Paul Gavan (Sinn Fein) | Oireachtas source

We should get him over here. I also welcome the Minister of State. As he alluded to, this is a highly technical Bill which is pitched towards one industry, which has its own needs and interests. I am sure the Minister of State will also agree that those needs and interests are not shared by the vast majority of our constituents, who would benefit much more from a reversal of the cuts to the pandemic unemployment payment, solutions to a coming wave of mortgage arrears or increased capacity in our hospitals than from arcane legislation that will delight private equity asset managers.Unfortunately, the priorities of this Government are clear.

The Irish investment limited partnership product was first established under the 1994 Act. It was thought then that the ILP would become a popular investment vehicle for real estate investments and private equity. The Bill before us is intended 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 commitment on affordable housing.

The 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, and 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 the general partner, the limited partner cannot take part in the management of the firm without taking on full liability for the partnership's debts and liabilities.

The ILP is established as an alternative investment fund, AIF, and is regulated by the Central Bank. Given the technicalities of this legislation, the small audience that it seeks to please, and the more pressing matters that face the Seanad, it is strange that the Government has given it such priority.

Ireland remains one of the best destinations of alternative investment funds in Europe. In the past ten years, the number of funds domiciled here has risen by 60%, with their net assets increasing by 350%. The value of investment funds currently domiciled and administered here stands at €4.9 trillion. This is not an industry in need of help at this critical time. We should be talking about industries that have been hammered by Covid-19, not the Irish funds Industry which is getting by just fine.

We understand that 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 around limited partnerships, and to achieve the Government's aim of making Ireland a global hot spot for private equity funds. The result is the Bill before us. We view this legislation as an unnecessary distraction and a waste of time given the crucial issues that we face. However, we will endeavour to give this legislation the scrutiny it deserves, as we did before the Bill lapsed in the Dáil.

The Bill, updated from that published in June last, proposes a number of changes to the current regime. It allows ILPs to be set up as umbrella funds, allowing them to be divided into sub-funds that are treated individually without being liable for the debts of other sub-funds in the umbrella - an arrangement similar to that enjoyed by Irish collective asset-management vehicles, ICAVs. It seeks to expand the white list by allowing limited partners to participate on boards and committees without loss of liability. The Bill also seeks to incorporate practices from other jurisdictions, aligning the ILP structure fully with alternative investment fund managers directive, AIFMD, and other fund structures such as ICAV.

Additionally, we welcome the fact that new provisions have been added to this legislation which were not included in its previous incarnation in June 2019. My colleague, Deputy Pearse Doherty, spoke with the then Minister of State, Senator D'Arcy, around issues of beneficial ownership, and I welcome the fact that section 27 will ensure these funds are covered by beneficial ownership legislation. Sections 29, 39, 63 and 633 are similar in this regard. Sinn Féin will further scrutinise these provisions of the legislation as it progresses.

We recognise that the Irish funds industry employs a significant number of people. That fact cannot be contested. However, it is becoming clear that the Government's industrial policy has become a one-trick pony, with phantom FDI and private equity funds becoming the central plank of high wage employment in this State, with an industry of tax and legal advisers benefitting, and a domestic low wage economy struggling beneath it. This is not a sustainable model.

Furthermore, we dispute the relevance of this legislation given the other pressing challenges we face, including the 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 this 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.