The last fifteen years, since t The last fifteen years, since the establishment of the International Financial Services Centre (“IFSC”) in It has also become a key location within the EU for the administration and listing of hedge funds and funds of hedge funds. The range and flexibility of the legal structures available has facilitated the growth of fund families aimed at investors with a broad range of investment criteria in a multiple of jurisdictions. Managers and Promoters have been attracted to According to Fitzrovia International, the Irish funds industry grew by nearly 30% in net assets (in USD) over the twelve months to 30 June, to reach USD 375.4 billion (up from USD 289.9 billion) in 2,334 funds. When all funds serviced in In an international context, all Dublin-domiciled funds (i.e. legally established there) now exceed those of UK-domiciled funds, both in terms of assets and number of funds. And, as a cross-border fund servicing centre, Summary of Services * Fund Administration/Fund Accounting * Management and Investment Management * Trustee/Custodial Services * Shareholder Services * Legal Advisory Services * Company Secretarial Services * Audit and Accounting Services Until last year, it was the Central Bank of * Calculation of the Net Asset Value (NAV) including the calculation of the funds income and expense accruals * Preparation of semi-annual and annual accounts * Maintenance of the funds financial books and records * Payment of the funds expenses * Calculation and payment of dividends and distributions (if required) * All back up documents underlying the books and records and the staff that maintain them. * Supervision of the orderly liquidation and dissolution of the fund. (if required) In respect to a non – Irish incorporated fund, the regulations are minimal, but strong regulations apply to the regulated Administrator as opposed to the non-regulated fund. As a minimum, IFSRA requires that: * A Health warning and disclosure that the fund is not regulated by the IFSRA be included in the fund’s documentation; and. * Submission of the agreement and other documents issued by the fund containing a reference to the Administration Company. The Irish Authorities position, with regard to non-Irish funds, is basically one of a tax issue and not a regulatory issue. Therefore, in order to prevent the non-Irish incorporated fund becoming liable to Irish Taxation it is essential that "Mind and Management" of the fund is undertaken outside of Although the IFSRA does not regulate any non-Irish funds, it, nevertheless, does regulate the Thus, the IFSRA requires an administrator, for example, to apply the same standards and procedures when administering a Cayman fund as they would administering an Irish fund and this is particularly so with regard to complying with anti-money laundering regulations. There are over 40 Administration Companies Operating in Many fund promoters who do not have a physical presence in There are a number of reasons why a promoter may wish to establish its own Management Company, including: The IFSRA imposes certain supervisory conditions on both Management Companies and Fund Administration Companies. These conditions include: Both the UCITS and Non-UCITS Guidance Notes issued by the Central Bank of The Trustee function includes the Custodian function. (A point of interest is that the notices make no distinction between the role of the custodian and of the trustee regardless of the investment vehicle concerned). The regulations describe the eligibility criteria to act as as a trustee in the There are certain practical distinctions between the Custodian’s operational responsibilities and the fiduciary obligations they assume under the regulations. In a pure operational sense a custodian generally provides some or all of the following services: Asset Safekeeping; Security Settlement; Income Collection; Corporate Action; Processing; Cash Management; Securities Lending. In providing these services the Trustee/Custodian under the regulations also automatically assumes the following responsibilities to: The Trustee/Custodian cannot be the same legal entity as the Administrator to a fund. As a result service providers are established as either Administration Companies or Custodian Banks. Many financial institutions operate both Trustee/Custodians and Administrators as separate entities. There are currently 23 Custodian Banks operating in the IFSRA is responsible for the regulation of the shareholder service providers and states that the minimum activities that must be carried out in respect to Irish incorporated funds are as follows: * Receive requests for the issue or redemption of Participating Shares. * Promptly notify the Directors and the Custodian/Paying Agent/Administrator of the same * Using the Redemption Price and Subscription Price provided by the Administrator, arrange for the following: * the number of Participating Shares issued; * the number of