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ICAV to become the ‘vehicle of choice’ for alternative funds

AUTHOR(S): Anne-Marie Bohan, Dualta Counihan, Elizabeth Grace, Gavin Coleman, Joe Beashel, Liam Collins, Michael Jackson, Tara Doyle, Philip Lovegrove, Shay Lydon
PRACTICE AREA GROUP: Asset Management and Investment Funds
DATE: 21.01.2014

The Irish government is creating a new type of fund vehicle, expected to be highly attractive to international asset managers.

The Irish Collective Asset-management Vehicle (ICAV) is a new type of Irish corporate structure, especially designed for investment funds. Legislation to allow for the creation of ICAVs is currently being drafted by the Irish parliament as a priority. It is expected to be passed early in 2014.

Michael Jackson, head of Matheson’s Asset Management and Investment Funds group, said: “The introduction of the ICAV shows the deep commitment of the Irish government to the funds industry. We anticipate that the ICAV will become the vehicle of choice for alternative investment funds in Europe.

“The introduction of the ICAV will provide an additional option for promoters, complementing the existing range of Irish fund vehicles available. The proposed ICAV legislation will not result in any changes for established plcs which will continue to co-exist with the ICAV.

“Matheson partners have been extensively involved in an industry project to introduce the ICAV. The proposals for the ICAV legislation demonstrate Ireland’s pro-active approach in meeting the evolving needs of fund promoters, and its competitiveness as a leading international fund domicile.”

What is an ICAV?

The intended features of the ICAV are already clear from the general scheme of the bill.

The key advantages anticipated are:

  • ICAVs will be a tailor-made corporate fund vehicle for both UCITS and alternative investment funds
  • It will not be subject to company law requirements inappropriate to collective investment schemes
  • An ICAV will be able to select its classification under US check-the-box taxation rules
  • An ICAV may be established as an umbrella structure with a number of sub-funds and share classes
  • It may be listed on a stock exchange
  • Investors will own shares in the ICAV which can be issued and redeemed continually according to investor demand
  • The board of directors will be permitted to elect to dispense with holding an annual general meeting
  • Existing funds established as plcs will be able to convert to ICAV status
  • Funds domiciled outside of Ireland will be able to easily re-domicile to Ireland as ICAVs by continuation

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