Right place right time Ireland - the domicile of choice for regulated funds www.pwc.com/ie January 2012 Download QR code scanner for your smart phone to view what is behind the code. 2 Right time, right place 2012 2012 Right time right place 3 1. Foreword 04 2. The Irish Funds Industry 05 3. Regulation 10 4. Distribution of Irish funds 25 5. Listing on the Irish Stock Exchange 34 6. Taxation 39 7. P ro ducts 43 8. Services 51 9. Contacts 54 10. Appendices 57 Contents 4 Right time, right place 2012 Foreword This achievement underlines the experience, expertise and global reach of Ireland as a leading funds domicile and as a leading centre for the administration of investment funds. The funds industry continues to be a source of high value employment in Ireland. In the two year period from the start of 2010 to the end of 2011 the Irish funds industry will have created 1,143 new jobs in Ireland – bringing total employment to 12,500. The Irish Funds Industry Association (IFIA) has opened representative offi ces in the US and the UK in a joint venture with IDA Ireland, the Irish Government’s inward investment agency. The move means that the Irish funds industry will now have representatives on the ground in New York, Boston, Chicago, Atlanta and London for the fi rst time. Offi ces have also been opened in Asia, Singapore and Tokyo. Ireland secured the accolade of Best Offshore Centre at the annual Global Investor Magazine awards 2010 and has recieved many other accolades based on its competitive infrastructure. I trust that you will fi nd this updated brochure on the Irish funds industry benefi cial to your business needs. The asset management world is in the middle of major regulatory change and it is a testing time for the industry. Ireland has been adapting quickly to this new landscape. It is now UCITS IV ready with the Central Bank transposing this legislation by the 1 July 2011 deadline and the QIF product is also ‘AIFMD ready’. The Irish funds industry has proven itself to be strong, diverse and resilient. It has emerged relatively unscathed from the global fi nancial crisis. According to the Central Bank of Ireland, as of the end of November 2011, the assets of Irish domiciled investment funds were EUR 1 trillion, the industry entered 2012 as a trillion euro industry, a remarkable achievement. Ireland was the managers’ choice for both UCITS and alternatives investments in 2011. Recent fi gures from the Central Bank of Ireland show that the number of QIFs, the alternative fund vehicle, is at an all time high of 1,355 funds with assets also reaching a peak of EUR174 billion. QIF assets grew some 18% in 2011. On the UCITS side, EFAMA statistics showed that Ireland attracted the highest infl ow of UCITS net assets (EUR 41.5 billion) of any domicile for 2011. In fact, the statistics show that the gains made by Ireland were almost two and half times that of the next most successful domicile. Damian Neylin Asset Management Leader Ireland January 2012 2012 Right time right place 5 The Irish funds industry 6 Right time, right place 2012 The Irish funds industry with more than 20 years’ experience and expertise offers asset managers a ‘one stop shop’ for domiciliation. Over 50 world class service providers provide an array of services to investment funds. An abundance of the big players of the fund servicing world are situated in Ireland including administrators, lawyers, custodians, auditors, transfer agents etc. There is a wide range of specialist expertise in fund structuring, domiciling and administration available within a 12,500 strong workforce. Ireland knows investment funds Why Ireland? Why Ireland for alternatives? • The world’s leading centre for the administrations of hedge funds • 40% of global hedge fund assets are serviced in Ireland • 7.4% of global hedge funds are domiciled in Ireland • Ireland is home to 63% of all European hedge funds • 18% growth in the Qualifying Investor Fund (“QIF”), the vehicle of choice for fund promoters wishing to pursue alternative strategies such as hedge funds, in 2011 • 1,355 QIFS now authorised with AUM of EUR 174 bn • The QIF is “AIFMD ready” as it already complies with the majority of the requirements Why Ireland for UCITS? • Almost 80% of the assets in all Irish domiciled funds are UCITS • Approximately 3,000 Irish UCITS funds approved for cross border distribution • Irish UCITS are distributed in over 70 countries • Ireland is the fastest growing major cross border UCITS domicile – over the past ten years the net assets of Irish UCITS have grown by 422% • Ireland has signifi cant market share in both Money Market Funds (30% of European market) and ETF’s (38% of European market) • UCITS IV Implemented as of 1 July 2011 Favourable Tax environment • 12.5% corporate tax • No subscription or fund taxes • No transfer taxes • Generous VAT exemptions for funds • Extensive tax treaty network with over 60 countries • Full compliance with international