IRELAND Law and Practice Contributed by: Nicholas Blake-Knox, Jonathan Sheehan, Damien Barnaville and Joe Mitchell, Walkers
Details of the potential risks relevant to the investment fund are required to be disclosed in the fund’s prospectus. Rules relating to insider trading, market abuse and transparency are generally only applicable to Irish listed investment funds. As Irish regulated entities, Irish investment funds (whether AIFs or UCITS) are subject to anti-money laundering and counter-terrorism financing (AML/CFT) legislation. As they gener - ally delegate transfer agency activities including investor services to an administrator, Irish invest - ment funds need to be aware of the administra- tor’s policy in relation to AML/CFT, in addition to having their own policy in place. 2.5 Fund Finance There are generally no restrictions on AIFs enter - ing into financing arrangements to fund the pur - chase of investments or for liquidity manage - ment purposes. In accordance with the AIFMD, AIFs are required to disclose their maximum level of leverage using both the gross method and the commitment approach. Loan origination QIAIFs are restricted in terms of the amount that can be borrowed, as such funds must not have gross assets of more than 200% of their NAV. An ELTIF is restricted to bor - rowing no more than 100% of NAV for ELTIFs marketed solely to professional investors. This limit is reduced to 50% of NAV for ELTIFs that can be marketed to retail investors (which may include qualifying investors). RIAIFs are not per - mitted to borrow an amount exceeding 25% of the fund’s NAV. Lenders will typically take security as part of financing arrangements with AIFs, with the types taken depending on the purpose of the financing
and the fund structure. For example, if financing is being obtained to fund investment, it is com - mon for security to be granted over the assets of the investment fund, including any cash accounts held by the depositary on behalf of the fund. If the fund has a capital call structure, it is common for security to be granted over the capital commitment account(s) into which com - mitments are drawn, as well as over any uncalled commitments. Lenders would typically also have the right to call uncalled capital commitments. QIAIFs are not permitted to act as a guarantor for third parties; this includes a sub-fund acting as guarantor for another sub-fund in the same umbrella. This restriction can create challenges in relation to the use of financing structures that require cross-collateralisation between borrow - ing entities falling within the same borrowing group. Depending on the structure, a cascading pledge mechanism can be used to overcome such challenges. The prohibition on acting as a guarantor for third parties does not apply to wholly owned subsidiaries of the QIAIF. It is necessary to register a security interest with the relevant authority, which will be either the Irish Companies Registration Office or the Central Bank, depending on the structure of the Irish investment funds structured as authorised investment companies, ICAVs and authorised unit trusts (both AIFs and retail funds) are subject to the Investment Undertaking Tax (IUT) regime and are exempt from Irish tax on their income and gains, assuming they do not invest in Irish real estate – see below with respect to the Irish real estate fund (IREF) regime. No stamp duty is payable on transfers of shares or units of an Irish investment fund (other than of an IREF in investment fund. 2.6 Tax Regime
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