Those seeking to establish a mutual trust in the Republic of Ireland should keep in mind that their activities will be governed by the Investment Act. Mutual trusts are defined as arrangements entered into for the purpose of creating opportunities for the general public to participate as beneficiaries in trusts’ profits generated from acquiring, owning or managing securities or property.
Ireland: Create a Unit Trust
A unit trust is established by concluding an agreement between trustees acting as depositories & management companies. Defining trusts’ goals & management-related limitations requires taking into account their investment objectives.
Such structures are managed by trustees whose main role is to make sure that a trust is managed as per its investment-related goals. A trustee can be an individual or organization entrusted with management of a trust’s assets on 3rd parties’ behalf.
If you’re planning to register a mutual trust in Ireland, you should keep in mind that an owner of such an organization is called a unit holder. They also have legal rights to all assets that funds own or manage.
There’s also registrars that act as intermediaries between managers of funds & interested parties.
Mutual funds may be established as UCITSs (which entails establishment of an open-end mutual trust in Ireland). Creating such a structure requires adherence to the UCITS regime & compliance with the CBI Rules. If you’re interested in creating an Irish AIF, please note that, under the AIFMD regime, you’re entitled to:
- establish a RAIF in Ireland & sell it to a retail investor;
- establish an Irish QIAIF & sell it to a qualified investor.
When it comes to an QIAIF & RIAIF, mutual funds aren’t required to act on a risk-sharing basis.
As mentioned earlier, mutual funds in Ireland can enjoy limited liquidity or be open-end. Registration of a closed-end unit trust in Ireland implies that its sub-funds will bear separate liability. Investors are entitled to hold units representing beneficial interest in the assets of a fund.
A unit trust can be established as a UCITS or AIF. It doesn’t have to pay income tax & profit tax arising from underlying investments. Investing more than twenty five percent in immovable property requires IREFs to pay a twenty percent withholding tax.
Seeking to establish a mutual trust in Ireland? Need advice on the regulation of mutual funds in Ireland? Why not contact IQ Decision UK?