tax standards Ireland - Your gateway to the world • More than 850 fund promoters from over 50 countries have chosen Ireland as their international hub • The main countries of origin for fund promoters are the US, UK, Germany, Ireland and Italy. The others originate from 45 countries in Europe, Asia, the Middle East and the America. • Over $ 2.5 trillion investor assets are serviced by Irish service providers from 167 countries • Ireland service providers support 23 currencies and 28 languages • Irish funds distribute to over 70 countries in Europe, Asia, the Middle East and the Americas Source - Irish Funds Industry Information 2012 Right time right place 7 Promoters from countries all over the world have set up funds in Ireland Who is here already? 20 largest promoters in Ireland 1. Blackrock 2. PIMCO 2. Goldman Sachs 4. HSBC 5. State Street 6. Insight Investment 7. D rey f us Cor po ra ti on 8. Deutsche Bank/DWS 9. Vanguard Group 10. Russell Investments 11. Scottish Widows 12. Mediolanum 13. Royal Bank of Scotland 14. Ignis Asset Management 15. Legg Mason Group 16. Baring Asset Management 17. Northern Trust 18. Invesco 19. Aviva 20. Legal & General Source: Lipper Fund Encyclopaedia Ireland 2011-2012 Country of origin No of funds Assets US 136 768,907,506,052 UK 375 670,454,473,263 Netherlands 8 65,508,813,300 Germany 7 52,834,514,857 Switzerland 64 38,501,662,569 Italy 10 33,382,009,286 France 19 28,660,298,898 Ireland 41 28,251,543,812 South Africa 10 16,095,831,225 Japan 19 15,183,462,212 Australia 10 14,755,818,614 Sweden 5 11,195,542,170 Liechtenstein 2 9,978,501,845 Brazil 3 8,060,978,831 Norway 12 4,598,983,527 Malta 2 3,808,332,625 Canada 6 3,095,275,534 Hong Kong 15 2,683,835,985 Country of origin No of funds Assets Spain 14 1,988,288,599 Belgium 5 1,897,066,635 Singapore 9 1,512,898,006 BVI 5 1,333,554,879 Finland 4 1,192,292,821 Kuwait 2 1,179,162,058 Israel 2 627,935,711 Guernsey 2 384,518,723 Russia 4 305,911,563 India 2 280,964,812 Jersey 2 274,481,942 Egypt 1 272,269,927 Portugal 2 261,211,824 Czech 1 216,476,470 Bahrain 1 207,831,875 Saudi Arabia 2 186,363,682 Greece 3 108,476,013 Cayman 2 106,681,287 Country of origin No of funds Assets Barbados 1 105,609,403 Austria 4 103,333,467 Honduras 1 98,745,690 UAE 6 85,562,418 Sri Lanka 1 38,508,262 Bermuda 2 34,851,888 Botswana 1 34,720,296 Korea 1 23,707,649 China 1 23,215,255 Ukraine 1 21,442,001 Turkey 1 19,977,339 Lebanon 1 18,575,878 Gibraltar 1 6,103,593 Promoters originating from this country have funds domiciled in Ireland Origin of promoters of Irish domiciled and non domiciled funds 8 Right time, right place 2012 Funding industry in numbers Service providers Promoters of Irish administered funds 852 Lipper, June 2010 Promoters of Irish domiciled funds 431 Lipper, June 2011 Promoters of non-Irish domiciled funds 599 Administrators 46 Lipper, June 2011 Custodians 18 Lipper, June 2011 Law Firms 11 Lipper, June 2011 Auditor s 11 Lipp er, June 2011 Employed in industry 12,500 IFIA, Dec 2011 Funds Industry by % Growth in domiciled funds (2009-2010) 29% Dec 2009 – Dec 2010 Global Hedge funds serviced from Ireland 43% HFM week survey & IFIA, Oct 2010 European hedge funds domiciled in Ireland 63% HFR, Oct 2010 European ETFs domiciled in Ireland 31% Dec 2010 Promoters originating from the US 43% June 2011 Promoters originating from the UK 38% June 2011 European cross border market 30% Lipper FMI, 2010 2012 Right time right place 9 • At the end of 2011, assets of Irish domiciled investment funds had reached EUR 1 trillion. • Ireland was the managers’ choice for both UCITS and alternatives investments in 2011. • Recent fi gures from the Central Bank of Ireland show that the number of QIFs, the alternative fund vehicle, is at an all time high of 1,355 funds with assets also reaching a peak of EUR174 billion. QIF assets have grown some 18% in the past 12 months. • On the UCITS side, EFAMA statistics showed that Ireland was also the domicile of choice for UCITS in 2011 attracting the highest infl ow of net assets of any domicile for the year. In fact, the statistics show that the gains made by Ireland were almost two and half times that of the next most successful domicile. • Ireland attracted EUR41.5 billion in net assets of UCITS in the year to date (Oct 2011). The largest infl ows experienced by any other jurisdiction was only EUR17 billion. In fact most jurisdictions saw signifi cant losses - some of more than EUR40 billion. Ireland’s fund industry continues to grow - In 2011 … • Irish Bank Guarantee Scheme begins • Global Financial Crisis: Lehman Brothers fi les for bankruptcy • Irish GDP falls 3.5% • Funds assets fall globally by 27.5% in 2008 • Net assets of Irish domiciled funds fall by 20% in 2008 • Irish GDP falls 7.6% • 16% annual growth in Irish domiciled funds • Funds assets serviced in Ireland reach EUR 1.8 trillion all time high • National Asset Management Agency set up to manage bad property loans • Record highs for Irish exports worth EUR 161bn • All time high for Irish UCITS and QIFs UCITS = EUR 759bn (+27% on 2009) QIFs = EUR 153bn (+35% on 2009) • Irish GDP falls 1.25% • QIF assets grown by 18% • Irish UCITS receive largest infl ows in Europe • Irish domiciled fund assets reach EUR 1 trillion Sept 2008 Dec 2008 Dec 2009 Nov 2010 Dec 2011May/June 2009 Irish funds industry fared well during challenging economic times • Irish GDP growth average at 0.7% for year Source: Irish Funds Industry Association (IFIA), PwC Analysis 10 Right time, right place 2012 Regulation [...]