Ireland: Structural Enhancements To Irish Funds – ICAV And The Investment Limited Partnership 2.0

Last Updated: 19 October 2018
Article by Ian Conlon and Aaron Mulcahy

Assets under management of Irish alternative investment funds (AIFs) are at an all-time high. The strategies being pursued by Irish AIFs continue to expand, hand in hand with the introduction of additional legal structures, particularly the Irish collective asset management vehicle (ICAV). Work is also currently ongoing on reforming the Irish investment partnership structure (ILP) and, once complete, there is scope for the further expansion of the strategies being pursued by Irish AIFs, particularly private equity (PE) and real economy investment strategies.

In this article, we highlight what makes the ICAV such an attractive legal structure for AIFs and how its introduction has seen the expansion of strategies being pursued. We also introduce the ILP and highlight the proposed enhancements that are designed to make it a "best of breed" partnership structure.

What is the ICAV?

The ICAV is a corporate vehicle tailored specifically for Irish investment funds, established by way of a registration and authorisation by the Central Bank of Ireland (CBI). It has a distinct and separate legal personality, (i.e. it may enter into contracts itself, can own property itself etc.) and is represented by its board of directors which retains overall responsibility for managing the business of the ICAV.

The ICAV is similar to existing Irish funds established as investment companies but with the significant advantage that the ICAV was specifically created for the Irish funds industry, enabling it to be more flexible than the investment company. The ICAV legislation essentially drew upon the best and most successful aspects of Irish company law, improving it in several material respects. The advantage of this is that with its own specific legislative code, the ICAV will not be impacted by amendments to European/Irish company law (which are targeted at ordinary companies and not funds), protecting the ICAV from any unintended consequences of such legislative changes. The result of this tailored legislative code is a more straightforward set of legal rules applicable to the ICAV, and lower administration and operating costs.

Key Features of the ICAV

Structuring flexibility

The ICAV can operate as a standalone fund or as an umbrella fund with multiple sub-funds which automatically enjoy segregated liability between each sub-fund under the ICAV legislation.

The ICAV can be structured to suit all major investment strategies and can accommodate traditional as well as alternative investment policies. It can also avail of a full suite of liquidity options making it suitable for mutual funds, hedge, real estate, infrastructure, credit, loan origination, PE, managed accounts and hybrid funds. ICAVs can also be established as part of global masterfeeders, co-investment or joint-venture structures and use a full range of underlying special purpose vehicles and subsidiaries to hold investments. The flexibility of the ICAV can be seen through its use to facilitate closed ended PE style strategies that typically would be undertaken through a partnership structure.

Mirroring the global trend of hedge funds engaging in the provision of private credit, ICAVs, established to pursue credit strategies have been the stand out trend since 2017. The relaxation of regulatory rules on origination of loans by Irish loan origination qualifying investor AIFs (L-QIAIFs) in February 2018 now allows L-QIAIFs to undertake a comprehensive mixed asset credit strategy, whereby investment in debt securities, including asset backed securities, primary and secondary lending can all be carried out by the L-QIAIF. This further product development has been welcomed by fund sponsors who to-date have achieved a mixed credit strategy indirectly by pooling L-QIAIF and non-LQIAIF sub-funds of the same umbrella into fund of fund or master-feeder structures.

Success of the ICAV

The ICAV has quickly established itself as the most popular vehicle for asset managers. As of 31 July 2018, 271 ICAVs have been registered with the CBI. More impressively, 80% of all Irish AIFs authorised by the CBI since its introduction have been established as ICAVs. In addition, approximately 12% of ICAVs have converted from investment companies into an ICAV, most notably the conversion of an umbrella scheme with over £43 billion of assets under management and comprising 154 sub-funds in April 2018.

The Investment Limited Partnership 2.0

While the ICAV is sufficiently flexible to accommodate many PE strategies and PE-centric features (such as capital commitment/drawdown mechanisms, distribution waterfalls, carried interest and "excuse and exclude" allocation of assets), historically global asset managers have preferred the limited partnership as the legal form for a PE fund. The ability to establish regulated ILP structures has been possible in Ireland since the implementation of the ILP legislation in 1994, however only a handful of asset managers have chosen to do so, with the general consensus being that this legislation had its limitations.

Against this backdrop, the Irish funds industry has made proposals to the CBI and the Irish Department of Finance (DoF) to enhance the attractiveness of the ILP, through a series of legislative changes to the ILP legislation.

What is the ILP?

The ILP is a regulated common law partnership structure, tailored specifically for Irish investment funds. It is established on receiving authorisation by the CBI and is constituted pursuant to a limited partnership agreement (LPA) entered into by one or more general partner(s) (GPs), who manage the business of the partnership on the one hand, and any number of limited partners (LPs) on the other hand.


Typical to common law partnerships, the GP is the operative legal entity, responsible for managing the business of the ILP and is ultimately liable for the debts and obligations of the ILP to the extent the ILP do not have sufficient assets. The GP must: (i) be authorised by the CBI to act as a GP; or (ii) avail of the right to manage an Irish AIF on a crossborder basis under AIFMD.

There are no restrictions on the number of LPs that may be admitted to an ILP. The liability of a LP for the debts and obligations of the ILP is limited to the value of their capital contributed or undertaken to be contributed, except where it becomes involved in conducting the business of the ILP. The ILP legislation helpfully includes a non-exhaustive list of 'safe harbour' activities that can be carried out by LPs without being deemed involved in conducting the business of the ILP. This safe harbour list provides additional legal certainty when considering Irish ILPs.

All of the assets and liabilities of an ILP belong jointly to the partners in the proportions agreed in the LPA. Similarly, the profits are directly owned by the partners also in the proportions agreed in the LPA.


Like the ICAV, the ILP can be structured to suit all major investment strategies and can avail of a full suite of liquidity options, making it a highly flexible product.


The Minister for Finance announced that the Irish Government has approved the legal drafting of the amendment to the ILP legislation and it is understood that the Heads of Bill (Heads) will be published later this year. Upon making the announcement of the proposed ILP reform, the Minister confirmed that the intention was to enhance and reform the existing legislation in order to align it with international standards for PE funds and certain requirements of AIFMD and ensuring that Ireland remains one of the leading funds domiciles in Europe.

The exact changes included in the Heads will not be known until it is published. However, given ongoing dialogue between the Irish funds' industry, the CBI and the DoF, it is anticipated that the key enhancements shall include: (i) features which improve the operation of ILPs by clarifying the rights, obligations and status of investors, (ii) align the structure fully with AIFMD and other Irish fund structures, (iii) allow for the establishment of umbrella ILPs and (iv) the migration of ILPs. It is also hoped that such enhancements will incorporate "best-of breed" features found in other leading fund jurisdictions that offer partnership structures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions