835AVB. Collective investment scheme

(1) In this section—

‘beneficial owner’, in relation to an undertaking, is any individual who is a beneficial owner within the meaning of—

(a) the Investment Limited Partnerships Act 1994, or

(b) 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—

(a) that is widely held, and

(b) which holds a diversified portfolio of assets;

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“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

“EEA state” means a state which is a contracting party to the EEA Agreement;

“foreign tax”, in relation to a relevant territory, means a tax which—

(a) corresponds to corporation tax in the State,

(b) generally applies to income, profits and gains arising to a company that is resident for the purposes of tax in that territory, and

(c) is imposed at a nominal rate greater than zero per cent;

“investment limited partnership” means a partnership authorised in accordance with the Investment Limited Partnerships Act 1994;

“listed territory” has the same meaning as it has in section 835YA;

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“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;

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“relevant company”, in relation to an investment limited partnership, means a company—

(a) which is a direct or indirect asset of the investment limited partnership,

(b) in which the partners of the investment limited partnership are beneficially entitled, directly or indirectly, to not less than 95 per cent of its ordinary share capital,

(c) whose business consists of the holding, directly or indirectly, of a diversified portfolio of assets, and

(d) which is—

(i) resident in the State, or

(ii) by virtue of the law of a relevant territory, is—

(I) resident for the purposes of foreign tax in the relevant territory, and

(II) not generally exempt from foreign tax;

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“relevant investment undertaking” means—

(a) a common contractual fund, within the meaning of section 739I,

(b) an investment limited partnership^[5]>, within the meaning of section 739J^<[5], or

(c) a relevant partnership,

but where the undertaking referred to in paragraph (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—

(a) a partnership, or

(b) a limited partnership under the Limited Partnerships Act 1907,

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

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“relevant territory” means—

(a) an EEA state, other than the State,

(b) not being such an EEA state, a territory with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(c) not being a territory referred to in paragraph (a) or (b), a territory with the government of which arrangements have been made which on completion of the procedures set out in section 826(1) will have the force of law,

but does not include a listed territory;

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(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) Subject to subsection (4), for the purposes of determining whether a relevant investment undertaking holds a diversified portfolio of assets, regard shall be had to—

(a) the nature of the assets held by the relevant investment undertaking,

(b) the extent to which the relevant investment undertaking is exposed to the risks and rewards of different classes of assets (whether directly or indirectly),

(c) the number of investments made by the relevant investment undertaking,

(d) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus, and

(e) where the assets held are derivatives, the assets to which the derivatives give exposure.

(4) A relevant investment undertaking shall not be determined to hold a diversified portfolio of assets—

(a) 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

(b) 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.

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(4A) In the case of an investment limited partnership, for the purposes of subsection (4)(a)—

(a) a relevant company shall not be considered to be an issuer of securities to the investment limited partnership, and

(b) an investment limited partnership shall be deemed to hold directly any securities held by a relevant company.

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(5) In a case in which 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—

(a) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,

(b) the date or dates on which the condition ceased to be satisfied,

(c) the circumstances giving rise to the condition ceasing to be satisfied,

(d) the steps taken, if any, to ensure the condition is satisfied and the date or dates on which it is satisfied, and

(e) the steps taken, if any, to prevent the circumstances, referred to in paragraph (c), reoccurring.

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(6) In a case in which a relevant investment undertaking, has not satisfied the conditions in paragraphs (a) and (b) of the definition of ‘collective investment scheme’ in subsection (1), the relevant investment undertaking will be treated as satisfying 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, and that the failure to satisfy the conditions is temporary, inadvertent and unavoidable, having regard to—

(a) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,

(b) the circumstances giving rise to the condition not being satisfied, and

(c) the steps taken, if any, to ensure the condition will be satisfied.

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(6) In a case in which a relevant investment undertaking, has not satisfied the conditions in paragraphs (a) and (b) of the definition of “collective investment scheme” in subsection (1), the relevant investment undertaking will be treated as satisfying those conditions in the period of 24 months from the date on which the undertaking makes its first investment (in this subsection referred to as the ‘relevant period’) where it would be reasonable to consider that—

(a) the conditions will be satisfied within the relevant period, and

(b) the failure to satisfy the conditions is temporary and unavoidable, having regard to—

(i) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,

(ii) the circumstances giving rise to the conditions not being satisfied, and

(iii) the steps taken, if any, to ensure the conditions will be satisfied.

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(7) In a case in which 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—

(a) the failure to satisfy the condition is due to the commencement of the winding down of the relevant investment undertaking, and

(b) 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.

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(7) In a case in which a relevant investment undertaking, having satisfied the conditions in paragraphs (a) and (b) of the definition of “collective investment scheme” in subsection (1)—

(a) ceases to satisfy one or both of those conditions, and

(b) the failure to satisfy the condition or both of those conditions, as the case may be, is due to the commencement of the winding down of the relevant investment undertaking,

the relevant investment undertaking will be treated as satisfying those conditions in the period of 12 months from the date on which the condition or both of those conditions, as the case may be, first ceased to be satisfied as a result of the winding down.

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