Fund Re-domiciliation Guide - Carne

Fund Re-domiciliation Guide
A guide for investment managers / fund promoters to
re-domiciling funds to Luxembourg and Ireland
By Carne - “the Funds experts”
Contents:
Section
Page
1.
Preface
4
2.
What does fund re-domiciliation mean?
5
3.
Why consider fund re-domiciliation?
7
4.
Which fund domicile to choose?
10
5.
Which fund type to choose?
6.
Regulatory considerations
13
18
7.
Operating considerations
24
8.
Distribution opportunities / channels
28
9.
Taxation 30
10.
Process to re-domicile to Luxembourg
11.
Process to re-domicile to Ireland
12.
Advantages of fund re-domiciliation
36
13.
Cross-border merger
42
14.
15.
How can Carne help?
43
Carne contacts
32
42
Reverse
What does fund re-domiciliation mean?
At a simple level “fund re-domiciliation” means moving an existing fund from one domicile to another
e.g. moving a Cayman domiciled fund to Luxembourg or Ireland.
Amongst the matters that need consideration when assessing re-domiciliation of a company are the
following:
Justin Egan,
Managing Director of Carne Luxembourg
Fund re-domiciliation has recently become a very hot topic in the industry. Three years ago there was
little or no discussion about it. Now, most managers and promoters who have funds in “offshore”
jurisdictions such as Cayman Islands, BVI and the Channel Islands have considered the possibility of
re-domiciling their funds to a regulated jurisdiction such as Luxembourg or Ireland. Luxembourg has
for many years welcomed foreign funds wishing to re-domicile. According to ALFI (Association of
the Luxembourg Fund Industry), during the past 5 years over 540 fund units totalling €140 billion in
assets have re-domiciled to Luxembourg. Ireland recently passed legislation allowing for a similar
straightforward re-domiciliation process. A number of funds have already taken advantage of the
new process and have re-domiciled to Ireland. At Carne, we are seeing a huge trend towards the
establishment of funds in regulated jurisdictions. Many new alternative managers and promoters who
are launching their first funds are choosing to launch those funds in Luxembourg or Ireland, whereas
previously those funds would have launched in an “offshore” jurisdiction. This guide explores why
promoters should consider re-domiciling their funds, what issues and practical points they need to
think about, what options are available and the actual process for de-domiciliation. We have tried to
be as practical as possible in considering the issues relevant to managers, fund promoters and other
stakeholders.
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•
Choice of fund domicile;
•
Choice of fund product;
•
Regulatory considerations;
•
Operating considerations;
•
Distribution implications;
•
Tax implications for both the company and its shareholders; and
•
The legal process for re-domiciliation.
How can re-domiciliation be achieved?
There are a number of ways in which a fund re-domiciliation can be achieved for example:
•
The registered office of the foreign fund is transferred to Luxembourg or Ireland
•
The offshore fund contributes its asset and liabilities to a Luxembourg or Irish entity in
exchange for shares in the Luxembourg or Irish entity
•
Cross border fund merger / amalgamation
This booklet is focused on option i) as this option ensures the continuation of the legal personality of
the fund and normally should not give rise to tax consequences for the fund or its investors. Options ii)
and iii) may trigger tax events at either the fund or investor levels. Under a scheme of amalgamation
however, roll over relief in some markets may be available to certain investors to reduce or eliminate
such a potential tax liability. Option i) has recently become possible in Ireland as a result of new
legislation and this option has for some time been possible in Luxembourg for corporate structures.
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Why consider fund re-domiciliation?
There are many reasons why a manager / fund promoter should consider re-domiciling to an “onshore”
location such as Luxembourg or Ireland:
Investor demand / perception
Whilst there will always be demand for “offshore” funds and unregulated fund products, there is
an increasing trend post Lehman, Madoff and the banking crisis for more regulated and “safe” fund
products. What Luxembourg and Ireland both offer in this regard are:
• Fund products that are regulated
• Fund service providers that are regulated
• Strong corporate governance environment
Regulated fund products
The role of the CSSF (the Luxembourg regulator) and the Central Bank of Ireland (Irish regulator) is both
to approve the establishment of new funds and to supervise the running of those funds on an ongoing
basis. There is a wide variety of different regulated fund products in Luxembourg and Ireland from the
highly regulated UCITS to the less highly regulated SIFs and QIFs. Section 5 below describes these in
more detail. Each type of funds structure has laws and regulations designed to protect investors whilst
at the same time recognizing different investor types (retail, high net worth, institutional) and their risk
appetites.
There is an increasing trend post
Lehman, Madoff and the banking
crises for more regulated
fund products
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Fund service providers that are regulated
In addition to the laws and regulatory oversight of the funds, there are laws and regulations relating
to the service providers for Luxembourgish and Irish funds. For example regarding UCITS funds, all
major delegates including the promoter, management company / investment manager, administrator,
custodian and directors are subject a regulatory approval process and ongoing regulatory supervision.
A strong corporate governance environment
Luxembourg and Ireland have a long history of providing good governance to investment funds. In
Ireland, a fund must have a minimum of two Irish resident directors who are usually independent of the
promoter / investment manager. Luxembourg has no legal requirement for independent directors but
the trend is increasingly towards having independent directors on the boards of funds. Luxembourg
and Ireland have both recently published best practice codes of governance for investment funds.
Under EU directive (2006/46), listed fund vehicles must state in their annual financial statements that
they comply with such a code of governance.
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Distribution
Distribution of “offshore” fund products is usually by way of private placement. A fund domiciled in
either Luxemburg or Ireland offers the prospect of a fund “passport” either under the UCITS directive
or (from mid-2013) under the AIFM Directive. The distribution of UCITS products to all investor types
including retail, high net worth and institutional is well established within Europe, South America,
South Africa, the Middle East and Asia. The distribution potential of the UCITS product has established
UCITS as a global (and not just an EU) brand. The AIFM directive which has been recently published
provides for a fund passport within the EU from mid-2013 for EU domiciled funds managed by EU
domiciled managers.
by the local authorities. Post the implementation of AIFMD and the EU passport, there is a view that
member states may place closer scrutiny on the private placement practices in operation. Thirdly,
the AIFMD will impose some additional rules in relation to the continuing operation of the private
placement regime in Europe such as the requirement for cooperation agreements to be in place
between regulators in the different countries and reporting obligations to regulators.
Servicing
Luxembourg and Ireland are the two leading fund servicing centres in the world outside of the US. They
both have significant depth and breadth of expertise in servicing funds including lawyers, management
companies, administrators, custodians, auditors, tax advisors and independent directors.
Distribution channels and the fund registration process for UCITS funds is described in Section 8 below.
Taxation
Luxembourg and Ireland fund structures benefit from a large network of double tax agreements “DTAs”.
