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IRELAND
LINKS IN THIS SECTION
TABLE OF STATUTES
INSURANCE LAW (CAPTIVES)
BANKING LAW
INVESTMENT FUNDS LAW
RELATED INFORMATION

Law of Offshore


Ireland Table of Statutes

This is a non-exhaustive list of some of the main Irish statutes affecting low-tax status and non-resident business. The statutes are listed in alphabetical order – click on the statute for a fuller description of the statute, the legal regime it forms part of, or in some cases the text of the law.

Capital Gains Tax Act 1975
Central Bank Acts 1942 to 1997
Central Bank Act 1989

Central Bank and Financial Services Authority of Ireland Act 2003
Central Bank and Financial Services Authority of Ireland Act 2004
Companies Acts 1963 to 1998
Companies (Amendment) (no.2) Act 1999
E-Commerce Bill 1999
EU Second Banking Directive 89/646/EEC

European Communities (Life Assurance) Framework Regulations 1994
European Communities (Non-Life Assurance) Framework Regulations 1994

Film Board Act 1980
Finance Act 1980

Finance Act 1996
Finance Act 1999
Investment Limited Partnerships Act 1994
Limited Partnership Act 1907

Partnership Act 1890 (UK)

Stamp Act 1891 (UK)

Statutory Instrument No. 78 1989
Stock Exchange Act 1995

Taxes Consolidation Act 1997

Unit Trusts Act 1990

Completing the reform of Ireland’s financial regulatory system as recommended in the 1999 McDowell report, the Central Bank and Financial Services Authority of Ireland Act 2003 was passed.

Another Act had established the Irish Financial Services Regulatory Authority earlier in 2003, and the new bill gave the Authority a wide mandate to oversee the financial services sector, including the protection of consumers.

The bill provided for:

  • A statutory Financial Services Ombudsman to deal with complaints against financial institutions;
  • Consumer and Industry Consultative Panels to advise the Regulatory Authority;
  • New reporting and auditing obligations for financial institutions as recommended in the Report of the Review Group on Auditing;
  • Power for the Regulatory Authority to impose sanctions directly on financial institutions for failure to comply with regulatory requirements, subject to a right of appeal to the Irish Financial Services Appeals Tribunal;
  • A right of appeal to the Appeals Tribunal in relation to certain supervisory decisions of the Authority;
  • New regulatory requirements for money transmission and bureau de change businesses to combat money-laundering and the financing of terrorism; and
  • Miscellaneous other amendments to financial services legislation

The Central Bank and Financial Services Authority of Ireland Act 2004 Act created a statutory financial services ombudsman for consumers. Consultative consumer and industry panels have also been appointed where matters of policy and practice can be discussed. In addition, this legislation created new enforcement powers for the Financial Regulator including fining and public censure powers.

In September, 2004, the Department of Finance promoted further legislation intended to complement the Central Bank and Financial Services Authority of Ireland Acts 2003 and 2004, which had established the new regulatory structure for the financial services sector.

Among the goals of the legislation were to:

  • Bring together in a single, modern legal text all of the primary legislation governing the regulation of the financial services sector (apart from the legislation related to company, tax etc issues).
  • Provide a legal framework for achieving the Governmentís consumer protection and financial stability objectives in a way that does not impose a disproportionate burden on regulated entities
  • Facilitate the international competitiveness of the financial services sector
  • Conform to the principles set out in the Governmentís Regulating Better White Paper (Necessity, Effectiveness, Proportionality, Transparency, Accountability, Consistency)
  • Reflect, in so far as possible, the single regulatory structure which has been put in place with the establishment of the Irish Financial Services Regulatory Authority and the Financial Regulatorís principles-based approach to regulation
  • Achieve a balance between the high-level principles appropriate to primary legislation and the more detailed requirements that should be laid down by the Financial Regulator using its statutory powers
  • Comply with the Stateís obligations under EU law.

In March 2010, Irish Minister for Finance, Brian Lenihan, welcomed the report of the Comptroller and Auditor General on the role of the Financial Regulator in response to the financial market crisis, which will form the basis for a new bill that will reform Irish financial services regulation.

