Colin Feely
01 Oct 2020
The Irish Government has announced the publication of the Investment Limited Partnership (Amendment) Bill 2020 (ILP). The objective of this bill is to promote investment, modernise the current partnership structure, enhance the regulatory environment in international financial services and secure Ireland’s competitiveness with other comparable partnership vehicles in Europe.
The approval by the Irish Government will boost Ireland’s commitment to ‘real asset’ investing as ILPs are likely to become the preferred investment vehicle for the likes of real estate, energy, infrastructure, private equity and private debt once the new legislation takes effect. The ILP is a regulated common law partnership structure which will be of interest to international managers and provides opportunity to raise capital across Europe post Brexit and COVID-19. From an investor perspective, they can derive benefit from the Irish ILP by enjoying limited liability and through the tax treatment of the assets invested in.
Key observations
Amendments to the limited partnership agreement (LPA) and approval by the limited partners Changes can be made to the LPA with approval from the majority of the general partners and a majority of limited partners. The LPA can now contain a specific provision as to what constitutes a ‘majority of limited partners’.
Contribution and withdrawal of capital There will be a simplified process for the contribution and withdrawal of capital in line with other Irish fund structures and partnerships in other jurisdictions.
Limited partner protection The new legislation clarifies that limited partners who do not take part in the management of the ILP or who do purport to carry on the business of the ILP after dissolution do not have unlimited liability for the debts of the ILP and cannot be prosecuted for any offences committed in the management of the ILP.
Migration The bill allows for the migration in and out of Ireland when operating in another jurisdiction which also mirrors the provisions of the Companies Act 2014 and the Irish Collective Asset-management Vehicles Act 2015.
Registrar of Beneficial Ownership The general partner of the ILP will be required to establish and maintain a register of beneficial ownership of the ILP and submit this to the Central Bank of Ireland.
Registration of ILP in an alternative foreign name This amendment will allow the ILP to operate in a non-English speaking jurisdiction and have official recognition of the translated name in that foreign jurisdiction.
‘Umbrella’ ILPs Establishing ‘Umbrella’ ILPs would provide greater flexibility for asset managers through the introduction of the ability to create sub-categories of limited partners in managing separate portfolio of assets. This option is attractive because it allows separate investor type or strategies for each sub-fund. The sub-funds may also share a general partner but are not affected by each other in the event of insolvency. This is similar to other investment fund vehicles including the ICAV and common contractual funds.
Irish Collective Asset-management Vehicles Act 2015 Technical amendments will be made to the ICAV Act to align the ICAV Act with certain provisions of the Companies Act 2014.
What happens next
Before the Investment Limited Partnership (Amendment) Bill 2020 can enter into law it will be subject to a number of stages of review and approval by the Irish Government. It is hoped the bill will be approved in the coming months.
How can we help
Grant Thornton has vast expertise in global private equity and we look forward to assisting our clients in navigating this legislation to ensure that Ireland continues to be one of the leading investment fund domiciles in Europe.
Contact
If you have any questions on the above, please contact a member of our team.