These agreements are for the most part not available to funds domiciled in the “offshore” locations. The
DTAs provide for reduced rates of dividend withholding taxes (versus the standard rates of withholding
tax) in many countries.
There are other tax advantages to regulated fund structures in Luxembourg and Ireland which are
discussed below in more detail in Section 9.
Legal and Regulatory Challenges
AIFMD will introduce huge changes in the way in which alternative (i.e. all non-UCITS) funds must
operate in Europe. For European based managers with existing “offshore” funds, the choice for the
time being is to continue to distribute their products via the existing private placement rules within
the EU or to consider the benefits of re-domiciling their funds to an “onshore” jurisdiction and avail of
the new passport under AIFMD. The concept of the EU passport is positive and will enable managers
and promoters to distribute in a way which was not previously possible. For one thing, distribution via
private placement in Europe only works in a handful of countries. Some countries such as France, Spain
and Italy have no private placement regime for investment into “offshore” products. The continuation
of the private placement regime (until such time as the regime may be “switched off” following the
recommendations of ESMA) does contain some uncertainties. Firstly, there is no guarantee that the
countries that currently permit private placement will continue to do so. Private placement rules are
country specific and can be changed at a country’s discretion. Secondly, there is a view that distribution
by way of private placement within those countries that permit it, is not heavily regulated or monitored
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Which fund domicile to choose?
Luxembourg and Ireland both have legal systems that welcome funds from other jurisdictions wishing
to re-domicile to an “onshore” location. Luxembourg and Ireland are the two largest fund servicing
centres in Europe for internationally distributed funds. These two fund centres have the necessary
infrastructure to service funds for international investors with a wide choice of administrators,
custodians, law firms, management companies, audit and tax advisors, consultants and independent
directors. As noted further below in Section 9, Luxembourg and Ireland are favourable fund domiciles
from a taxation perspective for both the funds and the management companies established to service
them.
Luxembourg and Ireland both have very comprehensive offerings in terms of fund vehicles and
servicing capabilities. We discuss the fund vehicles offered by Luxembourg and Ireland below in
Section 5. Some of the other factors to consider regarding the choice of fund domicile are as follows:
i) Legal System
private equity and real estate space as this industry is significantly larger than in Ireland. Ireland has
more specialist hedge fund service providers as traditionally many Cayman hedge funds have been
administered in Ireland.
iv) Taxe d’abonnement
Luxembourg has a tax on fund assets which is 5 bp of net asset value for non-institutional share
classes and 1 bp for institutional share classes per annum. Ireland has no equivalent tax although
there is a levy payable to the regulator which is a flat fee depending on the number of sub – funds up
to a maximum of €4,400 per annum per umbrella fund.
v) Independent Directors
In Luxembourg, none of the directors must be Luxembourg resident although there is usually at
least one Luxembourg resident director for governance and taxation reasons. In Ireland the fund
must appoint a minimum of two Irish resident directors. Regardless of the domicile of the fund, it is
considered good practice to have locally resident directors to anchor the tax residency of the fund.
Luxembourg has a continental European legal system whereas Ireland has an Anglo-Saxon
legal system. Despite the different legal systems, the nature of the legal agreements and fund
documentation are similar. Both jurisdictions have excellent law firms both locally based and
subsidiaries of the international law firms.
ii) Language / Culture
Business in Luxembourg is conducted usually in French although English is widely spoken and legal
documentation can be drafted and submitted to the CSSF in English, French or German. All business in
Ireland is conducted in English.
iii) Service Providers
Both Luxembourg and Ireland are very well serviced by administrators / custodians. Most of the
international service providers have substantial operations in both locations. Luxembourg service
providers are better suited to administering funds that sell directly to high volume retail investors
although funds that sell to retail investors through distributors / nominees are well serviced in both
locations. Most of the large international service providers operate in both locations and can offer
the same services in either Luxembourg or Ireland. Luxembourg has more service providers in the
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Which fund type to choose?
Luxembourg and Ireland have wide range of fund types, some of which are similar to the fund types
existing in “offshore” locations. In particular regarding funds marketed solely to institutional investors,
Luxembourg has the Specialised Investment Fund, “SIF” and Ireland the Qualifying Investor Fund,
“QIF”. Managers and fund promoters looking to re-domicile their funds to Luxembourg or Ireland may
wish to consider also whether their fund strategy would work in a UCITS format. UCITS opens up the
potential for a much wider distribution.
For detail on the issues involved in establishing and running UCITS funds, please refer to Carne’s
publication entitled, “UCITS Guide for Alternative Managers”.
A summary of the main fund types available in Luxembourg and Ireland is as follows:
Ireland
1. UCITS
During the past 5 years over 540
fund units totalling €140 billion
in assets have re-domiciled to
Luxembourg
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UCITS (Undertakings for Investment in Transferable Securities) is the European harmonized fund
product which can be sold on a cross border basis within the European Union (“EU”) based on its
authorization in one EU member state. UCITS also enjoy a high level of recognition in many non
EU countries. UCITS funds, while being suitable for sale to retail investors, are also widely sold to
institutional investors. UCITS are subject to detailed rules in eligible assets, risk spreading rules,
borrowings and use of derivatives.
Most asset types are permissible in UCITS (equities, bonds, money market instruments, collective
investments schemes, derivatives) provided that they are sufficiently liquid. UCITS funds must offer
a minimum of bi – monthly liquidity to investors. The main asset classes that are not permissible in
UCITS funds are commodities, real estate, collective investment schemes that are not highly regulated
and unlisted securities including private equity. There are however, ways in which some exposure can
be achieved to such asset classes including through indices and the “trash ratio” (which permits up to
10% of NAV of the fund to be invested in unlisted transferable securities).
UCITS master / feeder structures are permissible from 1 July 2011.
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2. Retail Non-UCITS
This fund type is suitable for retail investors. Passporting may be possible into some countries but
it doesn’t have the UCITS brand and (unlike UCITS funds) registration in other EU countries is not
guaranteed.
Retail non-UCITS funds can invest into asset classes such as commodities, real estate and unregulated
funds. Feeder funds and master / feeder structures are permissible subject to certain investor
protection restrictions. Closed-ended funds are also possible.
private equity). Feeder funds and master / feeder structures are permissible. Closed-ended funds and
limited liquidity funds are also possible.
As the QIF is not suitable for retail investors, it can only be marketed on a private placement basis
(although like all EU AIF for EU AIFMs, a passport will be available from mid-2013). The directors and
service providers (including the investment manager) must be approved by the regulator. Periodic
information must be sent to the regulator and the fund is subject to various regulations such as rules
on the valuation of securities.
