835AVB Collective investment scheme

Summary

This section provides the meaning of “collective investment scheme”.

Details

Definitions

(1) “beneficial owner”, in relation to an undertaking, is any individual who is a beneficial owner within the meaning of –

1. the Investment Limited Partnerships Act, 1994, or
2. the Investment Funds, Companies and Miscellaneous Provisions Act 2005,

and in applying this Chapter to a relevant partnership the beneficial owner of the partnership shall be identified in the same manner as the beneficial owner of an investment limited partnership is identified.

“collective investment scheme” means a relevant investment undertaking—

1. that is widely held, and
2. which holds a diversified portfolio of assets.

“relevant AIFM” means an AIFM, within the meaning of the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013), authorised under those Regulations.

“relevant investment undertaking” means—

1. a common contractual fund, within the meaning of section 739I,
2. an investment limited partnership, within the meaning of section 739J, or
3. a relevant partnership,

but where the undertaking referred to in paragraphs (a) or (b) is an umbrella scheme, within the meaning of section 739B, it shall mean a sub-fund of that undertaking.

“relevant partnership” means—

1. a partnership, or
2. a limited partnership under the Limited Partnership Act 1907,

the affairs of which are managed by a relevant AIFM and which has been established under the law of the State.

(2) For the purposes of the definition of ‘collective investment scheme’ in subsection (1), a relevant investment undertaking is widely held where there is no beneficial owner of that undertaking.

(3) This subsection provides the meaning of a diversified portfolio of assets for the purposes of determining whether a relevant investment undertaking qualifies as a “collective investment scheme”. It provides that, subject to subsection (4), regard shall be had to—

1. the nature of the assets held by the relevant investment undertaking,
2. the extent to which the relevant investment undertaking is exposed to the risks and rewards of different classes of assets (whether directly or indirectly),
3. the number of investments made by the relevant investment undertaking,
4. the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus, and
5. where the assets held are derivatives, the assets to which the derivatives give exposure.

(4) This subsection provides that a relevant investment undertaking shall not be determined to hold a diversified portfolio of assets—

1. in a case in which the undertaking holds securities, where more than 10 per cent of those securities are issued by a single issuer, or
2. in a case in which the undertaking holds land, unless the undertaking holds 3 or more properties and the market value of each of those properties is less than 40 per cent of the total market value of the properties held.

(5) This subsection provides for a situation where a relevant investment undertaking temporarily breaches the conditions in paragraphs (a) (widely held) and (b) (diversified portfolio of assets) of the definition of ‘collective investment scheme’ in subsection (1).

The subsection provides that where a relevant investment undertaking, having satisfied the conditions in paragraphs (a) and (b) of the definition of ‘collective investment scheme’ in subsection (1), ceases to satisfy one or both of those conditions, the relevant investment undertaking will be treated as satisfying those conditions where it would be reasonable to consider that the failure to satisfy the condition, was temporary, inadvertent and unavoidable at the time the condition ceased to be satisfied, having regard to—

1. the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,
2. the date or dates on which the condition ceased to be satisfied,
3. the circumstances giving rise to the condition ceasing to be satisfied,
4. the steps taken, if any, to ensure the condition is satisfied and the date or dates on which it is satisfied, and
5. the steps taken, if any, to prevent the circumstances, referred to in paragraph (c), reoccurring.

(6) This subsection provides for a situation where, during its start-up phase, a relevant investment undertaking does not satisfy the conditions in paragraphs (a) (widely held) and/or (b) (diversified portfolio of assets) of the definition of ‘collective investment scheme’ in subsection (1). The subsection provides that the investment undertaking will be treated as having satisfied those conditions where it would be reasonable to consider that the conditions will be satisfied within 24 months of the date on which the undertaking makes its first investment having regard to—

1. the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,
2. the circumstances giving rise to the condition not being satisfied, and
3. the steps taken, if any, to ensure the condition will be satisfied.

(7) This subsection provides for a situation where, during its wind-down phase, a relevant investment undertaking does not satisfy the conditions in paragraphs (a) (widely held) and/or (b) (diversified portfolio of assets) of the definition of ‘collective investment scheme’ in subsection (1). The subsection provides that in a case in which a relevant investment undertaking, having satisfied the conditions, ceases to satisfy one or both of those conditions, the relevant investment undertaking will be treated as satisfying those conditions where—

1. the failure to satisfy the condition is due to the commencement of the winding down of the relevant investment undertaking, and
2. the date on which the winding down is completed is less than 12 months after the date on which the condition first ceased to be satisfied as a result of the winding down.

Relevant Date: Finance Act 2021