... Mauritius 2012 - - - - - - - 5 - Right time, right place - - 4 - 28 - 3 - - - - - Source: Lipper Hindsight, PwC analysis Distribution Channels for the top 10 Distribution countries for UCITS Distribution Channels for the top 10 Distribution countries for UCITS Ranking Country Traditional Fund Distribution Channels Main channel & players As seen in the table, Retail Banks continue to be the dominant distribution... funds 2012 Right time right place 25 Ireland is one of the main gateways for UCITS funds Irish UCITS are distributed to a large number of countries across Europe, the Americas, Asia and the Pacific, Distribution of Irish funds Total number of registrations for Irish UCITS funds in each of the main regions the Middle East and Africa The chart below outlines the distribution of Irish UCITS over the last... the competent authority for the authorisation of regulated funds in Ireland Their duties include: • Approval of the fund promoter, investment manager and Management Company • Approval for the marketing of non-Irish investment funds into Ireland • Specification and approval of the fund administrator and custodian • Specification and approval of the prime broker in the case of hedge funds • Authorisation... 2011 2012 Right time right place 33 Listing on the Irish Exchange 34 Right time, right place 2012 Listing Investment Funds on the Irish Stock Exchange The Irish Stock Exchange (“ISE”) is recognised worldwide as the leading centre for listing investment funds with over 3,000 funds/ subfunds listed The demand for the ISE’s listed product is investor driven and it appeals to managers all around the globe... investment funds must have an Irish based administrator and an Irish based custodian / trustee The administrator is responsible for the calculation of the NAV, the maintenance of the accounting books and records, the maintenance of the share register etc The custodian / trustee are responsible for safekeeping of the assets and for certain fiduciary / trustee type functions The custodian cannot be the same... duty of care to the unit holders and is liable for any failure to meet the requisite standard of care Can fund be exempt from regulation? Is promoter approval required? Right time, right place • Risk monitoring for non-sophisticated the responsibility of any designated individual Collectively the responsibility of the board of the management company • Paying Agent/Facilities Agent Agreement 12 on the. .. Guernesy and the Isle of Man Other jurisdictions may be added by order of the Irish Minister for Enterprise Trade and Innovation • The latest annual report and any subsequent half-yearly report; and • The Key Investor Information Document(KIID)/Simplified Prospectus 2012 Right time right place 23 The new re-domiciliation regime provides a clear framework ensuring minimal disruption to day-to-day management... of the funds whilst preserving their legal identity The legal (registering with the Companies Registration Of ce (CRO)) and regulatory (approval by the Central Bank), processes involved in re-domiciliation are relatively straightforward minimising the administrative burden of migration The Central Bank of Ireland issued a “Guidance Letter” outlining the practical steps involved for both corporate funds. .. promoter is authorised in another jurisdiction and meets the principal criteria required by the Central Bank, the Central Bank may run the fund approval process in parallel with the promoter approval 2012 Right time right place 13 Approval of service providers Stage 1: Promoter Approval The promoter is the party responsible for lodging the application of the fund authorisation with the Central Bank and will... registrations The number of Irish UCITS registrations for the Middle East has been reducing year on year The number of Irish UCITS registrations for the Americas had been increasing every year but has dropped for the first time in 2010 Africa has the lowest number of Irish UCITS registrations out of the five regions 180 162 144 126 108 90 72 54 36 18 0 2006 Total number of registrations per year of Irish UCITS funds . Right place right time Ireland - the domicile of choice for regulated funds www.pwc.com/ie January 2012 Download QR code scanner for your. to view what is behind the code. 2 Right time, right place 2012 2012 Right time right place 3 1. Foreword 04 2. The Irish Funds Industry 05 3. Regulation