A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

The main features of both structures, QIF and LP, are summed up in the table below.

Figure 29 – Main characteristics of Irish private equity vehicles

QIF

LP

> The Limited Partnership Act, 1907

Applicable legislation

> Non-UCITS regulatory regime: - Non-UCITS investment companies: Part XIII of the Companies Act, 1990 - Non-UCITS unit trusts: Unit Trusts Act, 1990 - Investment Limited Partnerships (non-UCITS): Investment Limited Partnership Act, 1994 - Non-UCITS common contractual funds: Investment funds, companies and miscellaneous provisions act, 2005 > The rules governing QIFs are set out in > Investment company > Unit trust > Investment Limited Partnership (ILP) > Common contractual fund > Qualifying investors individuals with a minimum net worth of E 1.25 million (excluding principal private residence/ contents) or institutions who own or invest on a discretionary basis at least E 25 million (or are themselves owned by qualifying investors) the Financial Regulator’s Non-UCITS Notice N 0. 24

Legal structure

> LP

Eligible investors

> Private placement only

Eligible assets and risk diversification requirement

> Unrestricted

> Unrestricted

Borrowing restrictions > Unrestricted

> Unrestricted > Unrestricted

Minimum capital requirement

> Minimum initial subscription requirement per investor of E 250,000 or equivalent in other currencies (no limits made on subscriptions there after)

2.2

Regulated structure Yes / No Supervisory Authority Number of structures recorded by the Supervisory Authority

> Yes

> No

> The Irish Financial Regulator

> N/A > N/A

> 1,153 funds including sub-funds as at 30/11/2009

Tax regime

> Irish investment funds exempt from Irish tax on their income and gains, irrespective of where their investors are resident. > No withholding taxes apply on income distributions on redemption payments made by a QIF to non-Irish resident investors. > Depending on the tax status of a QIF investor in their home jurisdiction, a QIF can also be structured as a tax transparent vehicle resulting in the retention of the tax benefits (e.g. reduced withholding taxes) enjoyed by investors through direct ownership. > A QIF may also hold investments through Special Purpose Vehicles to improve tax efficiencies.

> Partnership: Tax transparent. > LPs subject to taxation on their share of underlying income and gains of the Partnership itself.

> Tax incentive schemes to encourage investment in venture capital companies: - Business expansion scheme; - Seed capital scheme; - Qualifying patent exemption; - Relief for investment in renewable energy generation.

> Irish registered fund administrator required > Irish based trustee/custodian required

> No requirement

Administrator/ Custodian requirements

Copyright CACEIS, 2009

A thorough understanding of PE | page 49