Amalgamation of Retail Investor AIFS and Qualifying Investor AIFS with other Investment Funds

1. Where a Retail Investor AIF or Qualifying Investor AIF is the merging AIF, a proposal to amalgamate it with a receiving investment fund must be presented to the Central Bank before the proposal is put forward for consideration by its unitholders. The submission must indicate how the conditions set out in paragraph 2 below will be satisfied. A proposal to which the Central Bank objects will not be permitted to proceed.
2. The minimum conditions which the Central Bank will require are as follows:
   1. in the case of Retail Investor AIFs, the receiving investment fund must:
      • be located in the State, another Member State of the European Union, a Member State of the European Economic Area (‘EEA’) (Norway, Liechtenstein, Iceland), Guernsey, Jersey or the Isle of Man;
      • not contain restrictions on subscriptions or redemptions which are materially different to the merging AIF, including the categories of target unitholders; and
      • be authorised and supervised by the relevant competent authority. Retail Investor AIFs may be permitted to amalgamate with receiving investment funds located in other jurisdictions on a case-by-case basis.

      In the case of Qualifying Investor AIFs, the receiving investment fund must be authorised and supervised by the relevant competent authority.

   2. There must be full disclosure to the merging AIF’s unitholders of all material facts and considerations relevant to the proposal by the investment company/management company/general partner. The cover of the circular containing this information must prominently disclose that the information contained therein is important and that unitholders must take advice if they do not fully understand it. The circular must include, inter alia, full disclosure in relation to the following:
      • the background to, and rationale for, the proposal;
      • a description of the receiving investment fund, which must be sufficient to enable unitholders to make an informed judgement of the proposal being put to them. In particular, this description must highlight any material differences by comparison with the merging AIF;
      • the procedures to be adopted for the transfer of assets;
      • the alternatives for unitholders who do not wish to become holders of units in the receiving investment fund. These unitholders must be offered an opportunity to redeem their holdings in cash prior to the amalgamation taking effect; the regulatory status of the receiving investment fund. It must be made clear, where relevant, that the receiving investment fund has not been authorised by and will not be supervised by the Central Bank;
      • details on how unitholders, if they so require, may obtain the prospectus, constitutional document and financial statements of the receiving investment fund; all relevant costs including, where applicable, costs associated with the winding-up of the merging AIF and who will bear these costs (for Retail Investor AIFs, see sub-paragraph (e) below);
      • other material information concerning, inter alia, tax treatment and details of the service providers to the receiving investment fund including their relationship, if any, with the service providers to the merging AIF; and
      • for Qualifying Investor AIFs, if the receiving AIF does not provide redemption facilities at least as frequently as the merging AIF, this matter must be highlighted in a prominent position at the beginning of the circular.
   3. Prior to notification to unitholders, the depositary of the merging AIF must review and be satisfied with the proposal and confirm to the Central Bank in writing that it has no objection to the proposal being put before unitholders for approval.
   4. A general meeting of merging AIF’s unitholders must be convened to consider and to approve the amalgamation proposal including, if appropriate, a resolution: to amend the constitutional document of the merging AIF to provide that the assets of the merging AIF may be passed to a non-Irish depositary to coincide with the time that the amalgamation becomes effective; and to wind-up the merging AIF. Approval of the proposal will be effective only if: it is approved by not less than three fourths of the votes cast, in person or by proxy, at the meeting; and the votes in favour represent more than half of the total number of units in issue.
   5. For Retail Investor AIFs, where the proposal to amalgamate derives from a commercial decision on the part of an investment manager/management company/AIFM to rationalise its own activities/structures, the investment manager/management company/AIFM must agree to bear the costs of the amalgamation proposal and arrangements for the winding-up of the merging AIF. The Central Bank may consider other proposals in exceptional circumstances.
   6. All unitholders must be notified of the outcome of the general meeting. In the event that the resolution is passed, unitholders must be advised of the procedures and deadlines by which they must submit their redemption request, if they so wish. A reasonable notification period following the general meeting must be provided to unitholders in open-ended Retail Investor AIF and open-ended Retail Investor AIF with limited liquidity in order to consider and submit a redemption request.
   7. The provisions of this section will also apply in the case of amalgamations of sub-funds within umbrella Retail Investor AIF.
3. Notwithstanding the above, the Central Bank may refuse to permit any such proposal to proceed if it is of the opinion that to do so is not in the public interest, the best interests of unitholders and/or the appropriate and prudent regulation of the business of Retail Investor AIFs.

Issued: 3 July 2013
Latest revision: 3 July 2013