We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
On 14 February 2012, the Central Bank of Ireland issued a policy
update in respect of the payment of dividends out of capital by
Irish authorised retail collective investment schemes. Under its
updated policy the Central Bank has removed the prohibition on the
payment of such distributions and all Irish authorised retail
funds, including UCITS, may pay dividends out of capital provided
they adhere to the following requirements:
appropriate provision allowing for distributions out of capital
must be contained in the fund's constitutional document;
the rationale for the payment of dividends out of capital must
be clearly outlined in the fund's prospectus;
the prospectus and any subscription form or marketing material
must include a prominent risk warning at the front of the document
setting out the risk associated with paying distributions from
capital, i.e., that the fund's capital will be eroded, that the
distribution may negatively impact on future capital growth and
that the distributions could continue until all of the capital is
depleted;
the prospectus must highlight that distributions out of capital
may have different tax implications from distributions of income
and it must recommend that investors seek advice in this regard,
and
documentation issued to unitholders in conjunction with such a
distribution should indicate that the distribution has been paid
out of capital.
Conclusion
The change in the Central Bank's policy is welcomed in that
it reflects the willingness of the Central Bank to consider fresh
approaches to policy matters and facilitates promoters of Irish
retail investment funds who wish to establish funds with units that
pay dividends from capital. These funds are particularly attractive
to investors who wish to invest in assets which provide a
consistent level of income as well as those that wish to maintain a
stable net asset value.
This article contains a general summary of developments and
is not a complete or definitive statement of the law. Specific
legal advice should be obtained where appropriate.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Risk and Regulation Monthly provides a summary of the key International, European and UK regulatory developments and pertinent regulatory activity affecting the Financial Services industry.
Existing funds which no longer invest after July 22, 2013 are not required to comply with the provisions of the KAGB, even if the manager of such funds also manages funds which still make investments.
The purpose of this investment memorandum is to provide an overview of the investment vehicles (i.e. regulated, lightly regulated and unregulated) that Luxembourg offers to (foreign) entrepreneurs and managers.
The FSA has been in discussions with the banks with regard to them providing appropriate redress for affected customers in relation to the mis-selling of payment protection insurance.
The Court of Justice of the European Union has ruled that VAT on investment management fees paid by the trustees of a UK defined benefit pension scheme is irrecoverable under a VAT exemption for special investment contained in two EU Directives.
The draft legislation transposing the European Union’s Alternative Investment Fund Managers Directive into Luxembourg law was submitted to the grand duchy’s Chamber of Deputies by finance minister Luc Frieden on August 24.
Directive 2011/61/EU on Alternative Investment Fund Managers comes into force on 22 July 2013, and aims to provide common requirements across all EU States for the management or sale of Alternative Investment Funds by Alternative Investment Fund Managers within the EU.
A summary of the most recent financial regulatory developments.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
