Irish Regulator Eases Qualified Investor Fund Rules

by Carla Johnson, Investors Offshore, London

11 January 2007

The Irish Funds Industry Association (IFIA) has reported that the Irish Financial Regulator has approved a filing-only authorisation process for qualifying investor funds (QIFs). The aim of this change in the authorisation process is greater speed to market of a fully regulated product.

Over the last number of months industry representatives have been working with the Financial Regulator to address the speed to market and attractiveness of the QIF by revising the authorisation process and enhancing product parameters.

Gary Palmer, chief executive, IFIA commented: ‘The practical effect of this development is that, where the Financial Regulator receives a complete application for the authorisation of a QIF before 3.00pm on a day, a letter of authorisation for that QIF can be issued the following day’.

An application for authorisation will be complete on the basis that the parties to the fund are all approved (the promoter, directors and relevant service providers to a QIF having the appropriate authorisation/approvals from the Financial Regulator) and that the fund reflects the agreed parameters. The intention is that the parameters for a QIF will be simplified and codified, and these will be included in a revised application form, a QIF application form. It is likely that there will be spot checks conducted on applications post-authorisation and in the event of non-compliance with the QIF requirements, applicants might have difficultly having similar future applications authorised on a pre-approved basis.

A very short and intense process of engagement is currently underway to effectively edit the current fund application form and determine what should be excluded for a QIF, with those key sections remaining forming the agreed parameters. A revised application form and Notice will be circulated in early January and the Financial Regulator will be accepting applications under the new QIF arrangements no later than February 2007.

Palmer continued: ‘By way of background, this very welcome development follows an initiative included in the Department of An Taoiseach’s recent strategy document ‘Building on Success’, for the International Financial Services Industry in Ireland’. The funds industry had highlighted that while speed to market is of critical importance for all investment funds, it is of paramount importance for certain investors and fund types. For a fund to seek and receive Regulatory Approval prior to launch, requires and involves a detailed process and such a process takes time. It was noted the timeframe for a fund to be approved is approximately six to eight weeks; however this timeframe is dependent on the complexity of the product structure and any issues that may arise during the approval process. It was proposed that the introduction of a fund structure that does not require an approval process will address the speed to market issues.

A Qualifying Investor Fund, which cannot be mass-marketed to regular investors, must have a minimum subscription of at least €250,000. In addition, each investor must certify in writing at the time of making the investment that he/she is either an institutional investor or a high net worth individual (as defined by the Financial Regulator). QIFs are exempted from various types of regulatory restrictions, including investment and borrowing restrictions normally imposed by the Financial Regulator.

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