Ireland’s Investment Limited Partnerships Amendment Bill 2020: Enhancing The LLP Fund Regime

19 May 2021

What is it?

The Investment Limited Partnerships (Amendment) Bill 2020 or ILP Bill modernises the 1994 Investment Limited Partnership (ILP) Act. 

It makes provision for a new ILP structure, which will add to the already extensive choice of fund vehicles available to asset managers including the ICAV, CCF and Unit Trust and also the unregulated 1907 partnership structure.

It also introduces a number of other measures to ensure there is alignment with more recent domestic and EU legislation, such as the Alternative Investment Fund Managers Directive, the 2014 Companies Act and the 2015 Irish Collective Asset-management Vehicles Act

Benefits of the new ILP legislation include:

  • Limited Partnerships (LPs)

    • Insertion of an enhanced ‘white list’ of safe harbour provisions which preserve the limited liability status of investors by permitting certain activities to be undertaken without the investor being deemed to be taking part in the management of the ILP.
    • Removal of the requirement for all investors to approve amendments to the partnership agreement. Instead such amendments will require approval by a majority of investors (by reference to investor contributions).
    • Clarification that limited partners who do not take any part in the conduct of the business of the partnership cannot be prosecuted for any offences committed in the management of the partnership.
    • Removal of the requirement on a return of capital to any investor for the general partner to certify that the ILP is able to pay its debts in full as they fall due after the return of capital is completed
  • Umbrella ILPs

    • Permits the establishment of ILPs as umbrella funds with segregated liability between sub-funds;
  • Easy migration from other jurisdictions

    • The possibility for ILPs to be migrated into and out of Ireland by way of continuation, which provides scope to redomicile existing partnerships without significant implications.
  • Sustainable Investment focus

    • Flexibilities in borrowing, speed-to-market, and investment restrictions make ILPs an attractive option for alternative environmental, social, and governance (ESG) focused funds. With the European Commission’s Green Deal to make Europe the first climate-neutral continent by 2050 in mind, ILP funds are expected to be at the forefront of alternative sustainable investment funds in the foreseeable future.
  • Beneficial Ownership

    • The introduction of beneficial ownership disclosure requirements in respect of 25%+ investors in the ILP, which ensures the transparency of the vehicle adheres to international best practice.

 

References:

https://www.oireachtas.ie/en/bills/bill/2020/29/

https://www.pinsentmasons.com/out-law/news/ireland-fund-partnership-structure-real-asset-managers

https://home.kpmg/ie/en/home/insights/2021/01/investment-limited-partnerships-bill-2020-asset-management.html

https://www.cscgfm.com/blog/high-hopes-for-irelands-new-ilp/?utm_content=154450974&utm_medium=social&utm_source=linkedin&hss_channel=lcp-3523941

https://www.gov.ie/en/press-release/a7965-commencement-dates-for-investment-limited-partnerships-ilp-amendment-act-2020-set-donohoe-fleming/#