UCITS Structures

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Umbrella or Single Fund and Classes of Shares

A UCITS may be established in Ireland as a single fund or as an umbrella fund comprising one or more sub-funds, each with a different investment objective and policy. UCITS are typically established as umbrella funds and the segregation of liability between sub-funds is achieved either by law (as is the case for an investment company or ICAV) or by contract. Each sub-fund may comprise different classes of units or shares. Typically, classes of units or shares are issued to allow for different fee arrangements, different subscription amounts and/or different currencies within the same sub-fund.

Legal Structure

UCITS can take one of four forms: investment companies, unit trusts, common contractual funds (“CCFs”) and Irish collective asset-management vehicles (“ICAVs”). Various factors determine the choice of fund structure, the principal ones being the potential distribution channels for the UCITS and the profile and location of prospective investors.

A comparison of the different legal structures is set out in the table below.

	ICAV	Investment Company	Unit Trust	CCF
Structure	A corporate entity with a similar structure to the SICAV or OEIC	A variable capital investment company incorporated as a public limited company	A unit trust constituted by a trust deed entered into between a management company and a trustee	An unincorporated body constituted under contract by a deed of constitution between a management company and a depositary
Single stand-alone fund or umbrella fund	Yes	Yes	Yes	Yes
Separate legal personality	Yes	Yes	No	No
Board responsible for management	Board of directors of ICAV	Board of directors of investment company	Board of directors of management company	Board of directors of management company
Segregation of liability	By law	By law	By contract	By contract
Other notable features	Meets the U.S. “check the box” taxation rules. Not subject to many of the types of rules applicable to Irish public limited companies which apply to investment companies.	Unlike the other structures opposite, is subject to a statutory obligation to diversify risk.		Tax transparent; unitholders are treated for tax purposes as if they directly own a share of the underlying investments. Investment in CCFs is limited to institutional investors.

Board of Directors

A UCITS that is established as an investment company or an ICAV is required to have a minimum of two Irish resident directors appointed to its board and the board must comprise at least three directors. The size of a UCITS board depends on the requirements of the promoter, however, boards typically comprise four or more directors

The Central Bank must approve all appointments to the board of directors in advance but will only do so once it is satisfied that a proposed director meets its fitness and probity standards. These standards require that the proposed director is fit and proper in terms of: (i) competence and capability; (ii) honesty, integrity, fairness and ethical behaviour; and (iii) financial soundness. Directors are also subject to the Central Bank’s individual accountability framework.

A letter of appointment must be put in place with each director setting out the terms of their engagement. The Central Bank must also be notified of all resignations from a board of directors.

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