Lenihan said:

"This is the first of a three stage legislative program to create a new fully-integrated structure for financial regulation, enhance the powers and functions of the Central Bank and consolidate existing legislation.”

“The financial regulatory reforms will address the problems identified by the Comptroller and Auditor General and respond as appropriate to his recommendations. This is an important element in a comprehensive program to put in place a domestic regulatory framework for financial services that meets government objectives for the stability of the financial system; providing for the effective and efficient supervision of financial institutions and markets, and safeguards to protect the interests of consumers and investors.”

The report, tabled in Ireland’s parliament on March 22, 2010, highlighted a number of areas where regulation should be revised, driven by lessons learnt by the financial crisis. These include: improving regulation applied to Irish financial institutions, including bolstering internal communications; the creation of crisis management plans to ensure international coordination rather than competition in the event of future crises; and greater oversight of the financial regulator and of Irish institutions, which could include annual reviews and more intensive stress testing of individual institutions' transactions and balances.

The report notes that, while enhanced financial regulation has now been put in place for institutions that required state support, going forward this should be extended to other institutions.

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Ireland Insurance Law (Captives)

Since 2003, insurance business in Ireland (including captive insurance) is regulated by the Financial Services Regulatory Authority. Following the 1994 implementation of the EU Insurance Framework Directives through the European Communities (Life Assurance) Framework Regulations 1994 and the European Communities (Non-Life Assurance) Regulations 1994, there is a 'single passport' regime in effect for EU insurance companies, and they can commence business in Ireland, as elsewhere, subject to a notification procedure and the annual filing of accounts with the Registrar of Companies. The EU legislation lies alongside pre-existing Irish insurance legislation, and the two need to be read together to construct the regulatory regime for Irish insurance companies; this task is not attempted here.

The captive insurance sector in Ireland took root in the International Financial Services Centre (IFSC) in Dublin, where substantial tax advantages have traditionally been available to companies who obtained certification from the Minister for Finance. From 2003 the 10% IFSC regime was supplanted by the 12.5% general corporation tax rate.

The minimum paid-up capital required for a captive insurer is EUR635,000, and the captive must conform with the normal body of EU and Irish insurance legislation, including solvency ratios.

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Ireland Banking Law

The previously mentioned Financial Services Regulatory Authority regulates the banking industry under the Central Bank and Financial Services Authority of Ireland Acts 2003 and 2004. Banks need licences from the IFSRA, unless they are already authorised in an EU member state under the Second Banking Directive 89/646/EEC, in which case they have to comply with certain administrative and information requirements. A non-EU bank will need to have an Irish subsidiary in order to apply for a license.

As from 2003, the Irish Financial Services Regulatory Authority took over bank regulation from the Central Bank, although the change was more apparent than real, since the new Regulator brought together many of the responsibilities previously held by the Central Bank (which continues to form a part of the Authority), the Department of Enterprise, Trade and Employment, the Office of the Director of Consumer Affairs and the Registrar of Friendly Societies.

In practice, most banks choose to operate out of the International Financial Services Centre because of the substantial tax advantages that were available; however these depended on the issue of a certificate by the Minister for Finance. The Central Bank's guidelines for issue of a license were as follows:

  • The applicant has an acceptable legal form;
  • The corporate structure of the group of which the applicant is part, or its relationship with other undertakings under common control, is clear and transparent and is not such as may result in the bank being unable to effectively exercise its supervisory responsibilities;
  • The applicant has clearly-defined and adequately-researched objectives and proposed operations which are consistent with the safety of depositors' funds, prudent banking practices and fair trading in banking;
  • The applicant will be independent of dominant personal and commercial interest;
  • There will be cohesion, continuity and consistency in the manner in which the business of the credit institution is directed by its owners;
  • The beneficial ownership of the credit institution is such as will ensure a capacity to provide such new capital for the credit institution as may be required in future;
  • There is a willingness and a capacity on the part of the credit institution to comply with the Bank's licensing and provision requirements on a continuous basis

New applications in 1999 (the last year for them) were limited under the Irish Government's agreement with the EU and the 10% tax rate applied only until the end of 2002. From the beginning of 2003 the EU-agreed rate of 12.5% applied generally to Irish companies.

