We are pleased to feature, as this week’s edition of European Funds Comment, a guest post on our European Private Equity Blog from the Irish funds team at Maples. In this post, the Maples team reviews the latest proposals from the Irish government to reform its investment limited partnership structure, hoping that will attract more private funds managers to locate there.
By Ian Conlon and Jennifer Murphy of Maples Group
Following widespread anticipation in the Irish funds industry, the Irish Government has now published a draft bill – the Investment Limited Partnership Bill 2019 – to amend the existing Investment Limited Partnership (ILP) law in Ireland.
The Bill seeks to introduce a number of important changes which aim to position the ILP as a leading EU fund vehicle for private equity, real assets and sustainable finance. Although the Bill remains subject to further approval as it passes through the legislative process, this is nonetheless a very positive and welcome development for the funds industry in Ireland.
The ILP is a common law partnership structure which is established as an alternative investment fund authorised and regulated by the Central Bank of Ireland (CBI). Whilst the ILP was introduced in Ireland in 1994, only a handful of partnerships have actually been established, the factors behind which we discuss in our previous blog post which can be found here.
The Bill proposes the following amendments to the ILP regime in Ireland:
- revision of the definition of “limited partners” to allow for the ability to divide LPs into sub-categories for regulatory reasons, fee treatment, rights and voting etc;
- provision for the concept of a “majority of limited partners” to align with partnership structures in competing fund domiciles by providing flexibility so that an ILP can specify, for example, a majority by number, a majority by value, a majority by class or a majority that is higher than a simple majority;
- provision for a statutory novation of assets and liabilities on substitution of a GP without further formality to simplify the administration of changes in GPs;
- express confirmation of the ability to transfer a GP interest and provision for the liability of incoming and outgoing GPs;
- alignment of the rules on withdrawal of capital with other Irish investment fund vehicles;
- removal of the requirement for all partners to consent in writing to a material amendment of the LPA, allowing greater flexibility for making changes with majority consent and notification;
- provision for amendment of the LPA where provided in the LPA (i) upon certification by the depositary that the proposed amendment does not (a) prejudice the interests of LPs; (b) relate to any matter specified by the CBI as requiring approval by LPs; and (ii) where approved by a majority of partners;
- ability to establish ILPs as umbrella funds, with segregated liability between sub-funds; and
- inclusion of the ability to register an “alternative foreign name” in order to enable an ILP operating in a non-English-speaking jurisdiction.
We continue to watch this space, but the introduction of the Bill is certainly a positive step in the right direction and will hopefully open the Irish funds market to global PE, real asset and the growing number of sustainable finance and ESG asset managers looking to establish common law partnerships for distribution to European investors using the AIFMD passport.