Thu, 04/06/2009 - 17:24
The recession has given everyone lots to think about and for the funds industry things are no different. With rising costs and staffing and recruitment pressures in the more established fund jurisdictions, international promoters are keen to consider other options. It is becoming increasingly evident that Ireland, as a funds centre, is facing more and more competition from the likes of smaller jurisdictions like Malta and Isle of Man.
Indeed, there has been a lot of change happening across the world on the regulatory side and most governments are taking this opportunity to overhaul company legislation. From the funds perspective, this is mainly to prepare for the global changes and ensure that they correct old legislation that in a lot of cases was not written to cater for funds.
Jurisdictions such as Ireland, Isle of Man, Saudi Arabia and Abu Dhabi are revising their company law to cater better for the financial services industry as it is today. Isle of Man released a new Financial Services Act 2008 and Collective Investment Schemes Act 2008 and, more crucially, is now competing head-on with the Channel Islands due to revisions on the VAT treatments for investments managers.
Malta's recent entry to the EU in 2004 has allowed them to very quickly make fast ground in getting market share on the UCITS products. They are expanding at a rate of 150 per cent year-on-year with regard to fund launches, which is remarkably similar to the Irish story in the 80s. Could we see ourselves relegated to the lower tables? Much will depend on the moves by Irish authorities concerning regulation and fund structures.
Many emphasise that a radical change must be made in Irish company law, towards the broader stakeholder model. There must also be a reform on corporate governance, with wider interests on employees, consumers, suppliers and the environment. And this must be done precisely in a bid to restore international confidence in Ireland as a place to invest and to do business.
The EU proposal for fund regulation has seen many disagreements and only time will tell what the final legislation will encompass. The Irish funds industry will need to keep a close eye on its neighbours within the EU that are also adapting legislation to meet the needs of the industry. Increasing regulation and costs of regulatory compliance, labour, rents and rising inflation are being monitored carefully, particularly given the poor growth of funds and change in economic climate.
A positive move is that Ireland is looking at reworking company law to cater for private equity and REIT type products. This may take more than 18 months to come into operation, but it is these foundations that will govern the success of Ireland as a funds jurisdiction in the decade ahead. It is also encouraging to see that the level of government commitment to maintain the development of our regulatory and service industry is evident, and this reaffirms the belief that forward planning and pragmatic regulation is key to ensuring success within the industry.
John Bohan, Managing Director, Apex Fund Services (Ireland)
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