3. Qualifying Investor Fund (“QIF”)
4. Professional Investor Fund (“PIF”)
The minimum investment requirement in a QIF is €100,000. QIFs are available only for sale to
“qualifying investors”:
The PIF is a kind of “half -way house” between a retail non-UCITS fund and a QIF. It does not have the
same blanket exemptions from investment and borrowing rules that a QIF would have. There are a
number of investment limits, borrowing and counterparty limits that apply and as such the PIF is a less
flexible product than a QIF. The advantage of the PIF over the QIF is that there is no investor test. The
minimum investment requirement is €100,000 subject to similar exemptions to those noted above for
QIF investors. Like the QIF, a PIF is not suitable for retail investors and it can generally only be marketed
on a private placement basis.
- An investor who is a professional client within the meaning of Annex II of Directive 2004/39/EC
(Markets in Financial Instruments Directive); or
- An investor who receives an appraisal from an EU credit institution, a MiFID firm or a UCITS
management company that the investor has the appropriate expertise, experience and knowledge to
adequately understand the investment in the scheme; or
5. Special purpose companies (i.e. Section 110 companies)
- An investor who certifies that they are an informed investor by providing the following:
a) Confirmation (in writing) that the investor has such knowledge of and experience in financial
and business matters as would enable the investor to properly evaluate the merits and risks of the
prospective investment; or b) Confirmation (in writing) that the investor’s business involves, whether for its own account or
the account of others, the management, acquisition or disposal of property of the same kind as
the property of the scheme.
There are exceptions from qualifying investor criteria and the minimum investment level for the
management company, general partner, investment management company, investment advisory
company, directors and certain employees of same.
This is a popular fund type for many alternative strategies. There are very few investment or
borrowing limits that apply although there are some rules for certain fund types, such as property
funds. Physical short selling and re-hypothecation of assets is permissible. There are no limits on
leverage. There are no asset class restrictions and less liquid asset classes can be accommodated (e.g.
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These are taxable non – regulated vehicles that are often used as subsidiary vehicles for QIFs or other
funds. As the vehicle is taxable it has the potential to access the wide network of Ireland’s double tax
agreements (DTAs). Although taxable, usually the profits and therefore the taxes are kept minimal
using structuring techniques.
Luxembourg
1. UCITS
The rules relating to UCITS in Luxembourg are similar to those in Ireland as described above. One
area where there is a difference between Luxembourg and Ireland concerns the requirement for the
“promoter”. UCITS funds launched in Luxembourg and Ireland must have a fund “promoter”. The
promoter is usually the management company, investment manager or distributor but can sometimes
also be another party. The promoter must be a regulated entity in an approved jurisdiction and must
have a track record in promoting funds or be able to demonstrate that it has sufficient expertise.
In Luxembourg, the promoter must have a minimum capital of around €7.5 million. The CSSF
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(Luxembourg regulator) takes the view that promoters have a level of ongoing responsibility for the
running of the UCITS and therefore must usually have a majority of members of the Board of Directors
of the fund. In Ireland, the capital requirement for the promoter is €635,000.
2. Part II Funds
These are similar to the Irish retail non-UCITS fund (see above). They are also highly regulated products
with various investment limits applying. Although they can be passported into certain countries, they
don’t benefit from an automatic ability to passport within the EU. The range of eligible assets is also
broader than UCITS.
5. Securitisation Vehicle
This vehicle is used for securitisation type investments. There are no diversification requirements and
all investors (including retail investors) can invest into such a fund.
6. Soparfi
This is similar to the Irish Section 110 company and is unregulated and taxable. Like the Section 110
vehicle, there is wide potential access to Luxembourg’s global network of DTAs. Actual tax paid by a
Soparfi is usually small. Soparfis are commonly used in private equity and real estate vehicles.
3. Specialised Investment Fund (“SIF”)
The Luxembourg SIF is a similar product to the Irish QIF. There are very few investment or borrowing
limits. There are no restrictions on eligible asset types and limited liquidity is possible.
Only “well informed investors” may invest in a SIF. A well informed investor meets the following
criteria:
•
he / she has confirmed in writing that he / she adheres to the status of a well-informed
investor and
•
(i) he / she invests a minimum of €125,000 in the specialised investment fund, or
•
(ii) he / she has been the subject of an assessment made by a credit institution within the
meaning of Directive 2006/48/EC, or by an investment firm within the meaning of Directive
2004/39/EC or by a management company within the meaning of Directive 2001/107/EC,
certifying his / her expertise, his / her experience and his / her knowledge in adequately
apprising an investment in the specialised investment fund.
4. Risk Capital Investment Company (“SICAR”)
The SICAR is a fund that is restricted to investment in securities that represent risk capital. This is
generally for investment either directly or indirectly in unlisted private equity and venture capital
entities. There are no diversification requirements. Investment can be in the form of shares, bonds,
warrants and other security types.
The investor criteria and minimum investment limit are similar to the requirements of the SIF (see
above).
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Regulatory considerations
The process for re-domiciling a fund from an “offshore” domicile to either Luxembourg or Ireland is
considered further in Sections 10 and 11 below. The process of re-domiciling a fund involves a number
of steps, one of which is obtaining regulatory approval from either the CSSF (Luxembourg) or Central
Bank (Ireland). Once regulatory approval has been obtained, the fund can then go through the redomiciliation process. The regulatory approval process can be summarised as follows:
i) Promoter Approval
All regulated funds in Ireland, including QIFs must have a promoter. All funds in Luxembourg
established under the 2010 Law i.e. UCITS and Part II funds must have a promoter*. There is no
promoter requirement for SIFs.
The CSSF / Central Bank will assess the promoter’s suitability to promote a fund based on criteria
such as the promoter’s own regulation together with the level and depth of its experience in the
investment fund area. There is also a minimum capital requirement. In Ireland the minimum
capital requirement is €635,000 whereas in Luxembourg the CSSF normally looks for minimum
capital in the region of €7.5 million.
*As of the date of this publication, the promoter requirement in Luxembourg is under review.
ii) Fund Approval
There are a number of aspects to the fund approval process:
Approval of Service Providers
The Fund or Management Company must appoint various service providers in relation to the
running of the Fund. The main service providers will need to be authorized by the CSSF / Central
Bank:
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Directors
All directors appointed to a regulated fund (UCITS, SIF, QIF etc) will need to
be authorized and approved by the CSSF / Central Bank. The qualifications
and experience of the directors will be taken into consideration in relation
to the approval. In Luxembourg, a detailed CV must be submitted together
with a “Statement of Honour”, copy of identification document and extract
of police records. In Ireland, there is a detailed questionnaire which must be
completed.
Promoter
As above
Investment Manager / Management
Company
The CSSF / Central Bank will request details of the Investment Manager /
Management company. UCITS funds and QIFs / SIFs require a regulated
investment manager from a recognized jurisdiction.
Administrator
Normally a fund or management company will delegate certain functions
to a regulated Administrator in the country of domicile of the fund. It
is possible for the Administrator to delegate certain elements of the
administration process outside of the jurisdiction. UCITS IV (under the
management company passport) enables the Management Company and
(by delegation) the Administrator to a UCITS fund to be based in another
EU country.
