Alternative Investment Funds 2022 – Fund Management/ REITs

Alternative Investment Funds 2022 – Fund Management/ REITs

1 Regulatory Framework

1.1 What legislation governs the establishment and
operation of Alternative Investment Funds?

The Irish Funds Legislation, which governs the establishment and
operation of Irish AIFs authorised and regulated by the Central
Bank of Ireland (the “Central Bank“), is
set out in question 1.3 below. Additionally, Irish AIFs structured
as European long-term investment funds
(“ELTIFs“) are impacted operationally by
Regulation (EU) No 2015/760 (the “European Long-term
Investment Funds Regulation

The governing legislation of Irish AIFs not subject to
authorisation by the Central Bank depends on the legal form of
those AIFs; e.g. the Companies Act, 2014 will apply to corporate
AIFs established as investment companies with fixed capital.

All Irish AIFs are impacted operationally by:

  • the European Communities (Alternative Investment Fund Managers)
    Regulations 2013 (S.I. 257 of 2013) as amended (the
    Irish AIFM Regulations“), which
    transposed Directive 2011/61/EU (the “AIFM
    “) into Irish law; and

  • Commission Delegated Regulations and Commission Implementing
    Regulations adopted by the EU Commission in specified areas in
    order to ensure that the AIFM Directive is implemented consistently
    across the EU, the principal one of which is the Commission
    Delegated Regulation (EU) No 231/2013 supplementing the AIFM
    Directive with regard to exemptions, general operating conditions,
    depositaries, leverage, transparency and supervision.

1.2 Are managers or advisers to Alternative Investment
Funds required to be licensed, authorised or regulated by a
regulatory body?


Irish AIFMs managing Irish AIFs established under the Irish
Funds Legislation are required to be authorised under the Irish
AIFM Regulations. However, an Irish registered AIFM may manage an
Irish AIF marketed to qualifying investors (a
QIAIF“) for a two-year start-up period
during which the Central Bank will not require the QIAIF to have an
authorised AIFM. After the start-up period, an authorised AIFM must
be appointed.

Non-Irish EU AIFMs managing Irish AIFs are required to be
authorised in their home jurisdiction and to have availed of the
passporting provisions pursuant to Article 33 of the AIFM

Although non-EU AIFMs currently have no passporting rights under
the AIFM Directive and will not have such rights until such time as
they are extended to non-EU AIFMs by the European Commission,
non-EU AIFMs may avail of transition benefits allowed by the
Central Bank for such entities and consequently may manage an Irish
QIAIF, provided they are designated by the QIAIF as the AIFM and
certain rules as set out in question 1.8 below are complied with.
However, in such circumstances, the non-EU AIFM must be approved by
the Central Bank to act as an investment manager of Irish
authorised collective investment schemes (see below).

An Irish AIF constituting a collective investment scheme
authorised and supervised by the Central Bank under the Irish Funds
Legislation and marketed to retail investors (a
RIAIF“) must have an authorised AIFM.
Consequently, a non-EU AIFM cannot avail itself of the transition
benefits allowed by the Central Bank as referred to above and
manage a RIAIF on the basis that it is designated by the RIAIF as
the non-EU AIFM.

Non-AIFM Irish Management Companies

RIAIFs and QIAIFs, depending on their legal form, may be
required to appoint a management company to carry out the
management of those AIFs. Where such a management company is not
acting as the AIFM, it must be approved by the Central Bank and
meet the requirements relating to such entities as set out in the
Central Bank’s AIF Rulebook (the “AIF
“), e.g.:

  • a minimum capital requirement of at least EUR 125,000 or one
    quarter of its total expenditure taken from the most recent audited
    accounts (whichever is higher);

  • organisational requirements such as the appointment of a
    compliance officer who must be located in the State, policies and
    systems to identify, control and monitor risk, accounting policies
    and procedures, maintenance of records, etc.; and

  • adequate management resources.

Non-AIFM General Partners

A general partner of an ILP, as a regulated financial services
provider, is subject to Central Bank regulations relating to
fitness and probity but is not otherwise required to be authorised
by the Central Bank.

Investment Managers

Investment managers or sub-investment managers, which are one of
the following entities, will not usually be subject to an
additional regulatory review process by the Central Bank:

  • UCITS management companies;

  • MiFID investment firms;

  • EU credit institutions; and

  • externally appointed authorised AIFMs.

Investment managers which are not one of the entities listed
above may only be appointed where (i) a Memorandum of Understanding
(“MoU“) is in place between the Central
Bank and the competent authority in the home jurisdiction of the
investment manager, and (ii) the Central Bank has approved the
investment manager following receipt of a completed Investment
Manager Clearance Form.

Investment Advisors

The Central Bank does not apply an approval process to
investment advisors in order for such entities to provide
investment advice in relation to a RIAIF/QIAIF, provided that the
managers/directors of the RIAIF/QIAIF confirm that the advisors in
question will act in an advisory capacity only and will have no
discretionary powers over any of the assets of the RIAIF/QIAIF.

1.3 Are Alternative Investment Funds themselves required
to be licensed, authorised or regulated by a regulatory

Irish AIFs established under the Irish Funds Legislation, as
detailed below, are required to be authorised by the Central Bank,
which has the power to impose conditions on them. The current
conditions that the Central Bank imposes are contained in an AIF

  1. unit trusts under the Unit Trusts Act 1990;

  2. investment companies under Part 24 of the Companies Act

  3. investment limited partnerships
    (“ILPs“) under the Investment Limited
    Partnerships Act 1994 as amended by the Investment Limited
    Partnership (Amendment) Act 2020;

  4. common contractual funds (“CCFs”) under the
    Investment Funds, Companies and Miscellaneous Provisions Act 2005;

  5. Irish collective asset-management vehicles
    (“ICAVs“) under the Irish Collective
    Asset-management Vehicles Act 2015 (collectively referred to as the
    Irish Funds Legislation“).

