Ireland offers a range of partnership structures for investors, with two key options: the 1907 Limited Partnership (1907 LP), established under the Limited Partnership Act of 1907, and the Irish Limited Partnership (ILP), which was reformed in 2021 to provide more flexibility within the regulation.
Both structures serve different purposes and choosing the right one can have a significant impact on your investment strategy.
Understanding the difference
The 1907 LP is an unregulated structure not overseen by the Central Bank of Ireland (CBI). It has historically been favoured for venture capital, property investments, family investment vehicles, and more recently, sustainable infrastructure. Its appeal lies in cost-efficiency, though it’s important to note that the number of limited partners is capped at 20 (extendable to 50 under certain conditions). In contrast, the ILP—especially after its 2021 reforms—provides a flexible, tax-transparent partnership vehicle regulated by the Central Bank of Ireland. It’s often the preferred choice for institutional investors who require regulatory oversight, as the ILP aligns with AIFMD (Alternative Investment Fund Managers Directive) requirements. This makes it suitable for large-scale investments where compliance and transparency are critical.
That being said, a 1907 LP that constitutes an Alternative Investment Fund under AIFMD can appoint a registered AIFM, however as it is not authorised by the CBI and also not subject to Collective Investment Scheme product specific rules. This nuance helps to attract managers with a preference for the protection of AIFMD but no further rules.
Making the right choice
The decision between these two structures often comes down to investor appetite and the profile of target investors. If your strategy focuses on attracting larger institutional investors who require a regulated environment, the ILP is likely the better fit. On the other hand, if your investment strategy can be executed within a more cost-effective, unregulated structure, the 1907 LP could be the right choice. Both structures allow access to the pan-European market through the AIFM passport and the European Venture Capital Fund Regulation (EuVECA), which enables managers to broaden their investor base to include high-net-worth individuals across the EU. It is fair to say that since the reform of the ILP, a renewed interest in the 1907 LP has been triggered as a result, highlighting the variety of different investment structures available in Ireland.
Navigating Ireland’s investment ecosystem
Once you’ve chosen the right structure, the next step is selecting reliable service providers to ensure your fund operates efficiently. Is the Irish ecosystem well-equipped to manage partnership capital effectively? Although the uptake in ILP since its reforms has been slower than expected, Ireland’s fund administration sector remains highly capable—provided you choose the right strategic partners. At HIGHVERN, we’ve successfully migrated several ILP and 1907 LP structures. Our approach combines experienced professionals backed by the right technology, enabling us to handle complex partnership capital arrangements like equalisation, carried interest, and accession fees. When selecting a fund administrator, it’s essential to ask: Do they demonstrate expertise in managing partnership structures? Are they equipped to scale with your needs?
New opportunities with ELTIF 2.0 and the ILP
Ireland’s investment landscape continues to evolve, particularly with the introduction of the European Long-Term Investment Fund (ELTIF) regime in March 2023. This new framework provides greater flexibility for managers using the ILP structure, allowing long-term investments while preserving tax advantages. The ILP’s ability to cater to both professional and retail investors across EU borders will significantly boost its appeal.
Ultimately, the choice between the 1907 LP and the ILP depends on the level of regulation, flexibility, and cost-efficiency required by investors. Both structures offer unique advantages, but the right service provider can make all the difference in ensuring your fund’s smooth operation. At HIGHVERN, we combine advanced technology with senior funds expertise in partnership structures, helping managers navigate these complexities and achieve success in their alternative investment strategies.