Custodian/ Depositary
A fund must appoint a regulated Custodian / Depositary in the country
of domicile of the fund. Often the Custodian / Depositary will appoint a
global sub - custodian who may be based in another country. The Custodian
/ Depositary has a duty of oversight over any appointed sub – custodians.
Legal Advisors
A law firm in Luxembourg or Ireland will be appointed. The law firm will
draft the prospectus and prepare / review all legal documentation. They will
liaise with the CSSF / Central Bank, prepare the submissions, deal with all
queries and re-submit revised documentation until authorization is granted.
Auditors
An annual audit is required.
Tax Advisor
Usually a tax advisor is required to review the section of the prospectus
relating to taxation.
Distributor(s)
The party or parties appointed to distribute / market the fund in different
countries.
Company Secretary/ Domiciliary
Agent
Required for corporate structures to keep company minute book, arrange
board meetings, organize general meetings etc.
Listing Agent
If the fund is to be listed on the Luxembourg or Irish Stock Exchange, it is
usually necessary to appoint a local listing agent.
Foreign lawyers/
Tax advisors/ Paying agents
For UCITS funds, if the fund is to be registered for public distribution in various
countries (either within or outside the EU), it will sometimes (depending on
the country) be necessary to appoint local lawyers, translators, paying agents
and tax advisors. Each country has different registration requirements and
it is necessary to register separately in each country. There are ongoing
filing requirements and additionally in some countries, ongoing taxation
obligations. The process for registering funds for public distribution in
various EU countries has been simplified under UCITS IV.
The other parties to a fund who are appointed but are not required to be authorized by the CSSF /
Central Bank include:
Consultant
See section 12 below for services that Carne can provide.
Legal Documentation
The process of re-domiciling a fund involves the amendment of certain existing legal documents
and the drafting of some new documents some of which will be reviewed and commented upon
by the CSSF / Central Bank:
Prospectus
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The prospectus or offering document will need to be amended to reflect the
laws and practices of Luxembourg / Ireland and other changes such as to
service providers, directors etc.
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Key Investor Information Document /
Simplified Prospectus
This is a UCITS only document. It is a short form summary of the key features
of the prospectus. The Simplified Prospectus has been replaced under UCITS
IV by the Key Investor Information Document.
Risk Management
Process Statement
This is a UCITS only document (although changes are being proposed to the
SIF Law which will require a Risk Management Process to be put in place
for SIFs). The risk management process statement (“RMP”) is a document
which describes the use of derivatives in a UCITS fund, the risks associated
with those derivatives and the controls and procedures in place to mitigate
those risks. It describes the systems in place and the people involved in
trading the derivatives and managing the risks. Under UCITS IV, the scope of
the RMP has been expanded to include all fund risks including operational
risks and liquidity risks.
Business Plan / Substance Application
This is a UCITS only document. This document, called the “Substance
Application” in Luxembourg and the “Business Plan” in Ireland, sets out
the governance framework for a UCITS management company or selfmanaged fund. It names the directors and designated individuals /
conducting persons (or dirigeants) their roles and responsibilities, frequency
of board meetings, reporting that they will receive, escalation process etc.
In Luxembourg, a business plan must also be submitted to the CSSF, in
addition to the substance application, which shows forecast growth in asset
under management, target markets etc.
Constitutional
Documentation
Changes to the constitutional documentation such as the Articles
of Association / Incorporation will be required to reflect the laws of
Luxembourg / Ireland.
Legal Agreements
The main legal agreements will need to be amended to reflect laws in
Luxembourg / Ireland and changes to parties. A Custody agreement will
need to be drafted which reflects the roles and responsibilities of the
Custodian under Luxembourg / Irish law.
Operating Agreements
Operating agreements such as ISDA / CSAs will need to be reviewed and may
need to be amended to reflect legal and regulatory practice in Luxembourg
/ Ireland.
For UCITS funds, it normally takes between 6 – 12 weeks for the regulator to review and approve
all fund documentation. This process usually involves a number of rounds of comments on draft
documents. For the Irish QIF, the Central Bank does not review the documentation and approval
is granted within 24 hours of the making of a completed submission (which includes a number of
certifications from the lawyers and directors). A Luxembourg SIF can be launched without CSSF
approval but the CSSF will review the documentation and can revert with comments post launch.
Consequently, most advisors recommend documentation to be submitted and reviewed by the CSSF
pre - launch. This process normally takes 4-8 weeks.
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Operating Considerations
Existing
relationships
The existing service providers may also operate in Luxembourg and /
or Ireland in which case the re-domiciliation process becomes simpler.
Otherwise, the fund promoter / investment manager may have some
existing relationships for other funds / products that it can leverage. For
example, some PBs also offer administration services.
Fees
Although the service provider market is very competitive, fees can vary
significantly. The methodology for levying fees also varies between
companies. Some service providers have simple charging methodologies
where various services are bundled together whereas others have much
more granular methodologies where everything is charged for separately.
It is important therefore when comparing the fees of different providers,
to model the potential fees under different scenarios such as assets levels,
shareholder trading volumes, security trading volumes etc. It is also
important also to examine the effect of minimum fees.
Service
The chosen service provider should be a good fit for the fund from a client
servicing perspective. Service quality can vary not only between service
providers but also for different clients within the same service provider.
In our experience, the key point is that the service provider values the
promoter’s business sufficiently and can provide sufficient evidence of this.
A fund re-domiciling to Luxembourg or Ireland may need to consider the appointment of new service
providers depending on who is already servicing the fund and whether those parties operate in
Luxembourg / Ireland.
Custodian / Depositary
All regulated funds in Luxembourg and Ireland must appoint a local Custodian / Depositary.
Luxembourg and Ireland are both very well serviced with custodians. All of the large international
custodians operate in both jurisdictions and there is also a selection of other good local / regional
banks offering such services. Sub – custodians can be appointed and these can be based in other
countries subject to effective oversight and supervision. For QIFs and SIFs, prime brokers (“PBs”) can
be appointed by the funds. UCITS can also appoint PBs although they may not be described as such.
They must adhere to UCITS regulations (assets must be maintained in segregated custody accounts
and cannot be re-hypothecated, stock and cash borrowing is not permitted). In Luxembourg, a PB can
be directly appointed by a UCITS under a tri-party agreement with the UCITS and the Custodian. In
Ireland a PB can only be appointed as a sub – custodian of the Custodian.
Management Company
A fund re-domiciling to Luxembourg or Ireland will need to consider whether or not to appoint a local
management company. For corporate vehicles, it is not necessary to appoint a local management
company but this may be advantageous in some situations to fulfill local substance and oversight
requirements.
