Ireland: U.S. Offices Update - March 2014

Last Updated: 4 April 2014
Article by John Ryan, Mark O'Sullivan, Alan Keating, Gina Conheady and Aiden Kelly

Welcome to our U.S. Offices update. It has been a busy start to 2014 and we are continuing to see a lot of interest in the use of Irish holding companies in public international M&A transactions.  We discuss why Ireland is the favored location for this activity. There has also been good news for the Irish securitisation industry with confirmation from the Irish Central Bank that the AIFMD regulatory regime will not apply to most Irish securitisation vehicles.  Meanwhile the Irish funds industry goes from strength to strength and the introduction of a new corporate investment vehicle (the ICAV) later this year will add even greater flexibility.  Ireland's preeminent position in the funds world has also been reinforced with the results of a recent EIU study commissioned by Matheson. Finally, we provide an update on recent data protection developments in Europe and, in particular, in the context of the EU/U.S. safe harbor regime for data transfers from the EU to the U.S.

Inversion transactions into Ireland

Corporate inversion transactions of U.S. groups from haven territories over the last decade have primarily been to either Ireland or Switzerland. As safe harbor provisions under 7874 have become more difficult to satisfy, the inversion transactions into Ireland that have occurred in more recent times were pursuant to merger transactions between U.S. and foreign companies in circumstances where the level of foreign stockholder participation has enabled the new Irish resident parent to be respected as such from a U.S. federal income tax perspective.  Ireland continues therefore to be the favored holding company location as evidenced by the number of announced public deals. Most of these have been deals involving Irish targets with Irish Takeover Code rules applying, except where the Irish target has been private. 

More recently, there has been deal activity with non-Irish targets and this is likely to be an emerging trend. Whilst the UK and the Netherlands have also seen some inversion deal activity, the combination of the Irish corporate governance rules and holding company regime should ensure that Ireland will continue to be a favored jurisdiction where circumstances permit an outbound U.S. expatriation. It is also noteworthy, given the number of precedent public deals with an Irish NYSE or Nasdaq listed parent, that there is now a familiarity and comfort level amongst the investment banking and stockbroking community where an Irish holding company is the new group parent of the combined businesses. We have also seen increasing evidence of foreign owned start-up and high growth companies establishing their holding company domicile in Ireland, even where the group business operations are substantially based overseas. 

Given the recently announced draft proposals concerning the 7874 rules by both President Obama and Chairman Camp, it is likely that there will be further deal activity of this kind in advance of possible future code changes which may make inversions more difficult to complete. For now, the combination of Ireland's corporate law and holding company regime would indicate that it is well placed to see further business combinations involving Irish parent companies in the near term.

AIFMD Regulatory Exemption for Irish Securitisation Companies

On 8 November 2013, the Central Bank of Ireland (the "Central Bank") updated its guidance on the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) ("AIFMD"). In a welcome move, the Central Bank published an updated fifth edition of its AIFMD Questions and Answers guidance document. This clarified that Section 110 Securitisation companies will, in most cases, be outside the scope of AIFMD.

In recent years, Section 110 companies have become a popular investment vehicle for U.S. private equity and hedge funds, particularly in the context of European investments. Aside from traditional securitisation transactions, section 110 companies have increasingly been used to invest in distressed assets and loans and also in the context of loan origination transactions.

For further information on Irish section 110 companies, please click here.

ICAV – a new Irish fund vehicle which can be checked

The Irish Minister for Finance recently published a framework for legislation which will give effect to a new form of corporate fund vehicle - the Irish Collective Asset-Management Vehicle ("ICAV"). The Irish government has stated that this legislation is being drafted as a matter of priority and is due to come into force later this year. The introduction of the ICAV will mean that fund promoters will have an additional option when selecting their preferred Irish fund vehicle. The introduction of the ICAV follows an industry-led project and several members of our Asset Management Group have been heavily involved to date.

As well as being less administratively burdensome than the existing Irish corporate vehicle, the public limited company (Irish plc), an important feature of the ICAV for U.S. promoters is that it will be able to elect its classification under U.S. check-the-box taxation rules. The Irish plc is not currently permitted to check-the-box for U.S. taxation purposes. This means that Irish plcs are treated as a separate entity and are not disregarded for U.S. purposes and potentially gives rise to two levels of tax: at the corporate level when the income is earned and at the shareholder level when distributions are made. However, an "eligible entity", namely an entity that can elect its classification under the check-the-box rules, can elect to be disregarded for U.S. tax purposes. The ICAV will be an eligible entity for these purposes. It will also be possible to convert an existing Irish plc into an ICAV.

The proposals for the ICAV legislation demonstrate Ireland's proactive approach in meeting the evolving needs of fund promoters and its competitiveness as a leading international fund domicile. Please read on for more information.

EIU report indicates Ireland is the preferred jurisdiction for funds in Europe

Matheson recently commissioned the Economist Intelligence Unit (EIU) to conduct an independent global survey of 200 asset managers to identify their preferences when choosing a European fund domicile, and to examine what are the most influential factors when deciding among competing domiciles. The results of the study identified Ireland as the clear market leader and domicile of choice in Europe not only for U.S. and UK managers, but also managers in Western Europe, Latin-America and the Asia-Pacific region.

Data Privacy: Progress towards a more secure Safe Harbor

The EU has historically taken a very strict approach to the protection of personal data and relevant laws differ substantially from applicable laws in the U.S. Because of these differences, the U.S. and the EU entered into a Safe Harbor agreement, to bridge differences and facilitate the movement of personal data from the EU to the U.S. The Safe Harbor agreement essentially requires organisations in the U.S. who voluntarily subscribe to the Safe Harbor framework to comply with data protection standards which are analogous to EU data protection laws when processing EU citizens' personal data. It also requires the U.S. Federal Trade Commission ("FTC") to enforce these standards. The EU has long been concerned with the level of enforcement of Safe Harbor, especially following recent revelations of mass surveillance by the U.S. National Security Agency.

The EU Commission sent a list of recommendations to the FTC last November, mainly relating to enforcement. This was backed up by a threat from both it and the EU Parliament that Safe Harbor might be suspended unless changes are made by summer 2014. While there are other methods of legitimising the transfer of personal data to the U.S., the Safe Harbor is most favoured by businesses on both sides of the Atlantic. Any disruption to it would be a significant issue for these businesses.

In response, the FTC has recently stepped up its enforcement of the Safe Harbor by reaching settlements with 13 U.S. entities that had falsely held themselves out to be Safe Harbor compliant. Representatives from the US Department of Commerce have also recently travelled to Brussels for discussions on the regime and further meetings are set for Washington in the coming weeks. The outcome of these discussions should hopefully form a secure basis for the Safe Harbor for many years to come and will clarify that the Safe Harbor is here to stay.

For more information on data protection and other technology law issues, you can visit our Crossfire blog.

Keeping you updated

Matheson recently launched two new initiatives to keep our international clients informed on key legal updates.  Our Employment law group launched a series of podcasts providing an update on key employment law developments, so you can keep up to date while taking the train or driving to work. Our Technology and IP law groups also recently launched an online law and liability blog which covers topical technology law trends and developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions