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
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,
documentation issued to unitholders in conjunction with such a
distribution should indicate that the distribution has been paid
out of capital.
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 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 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”