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28 I Why Ireland? A guide to doing business in Ireland I ByrneWallaceInvestment funds2.3 trillion of funds are administered from IrelandOVERVIEWIreland is recognised globally as one ofthe leading jurisdictions for the establishmentand administration of investmentfunds. The range and flexibility ofthe legal structures which are availablehas facilitated the growth of fundsaimed at investors with varying investmentcriteria in a multiple of jurisdictions.Ireland enjoys a reputation as acentre of excellence both for promoterslooking to establish funds and for theservicing of investment vehiclesdomiciled in other jurisdictions.THE REGULATORY AUTHORITIESThe Central Bank is responsible for theauthorisation and ongoing regulation ofinvestment funds in Ireland. It is also thesupervisory authority for the authorisationand regulation of providers ofinvestment services in Ireland whichservices include giving of investmentadvice, provision of fund administrationand custodial services and receiving,transmitting and executing orders inrelation to securities.The Irish Stock Exchange Limited (theISE) is responsible for the listing ofinvestment funds in Ireland. In order tolist, a fund must first appoint a Sponsor,which is registered with the ISE. TheSponsor is responsible for ensuring thatthe fund is suitable for listing and fordealing with the ISE in relation to allaspects of the fund’s listing. Manypromoters choose to list their funds onthe Irish Stock Exchange as their targetinstitutional investors may beconstrained to invest only in listedsecurities or securities which are listedon a recognised and regulated stockexchange.TYPES OF FUNDSThe principal forms of funds undermanagement in Ireland are:• UCITS funds constituted inthe form of (i) unit trusts, (ii)investment companies with variableshare capital, and (iii) commoncontractual funds; and• Non-UCITS funds constitutedin the form of (i) unit trusts, (ii)investment companies with variableshare capital, and (iii) commoncontractual funds Funds may alsobe established in other forms suchas investment limited partnerships,although these are very rare inpractice.UCITSUndertakings for Collective Investmentin Transferable Securities (UCITS)are collective investment schemesestablished and authorised under aharmonised EU (EU) legal framework.A UCITS established and authorisedin one EU Member State can be soldor “passported” cross border intoother EU Member States withouta requirement for an additionalauthorisation. This “European passport”enables fund promoters to create asingle product for the entire EU ratherthan having to establish an investmentfund product on a jurisdiction byjurisdiction basis.NON-UCITSNon-UCITS funds are establishedpursuant to domestic law rather thanEU law and, as such, do not qualify fora passport in order to be marketed inother EU Member States. It follows,therefore, that the Central Bank hasmore flexibility regarding the impositionor relaxation of conditions generally.In developing its regulatory regimefor non-UCITS, the Central Bank hasdrawn a distinction between differentcategories of investors, in terms of levelof ‘sophistication’ (i.e. whether retailor professional). In addition, certainspecialist funds (for example, real estateand private equity funds) which are notpermitted under the UCITS rules arepermitted as non-UCITS.Non-UCITS funds can be established inbroadly three regulatory categories: (i)retail, (ii) professional investor; and (iii)qualifying investor. Retail non-UCITSare subject to similar conditions andrestrictions in relation to investmentand borrowing as UCITS funds. Theseconditions and restrictions are relaxedsomewhat for professional investorfunds. The conditions and restrictionsrelating to investment and leveragedo not apply almost in full in respectof funds which are marketed solelyto qualifying investors. The investorsthemselves must also meet a qualifyinginvestor test.TAXATION OF FUNDSUnless an investor in an Irish fund isresident or ordinarily resident in Ireland,generally there is no tax payable inIreland on either a fund’s income andgains or in respect of any paymentsreceived from the fund by the investor.Irish regulated funds, however theyare constituted, are not subject to taxon their income and gains but insteadoperate an exit tax regime where apotential tax liability only arises inrespect of certain chargeable eventssuch as a payment of any kind to aninvestor, or a transfer of units. In certaincircumstances, the fund may elect not tooperate the exit tax on such a deemedchargeable event, in which