The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Redomiciliation

  • From Vol. 9 No.8 (Feb. 25, 2016)

    Operational Considerations Hedge Fund Managers Must Address When Redomiciling Their Hedge Funds (Part Two of Two)

    When making the decision to redomicile its hedge fund to a more favorable jurisdiction, a manager must consider more than the potential marketing or other advantages the move promises. Redomiciliation involves potential regulatory burdens, conflicts of interest and operational issues, including investor notification and redemption obligations. In a recent interview with The Hedge Fund Law Report, Jonathan Law and Donnacha O’Connor, partners at Dillon Eustace, discussed the prime reasons hedge fund managers consider redomiciliation of their hedge funds. This article, the second in a two-part series, details the potential drawbacks and operational considerations of redomiciliation. The first article addressed the regulatory implications of, and potential conflicts of interest inherent in, the decision to redomicile. For more on redomiciliation, see “Redomiciling Offshore Investment Funds to Ireland, the European Gateway” (Mar. 4, 2011). For additional commentary from Law and O’Connor’s colleague, Derbhil O’Riordan, see “Four Strategies for Hedge Fund Managers for Accessing E.U. Capital Under the AIFMD” (Feb. 13, 2014).

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  • From Vol. 9 No.7 (Feb. 18, 2016)

    Regulatory Considerations Hedge Fund Managers Must Address When Redomiciling Their Hedge Funds (Part One of Two)

    Hedge fund managers in search of marketing or other advantages may consider redomiciling their hedge funds to a more favorable jurisdiction. However, such managers must consider the implications of the move, including potential increased regulatory burdens and conflicts of interest created by the transition. In a recent interview with The Hedge Fund Law Report, Jonathan Law and Donnacha O’Connor, partners at Dillon Eustace, discussed the prime reasons hedge fund managers consider redomiciliation of their hedge funds, along with the legal and operational considerations that attend that decision. This article, the first in a two-part series, addresses the regulatory implications of, and potential conflicts of interest inherent in, the decision to redomicile. The second article will detail the potential drawbacks and operational considerations of redomiciliation. For more on redomiciliation, see “Benefits and Burdens of Redomiciling a Hedge Fund to an E.U. Jurisdiction” (Oct. 27, 2011). For additional insight from Dillon Eustace, see “Irish Central Bank Issues Proposed Rules to Enable Private Funds to Originate Loans” (Sep. 11, 2014).

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  • From Vol. 8 No.32 (Aug. 13, 2015)

    Tax, Legal and Operational Advantages of the Irish Collective Asset-Management Vehicle Structure for Hedge Funds

    The Irish Collective Asset-management Vehicles Act came into operation in March 2015 and allows for the creation of an innovative, tax-efficient corporate structure for Irish investment funds which sits alongside existing Irish fund structures.  See “New Irish Fund Structure Offers Re-Domiciliation Possibilities and Tax Advantages for Hedge Funds,” The Hedge Fund Law Report, Vol. 8, No. 10 (Mar. 12, 2015).  There has been widespread industry interest in the Irish collective asset-management vehicle (ICAV), with a number of leading asset managers such as Permal, Deutsche Bank and Legg Mason already having established ICAVs and a host of other asset managers in the process of either converting to or establishing new ICAVs.  Since the Central Bank of Ireland opened the ICAV register on March 16, 2015, there have been over 30 ICAVs authorized, representing in excess of $30 billion of inflows into Irish funds.  In a guest article, Ian Conlon of Maples and Calder explains the key features and advantages of the new ICAV structure and discusses how hedge fund managers can establish ICAVs, redomicile funds to Ireland and convert existing Irish fund vehicles so they can take advantage of the newly available structure.  For additional insight from Maples and Calder, see “Considerations for Hedge Fund Managers Evaluating Forming Reinsurance Vehicles in the Cayman Islands,” The Hedge Fund Law Report, Vol. 7, No. 33 (Sep. 4, 2014); and “Use by Private Fund Managers of the British Virgin Islands for Private Equity Fund Formation and Private Equity Investments,” The Hedge Fund Law Report, Vol. 5, No. 45 (Nov. 29, 2012).

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  • From Vol. 8 No.10 (Mar. 12, 2015)

    New Irish Fund Structure Offers Re-Domiciliation Possibilities and Tax Advantages for Hedge Funds

    The Irish Parliament recently passed legislation to provide for a structure specifically tailored to meet the needs of the global funds industry.  The legislation creates a new form of corporate vehicle for funds, known as the Irish Collective Asset-Management Vehicle (ICAV).  In addition to minimizing the administrative complexity and cost of establishing and maintaining a collective investment scheme in Ireland, the ICAV will be an “eligible entity” for U.S. tax purposes, allowing it to “check the box.”  It is anticipated that the ICAV will make it increasingly attractive for fund promoters to establish new corporate funds in Ireland or, allied with the user-friendly Irish re-domiciliation mechanism, to re-domicile offshore funds to Ireland.  See “Redomiciling Offshore Investment Funds to Ireland, the European Gateway,” The Hedge Fund Law Report, Vol. 4, No. 8 (Mar. 4, 2011).  The Central Bank of Ireland has recently confirmed that it stands ready and able to accept applications for ICAV structures within two weeks of the legislation being enacted.  In a guest article, Vincent Coyne, a Senior Associate in William Fry’s Asset Management and Investment Funds Department, first focuses on key tax considerations of the ICAV and the opportunities this creates for re-domiciling to Ireland, then examines the practical legal benefits of the new regime.

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  • From Vol. 4 No.38 (Oct. 27, 2011)

    Benefits and Burdens of Redomiciling a Hedge Fund to an EU Jurisdiction

    A recent report (Report) lays out the key considerations for hedge fund managers contemplating redomiciliation to the European Union (EU).  The Report is based on interviews of 49 hedge fund managers from 18 different countries, including managers who have redomiciled, managers who are thinking of redomiciling and managers who have no redomiciliation plans.  The Report catalogues the three most significant benefits driving redomiciliation, and other factors that factor into redomiciliation decisions.  The three key benefits and others mentioned in the Report and discussed herein, however, must be weighed against the flexibility and expertise of offshore funds as well as certain investors’ preferences for other, easier ways to allay their concerns.  This article catalogues the findings of the Report; describes redomiciliation mechanics; considers choice of jurisdiction arguments; describes a compromise position that may work for a range of managers that currently have offshore funds; and discusses the pros and cons of certain typically used European structures for hedge fund strategies.  See also “The Implications of UCITS IV Requirements for Asset Management Functions,” The Hedge Fund Law Report, Vol. 4, No. 36 (Oct. 13, 2011).

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  • From Vol. 4 No.8 (Mar. 4, 2011)

    Redomiciling Offshore Investment Funds to Ireland, the European Gateway

    Alternative investment managers have increasingly chosen to domicile their funds in European jurisdictions in recent years rather than the Caribbean islands which have traditionally been the home domiciles for hedge funds.  Ireland has been a particularly significant beneficiary of this trend and the percentage of global hedge fund assets domiciled in Ireland has more than doubled over the last 18 months alone so that it now exceeds that of both Bermuda and the BVI.   Furthermore, recent industry statistics showed that 63 percent of European hedge funds were domiciled in Ireland, and this position as the dominant jurisdiction in Europe is continuing to grow.  In a guest article, Mark Browne, a Partner in the Financial Services Department of Mason Hayes+Curran, explores the key drivers behind the movement of offshore funds to Ireland and details the practical steps involved where an asset manager decides to redomicile an existing fund to that jurisdiction.

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