The Central Bank applies various other reporting and prudential rules to all banks, although these are considerably moderated as regards EU banks qualifying under the Second Banking Directive.

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Ireland Investment Funds Law (and Stock Exchange)

Until 2003, the Central Bank of Ireland supervised investment funds under the following laws (and its own regulations):

  • Statutory Instrument No. 78 1989 (UCITS Regulations);
  • Companies Act 1990;
  • Unit Trusts Act 1990;
  • Investment Limited Partnerships Act 1994.

Since 2003, the The Financial Services Regulatory Authority regulates the investment fund industry under the Central Bank and Financial Services Authority of Ireland Acts 2003 and 2004.

Investment funds can take various forms; the most commonly used are investment companies, unit trusts, limited partnerships, or limited duration companies (see Forms of Company for basic information on formation, etc).

Funds of funds are permitted except for UCITS vehicles, but must not place more than 20% of net assets in the units of any one other scheme, which must itself offer a level of protection equivalent to that available in Ireland, and must itself not invest in units of other funds of funds; umbrella funds are permitted for all types of investment fund. These rules are somewhat relaxed for funds which are marketed only to professional investors, known as 'Qualifying Investors', who must invest a specified amount, and have a net worth (or discretionary investments if a corporation) above a designated amount. Such limited-investor funds are known as 'QIF' (Qualified Investor Funds).

Funds need to have a presence in Ireland, depending on their constitution: UCITS must have their registered office and their head office in Ireland; funds based on limited partnerships must also have a registered office and a principal place of business in Ireland; unit trusts have to use an Irish-incorporated management company (there are some requirements for its solidity, and it must have at least two Irish-resident directors); investment companies with variable capital must be Irish-incorporated.

All funds must have a trustee (who must be separate from the manager in the case of a unit trust); the trustee must either be a bank with an Irish license and a designated minimum share capital, or must be wholly-owned by such a bank or an equivalently solid financial institution.

All funds must publish a prospectus, which must be approved by the Central Bank. Annual and half-yearly reports must be sent to shareholders and to the Central Bank. Shareholders' meetings must be held in Ireland; and there must be regular directors' meetings, which should preferably be in Ireland.

The Irish Stock Exchange: Listing of Funds

As of 2010, just over 3,000 funds were listed on the Irish Stock Exchange (ISE), of which about half are domiciled in Ireland, mostly in the International Financial Services Centre in Dublin (see Offshore Legal and Tax Regimes). The recent success of the ISE in attracting funds is partly due to its flexible and rapid procedures; it has a specialised department to deal with the listing of offshore funds.

Listing does not depend on the underlying form of a fund; both open-ended and closed-ended funds are admitted, and they can be structured as investment companies, unit trusts, limited partnerships or limited duration companies. Listing rules accommodate equity, bond, derivative, venture capital and property funds; funds issuing debt securities may be listed subject to a number of prudential conditions.

The ISE will list funds for professional investors (meaning a minimum initial investment from any domicile; funds for retail investors must be domiciled in a jurisdiction the ISE considers 'regulated'; currently that means EU member states, Guernsey, Jersey, the Isle of Man, Hong Kong or Bermuda.

The listing process takes approximately four to six weeks. To list on the Irish Stock Exchange, an EU fund must pay a listing fee of EUR2,000 plus a similar amount in annual fees. Non-EU funds must pay EUR2,180 to list.

There needs to be a sponsoring broker who will handle the listing process. There are sets of rules governing listing particulars, directors, investment managers, custodial arrangements. financial disclosure, investment policies and continuing obligations. A streamlined listing process was recently introduced with the co-operation of the Central Bank whereby new open-ended funds which combine their offering documents and listing particulars are exempted from many of the procedural steps and requirements of the usual process.

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LINKS IN THIS SECTION
TABLE OF STATUTES
INSURANCE LAW (CAPTIVES)
BANKING LAW
INVESTMENT FUNDS LAW
RELATED INFORMATION

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