Ireland has recently modernized its Investment Limited Partnership (ILP) legislation in conjunction with amendments made to Central Bank of Ireland’s (Central Bank) AIF Rulebook in order to provide a more flexible fund structure for global investment managers and position Ireland as a more attractive destination for private equity, private credit, real estate and real asset investors.
What is an Irish ILP?
The ILP is a common-law partnership, specifically updated by the Investment Limited Partnership (Amendment) Act 2020. The long-overdue amendments seek to align the ILP to U.S. Limited Partnerships as well as other leading international investment fund domiciles within Europe and the Cayman Islands, providing a structure familiar to international investors, lenders, and finance professionals. An ILP must be authorized by the Central Bank as either a Qualifying Investor AIF (QIAIF) or Retail Investor AIF (RIAIF), providing a regulated vehicle that is highly attractive to institutional investors.
Unlike a corporation, an ILP has no separate legal personality and is constituted pursuant to a limited partnership agreement entered into by a General Partner (GP) and its Limited Partners (LPs).The GP (typically an Irish company, though it can be based offshore) is responsible for the management, control and operation of the ILP and generally has unlimited liability in respect of the debts and obligations of the ILP. LPs are provided with robust limited liability protections similar to those of a standard US LP.
Key Benefits
The ILP offers many features that are familiar to US-based managers, with the key benefits including, inter alia:
- Tax Transparent Investment Vehicle: Income and gains “flow through” to the partners;
- Umbrella Structure: Permitted use of sub-funds with segregated liability, allowing for different investment strategies or limited partners within each of the sub-funds;
- EU Marketing Passport: Access to professional investors across the EEA;
- Assets and Liabilities: Belong to the partners in proportion to the agreed Limited Partnership Agreement (LPA);
- Safe Harbor Activities: LPs can sit on advisory committees or approve LPA changes without losing limited liability;
- Capital Accounting Enhancements: Tailored for drawdown models providing streamlined processes for capital calls, distributions, and investor redemptions;
- Flexible Share Class Features (e.g., features such as ‘excuse and exclude provisions’ and facilitates distribution waterfall and carried interest provisions);
- Speed to Market: Eligible for the Central Bank’s 24-hour ‘Fast Track’ approval process; and
- Migration: Inward/outward migration policy to certain recognized jurisdictions (e.g., Cayman).
Alternative Partnership Options: The 1907 Limited Partnership (1907 LP)
As an alternative to the ILP, the Limited Partnership Act 1907 offers an alternative partnership structure in Ireland. The 1907 LP provides the flexibility of standard common law LPAs and, unlike the ILP, is not a regulated fund authorized by the Central Bank. This makes it a highly cost-efficient structure for managers who do not require an EU marketing passport. The 1907 LP remains popular for aircraft leasing, property investments, family investment vehicles, and, more recently, sustainable infrastructure. However, this structure is generally not suitable for broad institutional fund raises as it lacks an umbrella structure and its limited investor base is typically capped at 20 partners.
AIFMD and Amendments to Central Bank’s AIF Rulebook
The Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (AIFMD) entered into force in 2013, establishing a European regulatory framework for the management and marketing of Alternative Investment Funds (AIFs) within the EU. It provides a common framework for European regulators to protect investors through effective oversight with operational safeguards, while also providing regulators with the necessary supervisory tools to monitor and address risks that may arise from the activities of AIFs and their Alternative Investment Fund Manager (AIFM).
Following a review of AIFMD by the European Commission and to align with the recent modernization of the ILP legislation and the implementation of AIFMD II, the Central Bank has proposed substantial enhancements to its AIF Rulebook. These updates (included in Consultation Paper 162 (CP162)) aim to harmonize the Irish framework with the revised European rules and ensure that Ireland and the ILP will be fully aligned with the requirements of AIFMD II, in particular in relation to:
Loan origination
The proposed changes will remove the L-QIAIF section from the AIF Rulebook to ensure a harmonized EU-wide regime. This eliminates ‘gold-plating’ and permits non-EU AIFMs to manage loan-originating QIAIFs for the first time. CP162 also removes the general restriction on QIAIFs granting loans or acting as a guarantor, aligning with EU rules under AIFMD II.
Fund financing
The proposed removal of restrictions on third-party guarantees would make it easier to arrange subscription lines and asset-level financing across multi-entity fund structures.
Use of intermediary investment vehicles
Requirements for using subsidiaries will be streamlined and certain restrictions removed, while the AIFM will be required to: (i) disclose the use and purpose of any subsidiary in the prospectus; (ii) perform appropriate due diligence; and (iii) maintain policies and procedures to oversee and monitor the vehicle.
Other key changes
There is also the removal of certain requirements in relation to board composition of wholly owned subsidiaries, removal of initial offer period caps, clarification of the requirement around liquidity management and an additional requirement for AIFMs to produce a set of semi-annual information.
The updated Central Bank Rulebook is expected to take effect on April 16, 2026, to coincide with the EU-wide AIFMD II transposition deadline, subject to finalization of the AIF Rulebook by the Central Bank.
Conclusion and Looking Ahead
While both partnership options are attractive and can be tailored to specific investment strategies, the ILP offers a scalable, institutional-grade alternative that was specifically modernized for high-complexity structures.
The ILP’s ability to combine full EU marketing rights with a tax-transparent structure, now further enhanced by the AIFMD II alignment, ensures that Ireland remains an attractive global hub for managers. With a highly skilled workforce and robust government support, backed by strong regulatory oversight, Ireland offers the ideal balance of operational flexibility and regulatory certainty.
As we approach the April 16, 2026, deadline (effective date for the new AIF Rulebook), managers (in particular those with private credit or loan origination strategies) should seek appropriate advice in order to assess the impact on their structures. Consider updating governing documents to address potential changes to capital commitments, share‑class features, intermediary vehicle oversight, warehousing terms, conflicts/connected‑party policies, and depositary/performance fee controls.
If you wish to discuss any of the above changes in more detail, please contact Andrew Duignan, Audit and Assurance Partner, CBIZ RBK (Ireland) Limited.
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