Ross McCann, Head of Fund Services in Alter Domus Ireland: The recent change to the AIFMD’s marketing passport regulation has led Ireland to become even more attractive as a fund domicile. Prior statutes prohibited non-AIFMD authorised managers from marketing their funds to potential investors, a restriction that many managers evaded by using reverse solicitation.
This scenario arises where the manager and investor discuss potential ideas for funds. The investor subsequently calls the manager and makes a proactive request for information about the new fund. The manager avoids marketing and the investor receives information so they can act upon a new fund.

This practice is common among UK and US-based managers. To counter this, the new EU rules state that if a manager accepts a subscription from an investor they have spoken to within the past 18 months, it is considered marketing. Where it gets interesting for Ireland is that through AIFMD compliant products such as the ICAV and new Investment Limited Partnership, a pathway is available for fund managers desiring AIFM level access to the EU market.

Going forward, that should mean more managers setting up EU AIFs and appointing EU authorized AIFMs, which can avail themselves of the AIFMD marketing passport to raise capital. It is now possible to set up Irish Partnerships and Irish AIFMs. US or UK managers can do this directly or use a third-party provider to do it for them. Once the fund is submitted to the Central Bank of Ireland, the regulator will issue a passport that allows the manager to market the fund across Europe. The alternative is to use the national placement regime in each country which is expensive, time-consuming, and burdensome.