Uncorrelated – October 2017

A quick start guide to ICAVs: why, how and how long does it take?

As part of our series of quick start guides for first time managers, we reviewed the pros and cons of some of the primary European and non-European jurisdictions for hedge fund structures (our previous article is available here). In this article we review one of those key jurisdictions and its leading investment product: Ireland and the ICAV.

Ireland is recognised as a centre of excellence for investment funds. The reasons for this include a shared culture and language with the UK and the USA, the solid ecosystem of service providers and professionals, a common law legal system and access to the EU.

The ICAV structure has become the default option for those wishing to establish their funds in Ireland.

Why an ICAV?

The ICAV is the Irish Collective Asset Management Vehicle. It is a tailor made corporate structure for alternative investment funds (AIFs) which is not subject to the company laws that apply to normal trading companies in other sectors. For example, shareholder approval is not needed for amendments or changes to its constitutive document and annual general meetings are not required.

ICAVs have been designed to be attractive to US investors looking for tax-efficient returns in a regulated corporate fund. They allow taxable US investors to be in the same tax position as if they had invested directly in the underlying investments of the ICAV and to fall outside of the US Passive Foreign Investment Company (PFIC) regime.

Where the fund is structured as an umbrella fund, financial statements can be prepared on a sub-fund by sub-fund basis, rather than on a consolidated basis. This means the accounts for each sub-fund may be prepared using different accounting standards, for example, IFRS, US GAAP or Irish GAAP, etc. It also means that investors may be sent only those sub-fund accounts that are relevant to them, which makes the ICAV ideal for AIF platforms.


Your first port of call should be MJ Hudson or LK Shields. We will help you with your private placement memorandum (PPM) and all ancillary legal documents. We will also negotiate and liaise with the following service providers:

AIFM. All AIFs must have an alternative investment fund manager (AIFM). Most start-up managers use third party service providers. The role of the AIFM is to perform management functions as per AIFMD (broadly, portfolio and risk management; compliance and regulatory reporting). If the AIFM is not based in Ireland, it will have to be regulated as a full-scope AIFM under AIFMD to manage on a cross-border basis (further information about what it means to be a full-scope AIFM is found in our previous article here).

Depositary. All AIFs must have a depositary based in Ireland. The role of depositary is the safekeeping of assets, cash monitoring and oversight.

Administrator. All AIFs must have an Administrator based in Ireland. The role of the Administrator is calculating the Net Asset Value using valuation sources agreed with the AIFM, managing share dealings and drafting financial statements.

Directors. Two Directors must be Irish residents.

How long does it take?

The Central Bank authorises ICAVs as AIFs the day after LK Shields submits them for authorisation, based on confirmation from LK Shields that the Central Bank’s requirements have been met. Investor monies can be accepted on the following day.

About eight to ten weeks’ work is needed to get to the stage where an ICAV is ready for submission to the Central Bank.

Outline implementation calendar

Timing To Do
8 to 10 weeks before authorisation day (AD)
  • Engage MJ Hudson and LK Shields
  • Start work on the PPM
  • Engage service providers, directors, auditors and tax advisers (MJ Hudson/LK Shields can help introduce)
AD minus 8 weeks
  • Agree PPM and provide to service providers
  • Start to negotiate service provider agreements
  • Decide on board members
AD minus 4 weeks
  • Incorporate ICAV by registering it with Central Bank
  • Obtain director sign off on ICAV documents
AD minus 3 weeks
  • Submit director applications for approval by Central Bank
AD minus 1 week
  • Finalise documents
  • Hold launch board meeting
  • Arrange execution of documents
  • LK Shields completes Central Bank ICAV application forms
AD minus 1 day
  • LK Shields submits the documents for Central Bank authorisation
  • Central Bank authorises ICAV
AD plus 1 day
  • ICAV initial offer period opens with initial monies within a few days of submission
AD plus more than 1 day
  • ICAV accepts initial monies, initial offer period closes, share price floats at NAV thereafter


Guest author:

Trevor Dolan
Partner – Banking and Financial Services
LK Shields
DD: +353 1 637 1549

Uncorrelated is produced by MJ Hudson’s Hedge Fund team. We advise on all aspects of structuring, launching, and investing in hedge funds across all EU and non EU jurisdictions (including Cayman, Luxembourg, Ireland and US). We will find the ideal structure and jurisdiction for your needs.

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