Administrator
Most of the global custody groups operating in Luxembourg and Ireland also offer administration
services and usually like to offer a “full service” of administration and custody services. There are also
some specialist administrators for alternative funds such as hedge funds, real estate and private equity
funds although many of these are now owned by the large global service providers.
In choosing a Luxembourgish or Irish service provider, there are some factors to consider:
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Operating
considerations
Although all the large service providers offer a good all round service, there
are differences in the capabilities of the service providers. Depending on
the type of fund being re-domiciled there may be some service providers
who will have an operating edge over others in certain key respects. In our
experience, some of the key points to consider are:
- Transfer agency systems / retail capabilities and links to distribution
platforms (relevant mainly for UCITS funds)
- Performance fee calculations and ability to calculate performance fee
adjustments at shareholder level
- Derivatives pricing capabilities
- Extent of sub - custody network
- Reporting tools
- Communications links to investment managers (trade reporting and
reconciliations)
- Specialist private equity / real-estate expertise
The ability of service providers to offer certain middle office services and
other value added services (particularly for more complex strategies or
those using derivatives) such as:
- Risk reporting (including value at risk)
- Post-trade compliance monitoring
- Performance attribution
- Collateral management
- Trade matching
- Cash management
- FX services including currency hedging
- Securities lending
Transition
management
capability /
experience
P 26
If the re-domiciliation will involve a change of administrator and / or
custodian, significant consideration should be given to the expertise and
experience of the new service provider in managing such transitions. A
change of fund administrator, in particular, is a major project even for
non – complex funds. This will be particularly important from a KYC / AML
perspective. The “receiving” administrator or transfer agent will need to
ensure that it has complete AML documentation in place for all investors
to the standard requirement under Luxembourgish or Irish laws and
regulations.
The re-domiciliation of a fund to
either Luxembourg or Ireland
may impact positively on the
distribution opportunities for
the fund
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Relationships
with PBs and OTC
counterparties
For SIFs and QIFs, normally PBs and OTC CPs can be appointed directly by
the fund.
Regarding UCITS, the appointment of “PBs” and OTC counterparties can
be a little more complex as counterparty risk needs to be managed within
the UCITS limits and sometimes the fund’s securities will be held at the
custodian (rather than at the “PB”). There are some models in place to
manage this process and some service providers have negotiated operating
models with some of the well known “PBs” / OTC CPs.
Compliance / Risk Management
If the fund is to re-domicile as a UCITS then proper compliance and risk management systems and
processes will need to be in place to monitor all of the UCITS restrictions on a pre and post trade basis.
Many alternative managers do not have this functionality and this may require some development pre
launch of the UCITS.
For SIFs and QIFs there are not so many investment limits but there may be some and accordingly
appropriate systems and process will also need to be in place for these (although clearly much less
complex than for UCITS funds).
Distribution opportunities / channels
The re-domiciliation of a fund to either Luxembourg or Ireland may impact positively on the
distribution opportunities for the fund.
The first point to consider is the regulatory status of the fund after re-domiciliation i.e. whether the
fund will be a UCITS or a non – UCITS (e.g. SIF or QIF).
UCITS
The UCITS Directive grants to UCITS funds the ability to distribute cross-border in the EU, whereby
funds authorised as UCITS in one EU jurisdiction can be publicly distributed and marketed to
retail clients in all other EU jurisdictions, subject to a notification process to the foreign regulatory
P 28
authorities.
The distribution opportunities for UCITS funds are therefore not confined to the home domicile of the
fund but instead can be found across the wider EU market. In addition, there are extensive distribution
opportunities for UCITS funds further afield in Switzerland, Asia, South America, and South Africa. In
those regions, UCITS funds are widely recognised by the supervisory authorities and investors and are
regarded as being highly regulated and investable products characterized by a strong governance and
oversight framework and bound by careful investment restrictions.
While the UCITS status of the fund and its cross-border distribution potential are technically not
required for distribution to non-retail clients, UCITS funds are increasingly the preference of a large
number of professional investors across EU jurisdictions and globally, including insurance companies,
corporate and retail banks, funds of funds, pension funds, private banking groups and distribution
platforms. Investors such as insurance companies, funds of funds or pension funds will devote (either
due to regulatory restrictions, risk appetite or for tax reasons) a greater allocation of their portfolios to
regulated funds such as UCITS.
Process for Registering UCITS Funds
A UCITS authorized in one EU country benefits from the passport which allows it an automatic right
to register in all other EU countries. This process has been greatly simplified under UCITS IV. It now
involves regulator to regulator notification and in most cases, only the Key Investor Document (2 page
summary document of the fund) needs to be translated.
The process for registering funds in non-EU countries does not benefit from the EU passport and there
is therefore no automatic entitlement for a UCITS fund to register in a non-EU country. However, many
non-EU countries are very familiar with UCITS products and registration is possible by following a
standard process. In some countries there are rules which make it difficult for certain “sophisticated”
strategies to be sold to retail investors. In these countries, there may be an option to register the fund
on an institutional rather than a retail basis.
Non – UCITS
It may be possible to register some non – UCITS funds for distribution in certain countries but generally
speaking such funds are distributed on a private placement basis to mainly institutional and HNW
investors, in those countries that have a private placement regime. The private placement rules vary
considerably from country to country and some countries do not currently have a private placement
regime.
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AIFMD has proposed a number of changes in the distribution of non – UCITS funds:
•
Post implementation in mid-2013, EU domiciled non – UCITS funds of EU investment
managers will benefit from the new EU passport for EU professional investors
•
Post 2015 and subject to advice from ESMA, the passport will be extended to non- EU
funds and non-EU investment managers
•
Post 2018 and again subject to advice from ESMA, the private placement regime may be
abolished
EU domiciled non – UCITS funds (of EU managers) will have the advantage over non-EU funds of
being able to avail of the new passport under the AIFMD. There are also some potential challenges
to the continuation of the private placement regime as mentioned earlier such as the possibility that
governments may pay closer scrutiny on the operations of these regimes or that they may discontinue
such regimes. Also there are cooperation agreements to be put in place between regulators in the
different countries and reporting obligations to regulators, in relation to the continuation of the
placement regimes.
Taxation
Generally speaking regulated funds that are domiciled in either Luxembourg or Ireland are regarded as
“tax neutral”. This means that there is no tax levied at the fund level (subject to some exceptions see
below). Investors must consider their own tax position when investing in funds. Unregulated funds
such as Section 110 companies in Ireland and Soparfis are required to pay tax on certain income and
profits but usually they are structured in such a way that they pay minimal taxes.
•
The EU Savings Directive requires (for certain types of funds - mainly fixed income funds)
that paying agents report shareholder redemption and distribution activity to local tax
authorities. Some countries operate a withholding tax on distributions and redemptions in
lieu of reporting information to the tax authorities. Luxembourg investors can opt for either
system – withholding or disclosure. The rules apply to payments made by paying agents
to individual investors who are resident in a different country to the paying agent.
