Ireland has introduced legislation aimed at encouraging hedge funds domiciled in other jurisdictions to move to Dublin, a move that was welcomed by the Irish Funds Industry Association.
The Companies (Miscellaneous Provisions) Act 2009, approved by the upper house of the Irish parliament on Friday, will enable investment funds to re-domicile to Ireland “simply and efficiently”, the IFIA noted.
The move came as some hedge funds and other types of alternative investments have begun to change their domiciles in response to recent G20 government crackdowns on the use of “tax havens” following the global economic downturn.
The Cayman Islands is home to the largest percentage of offshore-domiciled hedge funds, with an estimated 67% market share, followed by the British Virgin Islands with 11% and Bermuda with 7%, according to a recent report by London-based International Financial Services London.
IFIA Chief executive Gary Palmer said that although legislation already was in place to facilitate fund re-domiciling in Ireland, “it was generally agreed that a modern and specific legislative framework was needed”.
“Achieving the stated objective of providing a clear and simple framework for the re-domiciliation of investment funds will add further efficiencies for the benefit of both investors and industry alike,” he added.
Corporate identity retained
According to the IFIA, the new legislation had been drafted specifically to allow a fund structured as a corporate entity in another domicile to re-register in Ireland with its original corporate identity retained, ensuring continuity of activity and continuation of arrangements.
In addition, it simplifies certain elements involved in re-domiciling, including the ability to re-domicile a fund following a single meeting of shareholders in the jurisdiction from which the fund is seeking to move.
“The simplified process should thus reduce the burden and cost of re-domiciling by eliminating unnecessary shareholder meetings, notary declarations, certificates and reports,” the IFIA noted.
IFIA chairman Michael Jackson said that although Ireland has always offered “significant advantages” to asset managers, the new legislation adds to its reputation as “the place to do business”.
Ireland’s funds industry, which ranks third in Europe in terms of size after Luxembourg and France’s, just marked its 20th anniversary. It began in 1987, when the Irish government put together a package of measures, including tax incentives, aimed at turning a derelict part of Dublin’s riverfront into a world class financial services centre.
The first Irish fund was traded two years later, and quickly joined by scores more.
Today Ireland accounts for 13.2% of authorisations for cross-border distributions in Europe, No. 2 behind Luxembourg, and is No. 3 in net assets, with an 11.3% share of the market and €542.6bn, according to European Fund and Asset Management Association statistics.
Although Dublin is also the top hedge fund administrator, many hedge funds have been domiciled in low-tax jurisdictions such as the Cayman Islands, normally for tax reasons.
More information about the IFIA and the Irish funds industry may be found at www.irishfunds.ie.
