If you are planning to start investing in Ireland, then the information from our blog post may be useful for you. This article provides expert explanations of some of the key aspects of Variable Capital Investment Company and why the establishment of a VCC in the Republic of Ireland is beneficial.
Variable Capital Investment Company (VCC) has the status of a legal entity with its legal capacity provided for by its articles of association. It has the right to enter into agreements, and also act as a plaintiff and defendant in claims.
In fact, it is a public LLC, which is managed either in the form of separate structures, or as part of an "umbrella" association, where the assets and liabilities of several sub-funds are separated. VCCs allow multiple asset classes to be consolidated and managed within a single fund, with each sub-fund being free to set its own investment strategy, risk monitoring regimes, shareholder rights and dividend policy.
A VCC may be listed, unlisted or the listing may be restricted to several classes of shares. It may be self-managed or may appoint a management company.
Assets are owned by a company in which investors own shares held by custodians.
How to establish a VCC in the Republic of Ireland
All you need to do on the first stage is submit an application in accordance with a special form together with a draft charter to the Registrar of Companies. The following basic requirements must be met:
- obtain a license as an investment fund manager in Ireland;
- keep a register of participants;
- appoint an auditor;
- in the case of an Irish VCC registration with sub-funds, each individual sub-fund has to submit audited annual financial reports.
NOTE: Two VCC directors must be Irish residents.
An Irish VCC can be established as a UCITS (open-end). Such a fund operates in accordance with the UCITS Rules of the Central Bank.
If you are planning to establish an umbrella fund in Ireland, please note that this structure implies a division of responsibility between the VCC sub-funds. VCC issues shares for investors. These shares do not represent a legitimate or beneficial interest in the assets of the fund.
You can also create an AIF in Ireland. This requires selecting one of the below categories:
- for retail investors (RIAIF);
- for qualified depositors (QIAIF).
Both funds are subject to the AIFMD regime.
Register a VCC in the Republic of Ireland: Key Benefits
If you are looking to incorporate an Irish Variable Capital Company, consider the following key benefits:
- provides easy access to DTA agreements;
- can be considered a SMIC in the case of UCITS. This gives the right not to comply with the operational or capital requirements that apply to asset management companies.
If you are interested in investing with a VCC in Ireland, it is worth considering that such a fund is subject to legal risk sharing requirements as it is aimed at maintaining stable returns for investors in the long run. Since it is a variable fund, portfolio diversification is achieved by investing in stocks, corporate and government bonds. This type of business is suitable for investors who want to generate profits along with fixed income.
For more information, sign up for advice on VCC regulation in Ireland from IQ Decision UK specialists.