The correct answer, of course, is d. The next question, which is not quite as easy for many people who are not involved in the Irish fund management industry to answer – yet – is why.
In essence, the Irish Collective Asset-management Vehicle (ICAV) is nothing more than a new, Ireland-only corporate structure that has been designed to accommodate Irish investment funds in a particularly efficient way.
A bill which sets out the legal framework necessary to permit the ICAV to be formally introduced into Irish law worked its way through the Irish government’s approval processes last year, with the publication of a final draft expected imminently, according to sources in Ireland’s funds industry.
Once approved, the new ICAV is expected to be overseen by the Central Bank of Ireland, and will, according to a background sheet compiled by the Matheson law firm, which has been involved in the initiative to introduce the scheme, “sit alongside the public limited company, or “plc”, which “has been the most successful and popular of the existing Irish collective investment fund vehicles to date”.
Designed just for funds
The reason the ICAV is special, according to those in the industry, is because instead of retro-fitting existing legislation, designed for conventional corporations, such as widget manufacturers, to accommodate investment funds – as was done when Ucits legislation was first introduced – the ICAV has been built from scratch, to accommodate investment funds only, and will need no retro-fitting.
Or, as Matheson partner Anne-Marie Bohan explains, “it started out by taking the existing legislation, and dis-applying the pieces that didn’t make sense in the context of an investment fund”.
As one might expect of a scheme designed to be this easy to use, the push that led to its creation came “very much” from the funds industry itself, through a legislative sub-group of Ireland’s International Financial Services Centre, Bohan points out.
The industry’s efforts over the last two years saw the Irish Minister for Finance finally publish the so-called General Scheme of the Irish Collective Asset-management Vehicle Bill on 17 December, and at that point heard the minister state his intention of pressing ahead with the final drafting of the bill as a matter of priority.
Once the ICAV is in place, which is expected to be by the middle of this year, Bohan says, fund companies will find pretty much everything having to do with setting up and running funds in Ireland will be “much more streamlined”.
And this, in turn, is expected to increase the range of fund vehicles available to Irish fund promoters.
“The [Irish] Central Bank will be the central point of contact [for fund companies], in terms of both the authorisation and incorporation”, unlike now, with incorporation being done at the Companies Registration Office and the authorisation by the Central Bank, Bohan explains.
Existing Part XIII companies will be able to convert easily into ICAVs, she added, “so they’ll be able to keep their performance histories, which we expect will happen over time, though we’re anticipating that new structures coming into the market will opt to go with the ICAV”.
Similarly, she says, funds looking to redomicile in Ireland will also find it easier to come in as an ICAV.
“The ICAV will be available to both Ucits and alternative [investment funds, or AIFs], and you can have umbrella funds within it, with segregated liability between the sub-funds, and it will have a board of directors in the same way an existing company would have.
“The legislation also specifically states that it has to have a depositary, so again, it’s very specifically-focussed on being a funds-investment vehicle.”
A cut-out-and-save summary of the key features of the ICAV, as currently proposed, according to Matheson:
• An ICAV will not have the status of an ordinary Irish company established under the Irish Companies Acts. Instead, it will have its own legislative regime to ensure that the ICAV is distinguished from ordinary companies, and therefore not be subject to those aspects of company law legislation which are not relevant or appropriate to a collective investment scheme
• An ICAV may be established as an umbrella structure with a number of sub-funds and share classes; it may also be listed on a stock exchange
• Investors will own shares in the ICAV, and the ICAV will be able to issue and redeem shares continually, according to investor demand. In this regard, there is no difference between the ICAV and other open-ended collective investment schemes
• The Central Bank will be the supervisory authority for the ICAV. It will adopt a similar approach in respect of filings and review as that which applies to fund vehicles currently authorised by the Central Bank, depending on whether the scheme is a UCITS or an AIF
• The ICAV will have a governing document likely to be known as an instrument of incorporation (IOI). Similar to the memorandum and articles of association of a plc, the IOI will be the constitutional document of the ICAV. (The primary reason for differentiating between memorandum and articles of association and an IOI is to emphasise the distinction between the ICAV and existing plcs as different types of corporate entity)
• In the case of changes to the IOI, it is envisaged that there will be no requirement to obtain prior investor approval where the depositary certifies that changes to the IOI do not prejudice the interests of investors (similar to the requirements relating to changes to the trust deed of a unit trust)
• Like a plc, an ICAV must have a board of directors to govern its affairs. Similar to other collective investment schemes, the ICAV may either be managed by an external management company or be a self-managed entity
• Similar depositary requirements to those that currently exist for an investment company will apply to an ICAV (which will vary depending on whether the ICAV is a UCITS or an AIF)
• It is likely that the board of directors of an open-ended ICAV will be permitted to elect to dispense with the holding of an annual general meeting by giving written notice to all of the ICAV’s shareholders
• It is expected that the preparation of financial statements for an ICAV will be governed by the requirements for UCITS or AIFs, and that no additional requirements will be prescribed (save that the accounts be prepared in accordance with certain accounting standards)
• Existing funds established as plcs will have the option to convert to ICAV status. Provision will be made for the migration of funds domiciled outside of Ireland into Ireland as "ICAVs by continuation"