•
Value Added Tax is a tax that is levied on certain types of expenses, usually professional
fees. Generally the main expenses in a fund such as management fees, administration fees
and custodian or depositary fees are exempt from VAT. However, expenses such as legal,
audit and professional fees will usually have VAT levied at the rate applicable in the EU
member state. It may be possible to reclaim a portion of the VAT paid.
•
Certain countries have tax rules that if followed offer a more favorable tax treatment
to some investors (or avoid a less favourable treatment), particularly for UCITS funds.
Examples include “reporting status” for certain UK investors, tax transparent status in
Germany and “white status” in Austria. Funds that have investors in such countries will
need to consider complying with local tax rules in these countries which usually involve
submitting an annual tax return and ongoing publication of certain information. Most
administrators in Luxembourg and Ireland will be familiar with these requirements and will
be able to produce the required reporting. It may be necessary to appoint local tax agents
for the filing of annual tax returns in these countries.
Generally speaking a re-domiciliation of a fund which involves the transfer of the registered office to
Luxembourg or Ireland should avoid triggering tax consequences for the fund or for investors. Clearly
specialist tax advice should be sought in relation to specific cases.
One of the main advantages of re-domiciling funds to Luxembourg or Ireland is to take advantage
of the wide network of DTAs enjoyed by both countries. Most “offshore” countries do not have such
a network of DTAs. In many countries the rates of dividend withholding tax for securities owned
by a regulated Luxembourgish or Irish fund are significantly less that for an equivalent “offshore” or
unregulated fund.
There are a number of other tax considerations in establishing funds in Luxembourg or Ireland:
•
Luxembourg imposes a “taxe d’abonnement” on fund assets at 5 bp for retail assets 1 bp
for institutional assets.
P 30
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Process to re-domicile to Luxembourg
3. Corporate decision to relocate by the shareholders and/or the management of the offshore fund
in compliance with offshore laws and regulations.
Luxembourg offers the attractive combination of a highly specialised network of service providers and
a strong regulatory framework. The proposition is enhanced by a large number of fund regimes offered
to cater for the needs of both managers and investors. Promoters and managers have been drawn over
the decades to Luxembourg for the flexible and regulated environment.
Luxembourg represents one of the main options for managers willing to relocate their offshore funds
into Europe. The different regimes – ranging from regulated sophisticated retail products to funds
not allowed for distribution to the wider public – accommodate different investment techniques and
marketing needs. The process of re-domiciliation to Luxembourg is influenced by the legal structure
adopted by the receiving Luxembourg entity and the legal restrictions existing in the home jurisdiction
of the re-domiciling entity.
4. Offshore fund documentation – especially articles of association - should be amended to comply
with Luxembourg legal and regulatory requirements. Fund features (e.g. share classes) may have to
be amended.
Change of the registered seat
One of the options to re-domicile to Luxembourg consists in the transfer of the registered seat of an
offshore fund to Luxembourg. Such option is available to all Luxembourg regimes (i.e. UCITS, Part II
or SIF) but is restricted to the corporate structures (whether variable or fixed capital) only and is not
allowed for contractual structures.
In fact, a long standing practice of re-domiciliation has been developed over the years based on an
extended interpretation of the Luxembourg Law of 1915, which states that foreign companies that are
centrally administered in Luxembourg will be governed by Luxembourg company law even if the deed
of incorporation has been executed abroad.
5. Restated articles of association to be adopted by an extraordinary general meeting of the
shareholders in Luxembourg to be held before a Luxembourg notary public. Such deed would
also include references to the new registered office in Luxembourg, the board of directors and the
Luxembourg auditor. The notary will need to be provided with numerous documents (e.g. legal
opinions, certified copies of the foreign transfer decisions, as well as of the shareholder register, a
declaration of the directors, a balance sheet, reports and certificates relating to the foreign fund)
in order to pass the deed. The Luxembourg notary public would take care of the registration of the
fund with the Luxembourg company registrar.
6. Prior approval of Luxembourg regulator will in principle be required for to approve the transfer
by continuation and all the fund documentation, as well as the fund’s directors and services
providers in case a regulated Luxembourg vehicle is chosen. This procedure will almost be identical
to a new fund approval procedure.
De-registration notification in the transferring fund’s domicile:
One of the features in choosing to transfer the registered seat of the company to Luxembourg is the
fact that the offshore fund entity does not cease to exist, provided that the law of the home country
authorises the transfer without its discontinuation. The continuation of the legal personality should
preserve the corporate history including the track record of the company.
An offshore fund which is transferring by way of continuation must be deregistered in its relevant
jurisdiction. The de-registration process in respect of funds domiciled in Bermuda, British Virgin Islands
and Cayman islands is broadly similar. The directors of the transferring company will be required to
swear declarations of solvency in relation to the transferring company. Sufficient time must be allowed
for creditors to contact the transferring entity (in the Cayman Islands a 21-day notice period is required
for secured creditors; in Bermuda the transferring entity must advertise in a national newspaper
where a substantial portion of the vehicle’s business is conducted 14 days prior to the transfer).
Process:
Anti – money laundering considerations:
1. Analysis of the offshore relevant law as to permissibility of relocation of the company.
2. Legal opinion from counsels – both in the offshore country and in Luxembourg – with regards to
the conditions for a valid transfer of registered seat.
P 32
AML/KYC procedures will have to be complied with in relation to investors in the foreign fund
before their “transfer” to Luxembourg. This must be in accordance with Luxembourg AML laws and
regulations. Furthermore, the status of these investors will have to checked (e.g. well-informed or not,
institutional or not).
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Contribution in kind of the portfolio of the offshore fund to a
Luxembourg entity
The contribution in kind cannot be technically considered as a relocation of a company. However, it
may represent the only solution to achieve the re-domiciliation effect, if either the legal structure or
the law represents a hurdle for proceeding with the transfer of the registered seat of a company.
After the contribution has been made the offshore company is generally wound up, with shares of the
Luxembourg entity being distributed to the shareholders. There are no restrictions as to the receiving
Luxembourg entity, which could be either structured in the corporate (and could have either fixed or
variable capital) or contractual form. The receiving entity could be an existing or newly incorporated
entity or a sub-fund thereof. Through the contribution in kind process it is normally not possible to
retain the corporate history and track record of the offshore company, although certain disclosures
about the past may be considered. Timing will of course be largely influenced by the procedures to
be completed in the foreign jurisdiction and by the status of Luxembourg receiving entity, it being
understood that an existing regulated entity may almost immediately use an existing sub-fund for the
contribution or much quicker obtain the regulators’ approval for the launch of a new sub-fund in order
to accept the contribution.
Process:
1) Articles of associations and offering documents of the Luxembourg receiving entity should not
exclude a contribution in kind.
