Michael Ahern (Cork East, Fianna Fail)

Section 256A of the principal Act provides a mechanism by which segregated liability will apply to umbrella funds, that is, that the assets of one sub-fund are protected from claims arising against other sub-funds. To protect creditors, section 256A includes a mechanism pursuant to which any existing umbrella fund that wishes to avail of the benefits of segregated liability must obtain approval by way of special resolution of the members. The creditors of an umbrella fund may apply to a court for an order delaying the implementation of the special resolution. Any such special resolution will not take effect if a creditor has successfully applied to a court for an order delaying the commencement date of the special resolution. Umbrella funds that convene a meeting for the purposes of passing the special resolution necessary to give effect to segregated liability must also notify their creditors at the time of the proposal.

Section 256E of the principal Act sets out the requirement to be complied with by umbrella funds to which section 256A applies, that is, those availing of segregated liability. Subsection (1) requires a statement to that effect on letterheads used by the umbrella fund and disclosure of that fact in any other dealings with third parties.