuring appropriate protection levels. One of the principal advantages of a UCITS structure is the UCITS "passport," which allows it to be marketed with limited restrictions across the EU once authorised in a single EU country. Exchange-Traded Funds (ETFs) and Money Market Funds (MMFs) are typically established as UCITS funds.

AIF

All investment funds that are not UCITS are considered Alternative Investment Funds (AIFs). AIFs provide greater flexibility to investors as they are not subject to the same leverage limits and investment and borrowing restrictions as UCITS. AIFs can be established in Ireland as Retail Investor Alternative Investment Funds (RIAIFs) or Qualifying Investor Alternative Investment Funds (QIAIFs). QIAIFs are suitable for sophisticated investors and have a minimum subscription of €100,000. They can benefit from the Central Bank of Ireland's 24-hour fast-track approval process.

Legal Structures

Both UCITS and AIFs can be established using various legal structures, including Unit Trust, ICAV, Common Contractual Fund (CCF), Investment Company, or Investment Limited Partnerships. The choice of legal structure depends on the specific requirements and characteristics of the fund.

Choose a legal structure

When it comes to choosing a legal structure for your investment fund in Ireland, there are a few options to consider. The Central Bank of Ireland (CBI) is the regulatory body responsible for approving and supervising collective investment schemes, including both UCITS (undertakings for collective investment in transferable securities) and AIFs (alternative investment funds). Here are the legal structures you can choose from:

UCITS:

• Unit Trust: This is a type of investment fund where multiple investors pool their money together into a trust. The fund is managed by a trustee, who invests the pooled money in various assets, such as stocks, bonds, or real estate.
• ICAV (Irish Collective Asset-management Vehicle): An ICAV is a corporate structure specifically designed for investment funds. It offers flexibility and simplicity in the establishment and operation of investment funds.
• Common Contractual Fund (CCF): A CCF is a type of investment fund commonly used by pension funds and insurance companies. It allows multiple investors to pool their money and invest in a diversified portfolio of assets.
• Variable or Fixed Capital Companies: These are companies that issue shares to investors and invest the proceeds in a diversified portfolio of assets. Variable capital companies can issue new shares or redeem existing shares to accommodate investor demand, while fixed capital companies have a fixed number of shares.

AIFs:

• Unit Trust: Similar to UCITS, AIFs can also be structured as a Unit Trust.
• ICAV: AIFs can also utilise the ICAV structure, taking advantage of its flexibility and simplicity.
• Common Contractual Fund (CCF): Just like UCITS, AIFs can be established as CCFs, providing a suitable structure for pension funds and insurance companies.
• Investment Company: This is a company that pools money from investors and invests it in a variety of assets, such as stocks, bonds, or real estate. The value of the investment company's shares depends on the performance of the underlying investments.
• Investment Limited Partnerships (ILPs): ILPs are formed between one or more general partners (who manage the fund) and one or more limited partners (who provide capital). ILPs offer a flexible structure and are often used for private equity, real estate, or venture capital investments.

It's important to note that the choice between UCITS and AIFs depends on factors such as the location of target investors and the investment policy of the fund. UCITS are generally more suitable for retail investors and have stricter regulations, while AIFs cater to sophisticated or institutional investors and offer more flexibility in investment strategies.

Approval by the Regulator in Ireland (CBI)

The Central Bank of Ireland (CBI) is the regulator responsible for the authorisation and supervision of all collective investment schemes in Ireland, including both UCITS and AIFs. The CBI must approve the following service providers in advance of fund approval:

• An Irish-based depository
• An Irish-based administrator
• An Irish-regulated external auditor
• A management company (Unit Trust and CCF)

The CBI is the competent authority for the authorisation and supervision of UCITS. The UCITS authorisation process involves two steps: the approval of service providers (as outlined above) and the approval of UCITS documentation. Applications to the CBI for UCITS funds must include the following documentation:

• Prospectus
• Instrument of incorporation
• Agreements with service providers
• Business plans
• The fund's Key Investor Information Document (KIID)

The KIID is a concise two-page document that must be translated into the language of the investor. It must provide basic details on the fund's investment strategy, charges, past performance over 10 years, and risks and rewards. The CBI aims to approve UCITS funds within 25 working days of receiving a complete application.