2) The structure of the receiving Luxembourg entity should be shaped to receive and appropriately
host the assets object of the contribution in kind. Prior approval of Luxembourg regulator is
required in case of regulated vehicles and could take between two/three weeks (for a new subfund) and four months depending on the type of structure.
3) Contributed assets and investors should be eligible in accordance with Luxembourg relevant
regulation.
4) It is in principle necessary for a valuation report from an independent auditor to confirm that
the value of the contributed assets is at least equivalent to the value of the shares that are being
issued in consideration thereof. NOTE: The CSSF will in principle insist on this although the law on
commercial companies is more flexible depending on the assets contributed and depending on the
corporate form.
P 34
Generally speaking a fund
re-domiciliation by way of the
transfer of the registered office
should avoid triggering tax
consequences for the fund
or investors
5) For Luxembourg receiving entities with fixed capital, the decision to accept a contribution in
kind has, in the absence of an authorized share capital, to be resolved by an extraordinary general
meeting of the shareholders complying with the requirements for the amendments of the articles
of association.
6) For Luxembourg receiving entities with variable capital, contribution in kind may be resolved
with no need to convene an extraordinary general meeting and amendment to the articles of
association.
7) Liquidation of the foreign fund and distribution in kind to its shareholders of the shares of the
Luxembourg entity. Share classes of the Luxembourg entity may not always exactly match with
share classes of the foreign fund. NOTE: Liquidation is not always necessary for instance if the
offshore fund is maintained as a feeder into the Lux fund. Furthermore, it would be necessary to
make sure that the distribution of the shares of the Lux entity to the shareholders in the foreign
fund would be seen to be in compliance with private placement or similar rules.
An alternative may be for each shareholder to redeem in kind out of the foreign fund and then to
contribute in kind to the Luxembourg entity, but this would normally not be so practical because
individual shareholder involvement would be required.
Process to re-domicile to Ireland
Ireland has been a leading regulated domicile and global servicing centre for internationally
distributed investment funds for the past 25 years. Ireland benefits not only from a couple of decades
experience of servicing mostly offshore funds but also from legal, cultural and linguistic affinities
with much of the hedge fund management industry which traditionally has been mostly based in the
US and UK. Ireland also has the expertise of dealing with a wide spectrum of fund structures from
traditional ‘long only’ funds to more complex structures. Ireland attracts international fund promoters
due to its open, transparent and well regulated investment environment, its strong emphasis on
investor protection and its efficient tax structures for both funds and management companies. It also
has the necessary infrastructure to service regulated products with a wide range of administrators,
custodians, law firms and consultants. As a result of long experience, valuable expertise, attractive
environment and adequate infrastructure, Ireland is widely regarded as a jurisdiction of choice for
asset managers seeking to establish regulated fund products for global distribution.
P 36
Process for re-domiciliation to Ireland
On 7th September 2010, the Companies (Miscellaneous Provisions) Act, 2009 which provides for
the efficient re-domiciling of offshore funds to Ireland, became effective. The Act permits offshore
funds from Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and the
Isle of Man to re-register as an Irish company while preserving their legal identity. The process is
relatively straightforward, easier and less costly than the traditional methods of merger or plan of
reconstruction.
It has been drafted specifically to allow a fund structured as a corporate entity in an offshore domicile
to re-register in Ireland with its original corporate entity retained, ensuring continuity of activity
and continuation of arrangement. It aims at minimal disruption to day-to-day management and
distribution of the fund as the fund retains existing clients who will continue as shareholders in the
fund.
A straightforward re-domiciliation process
The authorisation of the transferring company by the Irish Central Bank will be coordinated with the
Irish Companies Registration Office in order to achieve simultaneous authorisation and registration.
The process is similar in principle to the Luxembourg process. The re-domiciliation process to Ireland
involves 2 processes to run in parallel:
1) Legal process of registering the offshore fund with the Companies Registration Office, by way of
continuation as a company under the Companies Act 1963-2009.
2) Regulatory process of approving the offshore fund by the Irish Central Bank as a regulated
investment fund.
Companies Registration Office (CRO) registration
The procedure requires a number of documents to be filed with the Irish Registrar of Companies:
a. a copy of the transferring company’s certificate of incorporation or formation certified and
authenticated under public seal of the place of incorporation or formation;
b. a certified copy of the transferring company’s constitutional documents certified and authenticated
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under public seal of the place of incorporation or formation. If these documents are not in the English
language, a certified translation must also be filed;
c. a list setting out particulars in relation to the directors and secretary of the transferring company;
d. a statutory declaration of a director of the transferring company, made no more than 28 days prior
to the date of application to transfer the company, stating that the transferring company is
- established and registered in the relevant jurisdiction;
- not subject to any winding up or liquidation petition;
- that no appointment of a liquidator, receiver or examiner has been made;
- that the transferring company has served notice on the creditors of the company’s intention
to redomicile (this is to ensure that creditors can make claims against the transferring company
before it moves out from its original jurisdiction. If a claim is unresolved, it will prevent the
completion of a valid statutory declaration required by the Companies Registration Office);
- all consents in its home jurisdiction in relation to the transfer have been obtained; (the
transferring company must obtain any consents or waivers required by contracts to which the
transferring company is a party. All agreements entered into by the transferring company should
be reviewed to ensure that the re-domiciliation of the offshore company will not constitute a
breach of contract or trigger an event of default or other termination event);
- and such transfer is permitted by the transferring company’s constitutional documents;
e. confirmation that the transferring company will establish a registered office within Ireland;
f. an affidavit by a director of the transferring company attaching a statement of the assets and
liabilities of the transferring company;
g. a declaration by the directors as to the solvency of the transferring company; an auditor or an
independent person located in the offshore jurisdiction of the transferring company is required to
confirm that the directors’ declaration of solvency is reasonable.
Fund re-domiciliation is possible
for funds structured as trusts as
well as for corporate structures
PP 38
38
h. a schedule of the charges or security interests created or granted by the transferring company.
i. A notification of the proposed name of the transferring company if different form its existing name;
j. A copy of the constitutional documents the transferring company has resolved to adopt.
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Irish Central Bank (CB) Approval Process
Registration with Irish Tax Authorities
The transferring fund must apply to the CB for authorisation as a regulated investment fund.
The process will involve amending the existing foreign fund documentation with documentation
suitable for an Irish fund. As a result, a comprehensive review should be undertaken of the investment
strategies of the transferring fund to ensure that they are compatible with Irish rules applicable to
UCITS funds or to non-UCITS regulated funds (depending on the investments policies chosen for the
transferring fund).
