On 15 May 2013, the Central Bank of Ireland announced that it would be accepting applications for the authorisation of alternative investment fund managers (“AIFMs”). Ireland is the first European regulator to do this and it will enable Irish-authorised AIFMs to avail of the AIFMD passport from 22 July 2013. The Central Bank has issued formal applications, an “AIF Rulebook” and an AIFMD questions and answers document that will serve to clarify the policies.
The Funds Industry In Ireland
The Irish funds industry currently services €2.2 trilllion in assets. Ireland is number one in the world for hedge funds, servicing almost half of the globe’s assets. Undertaking For Collective Investments (UCITS) funds are growing faster than anywhere else, with assets up 500% in 11 years. There are 12,500 people directly employed in the Irish funds industry.
The AIF Rulebook sets out all the rules that will apply to retail investor Alternative Investment Funds ("AIFs"), qualifying investor AIFs, AIFMs, AIF fund management companies, AIF administrators and AIF depositaries.
The Central Bank may not grant an authorisation to an AIFM unless:
The applicant is a body corporate with its registered office and head office in Ireland;
It meets specific capital requirements;
Its shareholders, directors and managers satisfy the Central Banks Fitness & Probity requirements;
Its directors and managers are sufficiently experienced in relation to the types of AIFs to be managed;
Its group structure does not prevent effective supervision by the Central Bank; and
The Central Bank is satisfied that the AIFM will be able to meet the conditions of the AIFMD Regulations.
An existing EU AIFM for an existing AIF must submit an application for authorisation within one year. During that one-year transitional period, the European Commission has stated that AIFMs are expected to comply on a best efforts basis with the AIFMD as implemented by national law.
Irish Qualifying Investment Funds (“QIFs”) can continue to launch sub funds during the transitional period. During this transitional period, the sub funds can operate under the existing rules until the AIFM is authorised.
Ireland’s Growing Fund Industry
The publication of the AIF Rulebook, the Q&A and the application forms has been a welcome development for the Irish funds industry. The funds industry is a competitive one and Ireland is seen as a significant provider of services. Early adoption of these new measures has improved the attractiveness of Ireland for this business.