Ruairi Ó Murchú (Louth, Sinn Fein) | Oireachtas source

The Minister of State will agree this is a highly technical Bill which is pitched towards one industry with its own needs and interests. He will also agree that those needs and interests are not shared by the majority of our constituents who would benefit much more from solutions to the coming wave of mortgage arrears and increased capacity in our hospitals, rather than arcane legislation that will delight private equity asset managers. Much has been said in recent days about how time is prioritised in these Houses. Over a number of weeks, the Government has spent hours in the Dáil and Seanad progressing legislation which is not urgent, which serves a narrow range of interests and which is of benefit to very few of the people.

The ILP produce was first established under the Investment Limited Partnerships Act 1994. It was thought then that the ILP would become a popular investment vehicle for real estate investments and private equity. This Bill intends to update the existing ILP regime and make Ireland an attractive place for international investors. Amazingly, it made its way into the programme for Government rather than, for example, any real commitment to affordable housing. I am not sure if we should be amazed by this.

The funds industry regrets the fact that this Bill has become embroiled in the appointment of former Fine Gael Minister of State, Michael D'Arcy, as CEO of the Irish Association of Investment Managers three months after leaving office. Unfortunately, this was inevitable. It was strange that this legislation found its way into the programme for Government at a time of a public health emergency and with so many other pressing social issues, such as those relating to housing, childcare, health and disability services, facing our people. That this legislation made it to the front of the queue, and given the revolving door between power and industry, questions are obviously raised and impressions made. That is unfortunate and that is why lobbying legislation must be overhauled, updated and improved. Deputy Doherty and Sinn Féin will be introducing legislation to do just that in the coming days.

This Bill is extensive. An ILP is a partnership, the primary business of which is investment in financial assets such as property and shares. It is a collective investment fund consisting of one general partner who assumes unlimited liability, along with limited partners who assume assets and liabilities in proportion only to the capital they each contribute. The partnership does not have an independent legal status like a normal company. The profits are owned by the partners with each able to use tax reliefs available in their own jurisdictions. Unlike a general partner, a limited partner cannot take part in the management of a firm without taking on full liability for the debts and liabilities of the partnership.

The ILP is established as an alternative investment fund, AIF, and is regulated by the Central Bank. Given the technicalities of this legislation, as well as the small audience it seeks to please and the more pressing matters that the Dáil faces, it is strange that the Government has given it such priority. Ireland remains one of the best destinations for AIFs in Europe. In the past ten years, the number of funds domiciled here has risen by 60%, with the net assets of those funds increasing by 350%. The value of investment funds currently domiciled and administered here stands at €4.9 trillion - a figure that is almost too big to say.

This is not an industry in need of help at this critical time. Instead, we should be talking about industries hammered by Covid-19, such as hospitality and tourism, not the Irish funds industry, which is getting by just fine. We should be talking about amending legislation to ensure the eligibility of suppliers to the Covid restrictions support scheme, suppliers who are currently locked out.

Global private equity asset managers have been keen to establish European structures similar to those held in places such as the Cayman Islands for distributing profits to their European investors. This encouraged the Irish funds industry to lobby both the Central Bank and the Department of Finance to upgrade the legislation relating to limited partnerships and to achieve the Government's aim of making Ireland a global hotspot for private equity funds. The result is the Bill before us. Sinn Féin views this legislation as an unnecessary distraction and a waste of time in light of the crucial issues we face. However, we will endeavour to give it the scrutiny it deserves as we did before it lapsed in the previous Dáil.

The Bill, updated from that published last June, proposes several changes to the current regime. It allows ILPs to be set up as umbrella funds, then allows them to be divided into sub-funds which are treated individually without being liable for the debts of other sub-funds in the umbrella. This is an arrangement similar to that enjoyed by ICAVs. It seeks to expand the white list by allowing limited partners to take part on boards and committees without loss of liability.

The Bill seeks to incorporate practices from other jurisdictions aligning the ILP structure fully with the alternative investment fund managers directive and other fund structures such as ICAVs. In addition, we welcome the fact that new provisions have been added to the legislation which were not included in its previous incarnation in June 2019. Last year, in an earlier iteration of the Bill, Deputy Doherty spoke with the then Minister of State, Michael D'Arcy, around issues of beneficial ownership. We welcome the fact that section 27 will ensure these funds are covered by beneficial ownership legislation. Sections 29, 39 and 63 are similar in this regard. Sinn Féin will further scrutinise these provisions of the legislation as it progresses on Committee Stage.

We recognise that the Irish funds industry employs a significant number of people, a fact that cannot be contested. However, I would dispute the relevance of this legislation, given the other pressing challenges we face including the not-so-small issue of a global health pandemic. That the Irish funds industry has bumped itself up the list at the Department of Finance is testament to its determination and the priorities of the Government. This is a highly technical Bill but that is no reason to let it pass without scrutiny. We look forward to examining its provisions on Committee Stage.

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