Initially, the following form must be filed with Revenue:
Irish CB Approval Process for UCITS funds involves the following:
•
Approval of the fund’s promoter;
•
Approval of the Services Providers (Directors, Investment Manager, Administrator,
Custodian). Other services providers will need to be appointed (such as Consultant, Legal
Advisors, Auditors, Company Secretary, Distributor) but are not required to be authorised
by the Irish CB;
•
Approval of the Legal Documentation (Prospectus, Key Investor Information Document,
Risk Management Process Statement, Business Plan, Constitutional Documents, Legal
Agreements, Operating Agreements, Application Form);
Irish CB approval process for QIF funds involves the following:
QIFs can be authorised by the Irish CB within 24 hours of receipt of completed documentation and
provided that the service providers of the fund (Promoter, Investment Manager, Directors, Custodian
and Administrator) have already been approved by the Irish CB.
1) Completed Initial Registration Form
2) Prospectus and Information Memorandum
3) Declaration to the Revenue regarding domiciliation must be filed within 30 days of the redomiciliation.
De-registration notification in the transferring fund’s domicile:
An offshore fund which is transferring by way of continuation must be deregistered in its relevant
jurisdiction. The de-registration process in respect of funds domiciled in Bermuda, British Virgin Islands
and Cayman islands are broadly similar. The directors of the transferring company will be required to
swear declarations of solvency in relation to the transferring company. Sufficient time must be allowed
for creditors to contact the transferring entity (in the Cayman Islands a 21-day notice period is required
for secured creditors; in Bermuda the transferring entity must advertise in a national newspaper
where a substantial portion of the vehicle’s business is conducted 14 days prior to the transfer).
Anti – money laundering considerations
AML/KYC procedures will have to be complied with in relation to investors in the foreign fund
before their “transfer” to Ireland. This must be in accordance with Irish AML laws and regulations.
Furthermore, the status of these investors will have to checked.
There is also a process which allows for the re-domiciliation of Trusts to Ireland.
The following key documentation will also have to be submitted to the Irish CB:
•
Application form
•
Prospectus
•
Constitutional Documents
•
Material agreements entered into by the fund (Investment Management Agreement,
Custody and Administration Agreement, Prime Brokerage Agreement, Distribution
Agreement).
P 40
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Advantages of fund re-domiciliation
How Can Carne Help?
Advantages of the re-domiciliation process to either Luxembourg or Ireland:
Carne is a leading advisor to the asset management industry advising asset managers, fund
promoters, distributors and their service providers. We are expert in UCITS, non – UCITS funds and
unregulated funds in various jurisdictions both within and outside of the EU. Carne has offices
currently in Luxembourg, Ireland, London, Cayman, New York and Switzerland. Our services include:
•
The procedure is relatively straight forward
•
The fund will retain its corporate identity and its existing contractual arrangements
•
There is no transfer of assets or other taxable event as a consequence of the re-domiciliation
•
The existing track record of the offshore fund will be retained which enables managers to
demonstrate continuity of performance.
Cross-border merger
One alternative to a fund re-domiciliation process is a cross-border merger. Although not as straight
forward as the fund re-domiciliation process, a cross-border merger is an operation whereby an
offshore fund is absorbed into, or amalgamates with, a Luxembourg or Irish fund. All the assets
and liabilities of the offshore fund are transferred to the absorbing Luxembourg / Irish investment
vehicle, which in turn issues new units to the unit holders of the offshore fund - the latter is dissolved
thereafter. UCITS IV entitles all UCITS funds to merge, regardless of their legal structure. Also, foreign
law dictates the permissibility of cross-border mergers, which, ultimately, should be allowed by the
laws of both countries. Once complete the merger has the effect to transfer without discontinuity the
assets and liabilities of the offshore fund and to retain the corporate history and track record.
Process: 1) Merger proposal should be adopted in concert by both companies.
2) Luxembourg / Irish regulator must grant its approval to the draft merger proposal.
3) Merger proposal must be published according to Luxembourg / Irish and offshore laws.
4) A report shall be established by the directors of both companies to justify the economic
rationale of the merger.
5) A report shall be established by an independent auditor to detail the valuation method of the
share exchange ratio.
6) Merger proposal, report of directors of both companies and auditors’ report to be approved by
the extraordinary meeting of the shareholders of both merging entities.
P 42
1) Advisory
2) Governance
Advisory Services
We advise asset managers and promoters on various aspects of funds establishment in regulated
and unregulated jurisdictions. We are very active in advising asset managers on product structuring,
regulations, governance arrangements and service provider selection. We can provide a turn-key
solution for fund launches and re-domiciliations.
Governance
All of Carne’s senior executives act as independent directors on fund boards in various fund
jurisdictions including Luxembourg, Ireland and Cayman Islands. Carne provides UCITS substance and
residency services in Luxembourg and Ireland whereby Carne personnel act as designated persons or
conducting persons / dirigeants. Carne also provides the use of its management companies (UCITS
and non-UCITS) to third party investment managers / promoters requiring a solution involving a local
management company.
For further details on fund re-domiciliation and other Carne services, please get in contact with us
(contact details on the reverse of this booklet). The Carne website address is www.carnegroup.com
Disclaimer
This booklet does not constitute professional advice and cannot be taken as such. The content of this
booklet may be subject to change. If you are looking for advice or assistance with any aspects of fund
re-domiciliation please contact us directly to discuss the particulars of your project.
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Carne Contacts
Dublin:
London:
Carne Global Financial Services Limited
Carne Global Financial Services (UK) Limited
2nd Floor Block E Iveagh Court
City Tower, 40 Basinghall Street
Harcourt Road Dublin 2, Ireland
London EC2V 5DE, UK
Contact: John Donohoe
Contact: Aymeric Lechartier
Chief Executive Officer
Managing Director
Tel: +353 1 489 6802
Tel: +44 207 618 8382
Mobile: +353 87 249 7969
Mobile: +44 77884 08136
[email protected]
[email protected]
Luxembourg:
Switzerland:
Carne Global Financial Services (Luxembourg)
Carne Global Financial Services (Switzerland) GmbH
S.a.r.l.
c/o Confidas Treuhand AG
25B Boulevard Royal
Gubelstrasse 5, PO Box 1524
L-2449 Luxembourg
6301 Zug, Switzerland
Contact: Justin Egan
Contact: Aymeric Lechartier
Managing Director
Managing Director
Tel: +352 26 732333
Tel: +44 207 618 8382
Mobile: +352 661 321 661
Mobile: +44 77884 08136
[email protected]
[email protected]
Cayman Islands:
New York:
Carne Global Financial Services (Cayman)
Carne Global Financial Services Limited
Limited
PO Box 851
PO Box 30872
Spring Lake
Grand Cayman KY1 – 1204, Cayman Islands
NJ 07762 USA
Contact: Peter Heaps
Contact: Joe Hardiman
Managing Director
Managing Director
Tel: +1 345 769 9900
Mobile: +1 732 642 5808
Mobile: +353 87 617 7343
[email protected]
[email protected]
Cayman Islands