Investment Limited Partnership (Amendment) Bill, 2017
About the Investment Limited Partnership (Amendment) Bill, 2017
On the 18th of July 2017 The Minister for Finance and Public Expenditure and Reform announced that the Irish Government approved the legal drafting of the Investment Limited Partnership (Amendment) Bill, 2017. These changes aim to ensure that Ireland continues to remain a leading centre of excellence as an international fund domicile for investment funds and remains at the cutting edge of market developments for global equity funds. Also worth noting is that The Irish Collective Asset-management Vehicles Act 2015 (“ICAV Act”) will also be amended, as it was agreed that technical amendments will be drafted.
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe said:
“This is a further step towards ensuring that Ireland remains one of the leading funds domiciles in Europe. The revised Investment Limited Partnership structure will stand alongside the Irish Collective Asset-management Vehicle as a symbol of Ireland’s commitment to grow the funds sector while retaining a sound regulatory environment.”
What is the Investment Limited Partnership ("ILP")?
An Investment Limited Partnership may be formed in Ireland pursuant to the Investment Limited Partnership Act 1994. This structure is not allowed for UCITS funds. The ILP is used to establish an Alternative Investment Fund. If an EU AIFM is appointment the ILF can use the AIFMD marketing passport.
An investment limited partnership is a partnership of two or more people having as its principal business the investment of its funds. The Central Bank of Ireland (“CBI”) requires that there must be at least one Irish general partner, who manages the business of the partnership and is liable for the debts and obligations of the ILP that may arise. There can be any number of limited partners and they are liable for the debts and obligations of the ILP limited to the value of their capital contributed unless they become involved in conducting the business of the ILP. The rules of the Investment Limited Partnership are set out in the limited partnership agreement (“LPA”). Investors subscribe to the partnership as limited partners. An investment limited partnership is not a separate legal entity and it cannot enter contracts in its own name.
The assets and profits of an ILP are owned jointly among the partners in the proportions agreed in the LPA.
Legal Structure of the ILP
The ILP is suitable for a range of investment strategies and it can use various liquidity options making it suitable for PE, real estate, venture capital, infrastructure, credit, lending vehicles, managed accounts, hybrid funds and hedge strategies. ILPs are not subject to legal risk spreading obligations.
What are the changes ahead?
Until the Heads of Bill are published there is still uncertainty about the changes lie ahead. It is looking likely that the Government’s approved changes won’t now be published until the middle of 2018. The industry is optimistic that the changes will include amendments which will improve the operation of ILPs and align the structure with AIFMD. It is also hoped that the new bill will allow for the establishment of umbrella ILPs and the migrations of ILPs. The change should increase the options available in Ireland for promoters of venture capital and private equity funds.