The Central Bank has announced some significant changes in relation to the criteria for Qualifying Investor Funds (“QIFs”). Up to this, investors in a QIF were required to make a minimum initial subscription of €250,000 and had to meet a high net worth requirement (in the case of institutional investors, a requirement that they had to own or invest on a discretionary basis, at least €25,000,000 and in the case of individuals, a requirement to have a minimum net worth (excluding main residence and household goods) in excess of €1.25 million). Since 20 October 2010, this has changed significantly. The minimum initial subscription requirement has been reduced to €100,000 and a person may now be considered to be a “qualifying investor” if the investor:
(a) certifies that they are an informed investor and provides certain written confirmations (referred to below); or
(b) is a “professional client” within the meeting of Annex II of the MiFID Directive (2004/39/EC); or
(c) is 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 fund.
The written confirmations that an investor referred to at (a) above must provide are the following:
(i) 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
(ii) that the investor’s business involves, whether for its own account or for the account of others, the acquisition or disposal of property of the same kind as the property of the fund.
In order to avail of the above relaxed criteria, promoters of existing QIF funds will need to amend their Prospectus/Supplement and share subscription documentation and possibly, in some cases, the constitutional documents of the funds.
The Central Bank has also added to the list of persons associated with a QIF who are not required to meet the minimum subscription and investor criteria qualifications for a QIF, the promoter of the QIF, i.e. the entity which is the driving force in creating and establishing the fund and directors and certain senior employees of the promoter.
These changes represent a very significant development in the context of Ireland’s fund offering, because there had for some time been a view that some sophisticated institutional investors, including mid-size pension funds, family offices and also corporates and individuals being professionally advised, were excluded from the QIF product because of the high net worth requirements, in particular. This development is also very welcome and timely in the context of the new fund redomiciling regime which has been put in place in Ireland under the Companies (Miscellaneous Provisions) Act 2009 such that non-Irish fund companies domiciled in the British Virgin Islands, the Cayman Islands, Jersey, Guernsey, Bermuda and the Isle of Man can redomicile into Ireland on the basis that the migrating fund company will continue its existence as a company registered under Irish law and authorised by the Central Bank. This new regime of redomiciling enables fund companies established in those jurisdictions to redomicile as any sort of Irish fund including QIFs and UCITS. It should be noted that it is also possible to redomicile funds established as unit trusts to Ireland.
For further information on establishing a fund product or on the redomiciling of non-Irish funds into Ireland, please contact any of our Partners.
