Europe: Ireland’s Private Funds Regime Gets a Major Overhaul: Central Bank Publishes Revised AIF Rulebook
By: Gayle Bowen and Shane Geraghty
The Central Bank of Ireland (the Central Bank) today published its long-awaited revised AIF Rulebook, consolidating and modernising the regulatory framework for Irish alternative investment funds (AIFs). The revised Rulebook introduces a number of important flexibilities that will be welcomed by industry and will provide greater flexibility to investment managers when structuring their investment funds to better meet investors’ needs.
Intermediary Investment Vehicles—A More Flexible Approach
While QIAIFs have always been able to invest through subsidiaries and other intermediary structures, the revised Rulebook introduces a meaningful relaxation of the operational requirements governing how those structures must be organised. QIAIFs may invest through a broader range of intermediary investment vehicles—including special purpose vehicles, aggregators, subsidiaries and on a co-investment basis—for the purposes of implementing their investment strategy. The requirements to seek prior Central Bank approval and to control the board of any subsidiary have been removed and are replaced by disclosure and diligence requirements.
Share Class Flexibility—Extended to All AIFs
The revised Rulebook introduces an important liberalisation of share class arrangements for all Irish AIFs. Previously, more sophisticated share class features—designed to reflect the specific structural needs of private markets strategies—were available only to ELTIFs. The Central Bank has now extended this framework to all AIFs, including QIAIFs and Retail Investor AIFs, permitting differentiated participation including below-NAV issuances, excuse and exclude provisions, stage investing, and management participation.
Other Flexibilities
The revised Rulebook also introduces a number of further operational flexibilities, including the removal of the requirement for QIAIFs to state in their prospectus that they will pay no more than current market value when acquiring warehoused assets—a change that will be particularly welcomed by managers of closed-ended private markets strategies.
The proposed changes are a welcome development, providing managers of Irish-domiciled private funds with greater structuring flexibility across the full range of fund types and provides Ireland with a modern and flexible private funds regime.