Participating Shares to be redeemed; * the total amount receivable or payable by the Company in respect of such issues and redemptions. * Forward or deposit with the Custodian Paying Agent or the Fund all monies received on behalf of the Company * Direct the Custodian/Paying Agent to pay the amount due on redemption to the persons entitled thereto * Respond to all shareholder correspondence addressed to the Fund, * Dispatch to the shareholders of the Company such notices, reports, financial statements and other written material as may be requested from time to time by the Manager or the Fund * Safekeep certificates or such other evidence representing shares of the Fund * Maintain and safeguard the Register of Shareholders and other documents in connection therewith and enter on such Register all original issues or allotments of shares and all transfers and redemption of such shares, * Arrange with the Custodian/Paying Agent the necessary foreign exchange transactions where payments in respect of the redemption of Participating Shares are tendered or requested in a currency other than the currency of the Fund. * Ensure that all Money Laundering provisions have been satisfied in relation to shareholder transactions in accordance with the relevant legislation. In respect to a non-Irish incorporated fund, the regulations apply to the regulated Administrator as opposed to the non-regulated fund. Again, IFSRA requires that: * A Health warning and disclosure that the fund is not regulated by the Central Bank of Submission of the agreement and other documents issued by the fund containing a reference to the Administration Company; and * IFSRA does require the Administrator to comply with Irish anti-money laundering regulations, when acting for non-Irish funds. Dublin Domiciled Investment Funds will generally appoint an Irish law firm to act as counsel to the Fund to carry out the following activities in respect of the initial Fund set-up and launch:- COMPANY SECRETARIAL SERVICES Domiciliary Administration or Company Secretarial Services can be broadly described as comprising the following services. These are generally included in the Administration Agreements issued by Administration Companies or Company Secretarial Companies to Fund Structures and Management Companies. All As such an auditor’s signature on the annual financial statements of investment funds is a regulatory requirement. The auditors produce a “Management Letter”, which discusses, not just the financial statements, but anything they have found, which they think is untoward, including, for example, comment on controls and procedures and how they are followed, etc. This Management Letter is also sent to IFSRA and is part of the audit report, although it may not be published for public consumption. The audit and accounting firms help their investment fund clients to solve complex business problems providing assurance and risk solutions that reasonably enhance their ability to build value and improve performance in an internet enabled world. As well as providing audit services, the accounting firms involved in servicing the Funds Industry in * Advice on product design and structuring; * Advice on distribution methodologies and strategies; * Taxation services; * Internal controls reporting including SAS 70 and FRAG21 Reports; * General consulting assistance; * Training courses for the funds industry; * Advice on Generally Accepted Accounting Practice; * E-business and Internet Solutions; * Internal audit; and * Performance measurement and attribution consulting and verification. IRISH-AUTHORISED RETAIL FUND OF HEDGE FUNDS With a reputation as the established centre of excellence for the administration and domicile of alternative investment schemes, the introduction of Retail Fund of Hedge Funds has further enhance the attractiveness of Ireland as the location-of-choice for the growing hedge fund industry. Commenting on the publication of the Central Bank notice, Damian Neylin, partner at PricewaterhouseCoopers noted, “ Gary Palmer, Chief Executive of the Dublin Funds Industry Association, added: “From an Industry perspective this once again proves Consolidated UCITS Regulations (which includes provisions for a Common Contractual Fund) and amending UCITS Product Directive Signed into Law The Statutory Instrument to transpose the amending UCITS Product Directive has been fashioned in such a way as to allow the maximum flexibility for fund promoters ensuring that during this transition period Irish UCITS can be established under the provisions of the existing Directive or under the provisions of the amending Directive. This highlights the pragmatic approach of the regulator and legislature in ensuring, where possible, legislation is enacted in the most pragmatic way possible.
FUND ADMINISTRATION/FUND ACCOUNTING
MANAGEMENT COMPANIES
TRUSTEE/CUSTODIAL SERVICES
SHAREHOLDER SERVICES
LEGAL ADVISORY SERVICES
AUDIT AND ACCOUNTING SERVICES