For Irish-regulated AIFs, the key parties to the fund must be approved by the CBI, including the Alternative Investment Fund Manager (AIFM), directors, investment manager/advisor, fund administrator, depositary, and auditor. A detailed application form must also be submitted to the CBI, including the prospectus, constitutional documents, and material contracts with various parties to the fund.

The CBI can approve Qualifying Investor Alternative Investment Funds (QIAIFs) within 24 hours, while other funds typically take 6 to 8 weeks for approval. It's important to refer to the CBI for detailed information on the authorisation processes and documentation requirements for both UCITS and AIFs.

Fund re-domiciliation

Since 2010, it has been possible for investment funds established and operating in certain jurisdictions outside of Ireland to re-register in Ireland. This process is known as fund re-domiciliation. The Companies (Miscellaneous Provisions) Act 2009 provides a clear framework to minimise the challenges of re-domiciling a fund. The process ensures minimal disruption to the day-to-day management and distribution of the fund.

The legislation has been designed to allow a fund structured as a corporate entity in another jurisdiction to re-register in Ireland while retaining its original corporate identity. This ensures continuity of activity and the preservation of the fund's existing identity and track record. The new process eliminates the administrative aspects of creating a new fund and any associated tax issues that may have arisen from moving assets between funds.

The simplified process reduces the burden and cost of re-domiciling by removing the need for multiple shareholder meetings, notary declarations, certificates, and reports. It only requires a single meeting of shareholders in the jurisdiction from which the fund is moving and a single filing of registration documentation with the Companies Registration Office in Ireland, including a statutory declaration from a company director.

Funds domiciled in the following jurisdictions can take advantage of the new re-domiciling framework:

British Virgin Islands

Ireland's robust legal infrastructure, expertise in sophisticated fund structures and strategies, and compliance with OECD tax guidelines make it an attractive jurisdiction for fund re-domiciliation. The country's full funds product coverage, access to the EU, and extensive network of double taxation treaties further enhance its appeal.

Company branding and marketing

Branding can play a big part in the success of your business, especially if your target audience is the general consumer rather than other businesses. The name needs to be relatively unique, so conduct research to ensure that you are not accidentally branding yourself similarly to another business, especially one within your industry. Check with the relevant authorities that your chosen name is unique and available, and then register it.

As soon as possible, register your web domains in the market that you are looking to operate in. Think long-term and consider whether you plan on launching in other countries. It's also worth getting the .com version of the domain, as many people associate this with the internet and businesses based outside of the US operate a .com domain name.

Register your business name on all the social media channels. You won't have to pay for this, and even if you don't use the accounts immediately, they might come in useful at a later date if you start to carry out more digital marketing.

When first starting out, focus on covering the basics in terms of website and marketing. There is no need to invest heavily in expensive graphic design, web development or even copywriting when first starting out as these elements just increase your startup costs. Unless your business will rely heavily on these kinds of requirements, wait until your business grows and your online presence in search engines starts to generate income.

If you run a purely online business, you may need to consider design and development as part of your initial launch. Ultimately, try to cut any unnecessary expenses and instead focus on the core essentials to get your startup idea up and running as quickly and effectively as possible.

If you need to launch a basic website, you can find free design templates and even free systems such as WordPress to build a site upon. It is possible to build a small site very cheaply with the free tools and services that are available. If your business starts to be successful, you can always invest more and upgrade at a later date.

When it comes to marketing, look for ways to advertise your business without breaking the bank. There are a lot of different marketing techniques available, from PPC and SEO to content and affiliate marketing. If you need to do some marketing instead of relying on word-of-mouth, spend time looking at what your competitors are doing and focus on one or two aspects that you think you can carry out cost-effectively, which will give you fast results.

Frequently asked questions