Legal Structure

In regards to the Qualifying Investor Alternative Investment Fund, otherwise known as a QIAIF, there are numerous legal structures, which can support the QIAIF. 

These legal structures are: 

  • Irish Collective Asset-Management Vehicle (ICAV)
  • Investment companies
  • Unit trust
  • Common Contractual Funds (CCF)
  • Investment Limited Partnerships (ILP).

The following are detailed descriptions of these structures, which support the QIAIF. 

ICAV

The Irish Collective Asset-management Vehicle (ICAV) is an Irish legal structure available since March 2015. An ICAV has the ability to produce more streamlined audited accounts, to dispense with AGM’s in specific circumstances and has the ability to amend constitutional documents more easily than other legal structures. ICAVs are not considered companies and are not subject to the same requirements.  The ICAV is a new form of collective investment vehicles for UCITS funds and Alternative Investment Funds (AIFs). 

It provides managers and promoters with a corporate structure that is designed specifically for investment funds and which is not subject to rules or requirements designed for other forms of company, thereby helping to reduce administrative burden and cost.  ICAVs are tax efficient and there is no withholding tax or capital gains tax on distributions to non-resident investors, thus making the fund structure more appealing to American Investors. 

Key Features:

  • Investors in an ICAV benefit from limited liability protection (i.e. the liability of members of an ICAV is limited to the amount, if any, unpaid on the shares respectively held by them).
  • There is no requirement for an ICAV to have the aim of spreading investment risk.
  • The Central Bank is both the registration and the supervisory authority for the ICAV.
  • An ICAV may be established as an umbrella structure with a number of sub-funds and share classes.
  • ICAVs can issue debenture stock, bonds and other securities and may be listed on a stock exchange.
  • Paid up share capital must be equal to the net asset value of the ICAV.

Investment Company

As a corporation, an investment company is a separate legal entity, managed and controlled by its board of directors, which can enter into contracts in its own name.  A QIAIF established as a company may be structured as a stand-alone fund or as an umbrella fund. 

The assets are the property of the company and each investor holds shares in the company.  A depositary must be appointed to ensure the safekeeping of the assets on behalf of the company.  A QIAIF established as a company should be either self-managed or an established management company should be appointed.  The key aim is to spread the risk of the investment.  The paid-up share capital of the company must at all times equal the net asset value of the company, the shares of which have no par value.  

Unit Trust

A unit trust is created when the trustee and the manager of the trust, with the use of the management company, enter into a trust deed.  This is a constitutional document, or a contractual arrangement, which ensures that the trust is not a separate legal entity, with the result that the trust does not have power to enter into contracts on behalf of the trust.   The trustee is registered as the legal owner of the assets on behalf of the investors, who receive units, each of which represents a beneficial interest in the assets of the unit trust.

Unlike the formation of a QIAIF through an investment company, there is no requirement for a QIAIF unit trust to operate on the principle of risk spreading. 

Common Contractual Fund (CCF)

A Common Contractual Fund (CCF), introduced by the European Communities UCITS Regulations in 2003, is a collective investment scheme structure in Ireland.  They can be established for both UCITS and non-UCITS (Undertakings for Collective Investment in Transferable Securities Directive).   The constitutional document for a CCF is called the deed of constitution.  As an unincorporated body, CCFs are established by a management company, under which the participants by contractual arrangements participate and share in the property of the fund as co-owners. 

Investment Limited Partnership (ILP)

ILPs are collective investment schemes authorized by the Central Bank of Ireland under the Investment Limited Partnership Act, 1994.  Internationally, limited partnerships are a very popular structure, especially in the U.S. where an ILP may be formed by two or more persons. They shall have as its principal business, to be expressed in the partnership agreement establishing the investment limited partnership, the investment of its funds in property.