In addition, Irish AIFs structured as ELTIFs must be authorised
by the Central Bank pursuant to the European Long-term Investment
Funds Regulation.

1.4 Does the regulatory regime distinguish between
open-ended and closed-ended Alternative Investment Funds (or
otherwise differentiate between different types of funds or
strategies (e.g. private equity vs hedge)) and, if so,

The Central Bank allows RIAIFs/QIAIFs to be structured as

  1. Open-Ended

    An AIF is considered open-ended by the Central Bank where it:

    • provides redemption facilities on at least a (i) monthly basis
      in the case of a RIAIF, and (ii) quarterly basis in the case of a

    • redeems, when requested, at least (i) 10% of net assets in the
      case of a RIAIF/QIAIF that redeems on a monthly basis or more
      frequently, or (ii) 25% in the case of a QIAIF that redeems on a
      quarterly basis; and

    • does not impose a redemption fee in excess of (i) 3% of the net
      asset value (“NAV“) per unit in the case
      of a RIAIF, or (ii) 5% in the case of a QIAIF.

    An AIF, which provides for a period of greater than 30 days in the
    case of a RIAIF and 90 days in the case of a QIAIF between the
    dealing deadline and the payment of redemption proceeds, will not
    be subject to the above requirements provided it classifies itself
    as open-ended with limited liquidity

  2. Open-Ended with Limited Liquidity

    A RIAIF/QIAIF is classified as open-ended with limited liquidity if
    it does not meet one or more of the requirements for an open-ended
    AIF but does permit the redemption of units throughout the life of
    the AIF.

  3. Closed-Ended

    The Central Bank considers a closed-ended RIAIF/QIAIF to be one
    which does not facilitate the redemption of units at the request of
    the unitholders during the life of the AIF.

1.5 What does the authorisation process involve for
managers and, if applicable, Alternative Investment Funds, and how
long does the process typically take?


The application for authorisation of a RIAIF/QIAIF must be made
by (i) the AIFM, together with (ii) the corporate AIF or management
company/general partner in the case of a non-corporate AIF, and
(iii) the depositary, in the case of a unit trust or CCF.

All parties to a RIAIF/QIAIF must have been authorised or
otherwise deemed acceptable to the Central Bank prior to the
application for authorisation (e.g. the management company, general
partner, AIFM, directors in the case of a corporate AIF,
depositary, other service providers such as the fund administrator,
investment manager, etc.).

The directors of any entity authorised by the Central Bank
(including, inter alia, the directors of a corporate
RIAIF/QIAIF) are required to meet certain standards of fitness and
probity. As part of the Central Bank’s fitness and probity
requirements, any director proposed to be appointed must be
pre-approved by the Central Bank. In this regard, an individual
online questionnaire must be completed by the proposed director and
validated and submitted on behalf of the appointing entity by a
certain time period in advance of the proposed authorisation date
for the RIAIF/QIAIF (i.e. at least 20 working days in the case of a
RIAIF and at least five working days in the case of a QIAIF).

A RIAIF/QIAIF is not subject to any minimum capital requirements
unless it is internally managed and therefore constitutes the

In relation to the authorisation of QIAIFs, there is no prior
filing of QIAIF documentation for review by the Central Bank.
Instead, there is a self-certification regime (i.e. certification
has to be given that the Central Bank’s disclosure requirements
relating to the QIAIF documentation are met). Because there is no
prior review by the Central Bank, the timeframe for authorisation
of a QIAIF is within the control of the relevant parties based on
the length of time it takes to negotiate and agree the QIAIF
documents (subject to the pre-clearance of any persons or parties
required by the Central Bank). Once the documentation is filed
online by 3pm on the business day prior to the date for which
authorisation is sought, a QIAIF will be authorised on the
requested date without a prior review. The Central Bank may carry
out a “spot check” post-authorisation review.

This contrasts with the authorisation process for RIAIFs, as the
Central Bank requires certain documents (e.g. the prospectus) to be
submitted for review and cleared of comment by the Central Bank in
advance of the formal application for authorisation being
submitted. As a result, a RIAIF with an externally appointed AIFM
can take approximately eight to 10 weeks to be authorised by the
Central Bank from the date of submission of applicable documents
for review.

The only exception to the self-certification regime, where no
prior filing of QIAIF documentation is submitted to the Central
Bank for review, is where the QIAIF has what are in the Central
Bank’s view one or more features of an unusual nature which may
need to be presented to the Central Bank by way of a written
submission and approved in advance by the Central Bank.

Internally Managed RIAIF/QIAIF Constituting the

Where it is proposed that a RIAIF or QIAIF will be internally
managed and constitute the AIFM, a separate application for
authorisation of an AIFM must be submitted to the Central Bank
(together with other supporting documentation, including, inter
, a programme of activity) and such authorisation must be
obtained before formal application for authorisation of the
RIAIF/QIAIF may be submitted to the Central Bank.

Any such RIAIF/QIAIF is required to meet the minimum capital
requirements of an AIFM as set out in Regulation 10 of the Irish
AIFM Regulations (equivalent to Article 9 of the AIFM

The Central Bank is obliged to inform the AIFM in writing as to
whether or not authorisation has been granted, within three months
of a complete application. However, the Central Bank may extend
this period for another three months where it considers it
necessary because of the specific circumstances of the case.

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Originally published by International Comparative Legal

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.

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