Irish ILP structure for credit funds: the practical guide

An Irish ILP answers to two rulebooks at once. One is a 1994 statute, rebuilt in 2020; the other is the Central Bank's AIF Rulebook. For a credit manager the split matters. The statute governs capital calls, defaults, amendments and the fund's end date, while the Rulebook governs what the product may do and which changes need the Bank's approval. A closed-ended credit fund has to satisfy both at every stage, from first close to the last loan repaid.

The Investment Limited Partnerships (Amendment) Act 2020, signed on 23 December 2020, rewrote the vehicle's private-fund mechanics. Most of that Act came into operation on 1 February 2021, and the beneficial-ownership provisions followed on 1 March 2021. The dates come from the annotations in the revised Investment Limited Partnerships Act 1994. The Central Bank's AIF Rulebook is now in a July 2026 edition, and AIFMD II has replaced Ireland's own loan-origination regime.

This page walks through the ILP as a credit sponsor meets it. It covers what the 2020 Act changed, which product wrapper to use and who carries which duty. It then follows a closed-ended credit ILP from first close to wind-down, through authorisation, and against the Luxembourg special limited partnership. The AIFMD II lending rules sit on the loan-originating funds comparison. The four-domicile cost and speed matrix sits on where to domicile a private fund. For the one-paragraph definition, see the ILP glossary entry.

An ILP is a partnership of at least one general partner and one limited partner whose principal business is investing its funds in property. It needs a Central Bank certificate of authorisation to exist as one (ILP Act 1994, s.5(1)). The Partnership Act 1890 applies to it, while the Limited Partnerships Act 1907 does not (s.4(1) and (2)). The general partner is personally liable for the ILP's debts. A limited partner is not liable beyond the amount it has contributed or undertaken to contribute (s.3 definitions, s.20(1)(c)). That shield has statutory exceptions, such as taking part in the conduct of the business (s.6(2)). The Act gives the ILP no separate legal personality. Revenue's guidance describes partnership property as held by the partners as tenants in common (Revenue TDM Part 27-01a-04, section 4.1).

The 2020 Act did not change that core. It changed the operating mechanics. The table maps each change to the section it now sits in, using the amendment notes in the revised text.

Two older rules survived the rewrite. A limited partner can contribute cash or other property at a fair and appropriate value. A contribution cannot be satisfied by services, or by a loan from that partner (s.5(3) and (4)). And no proposed limited partner has limited liability for the partnership's debts until the Central Bank issues the certificate of authorisation (s.8(7)). The practical consequence: before authorisation, investors who are already partners carry no statutory liability shield.

The lawreform.ie revision is dated 7 December 2022. Its header says the Act is up to date with all changes known to be in force as of 17 September 2026. The 1994 enacted text omits every change described on this page.

The ILP Act creates the partnership. The AIF Rulebook decides which regulated product it becomes: a Qualifying Investor AIF or a Retail Investor AIF. The difference goes beyond the investor base. The Retail Investor AIF chapter sets portfolio and borrowing limits, while the QIAIF chapter sets almost none.

Two further QIAIF points matter for credit. First, the open-ended label comes with hard dealing terms. The fund must offer at least quarterly redemptions and meet at least 10% of NAV monthly or 25% quarterly. Quarterly dealing must settle within 90 calendar days, or 95 for a fund investing in other funds. A semi-liquid fund that cannot meet those terms classifies itself as open-ended with limited liquidity (ch.2, s.1(iv)(1) to (3)). That label removes the Rulebook's dealing-frequency, redemption-quota and settlement parameters. It does not remove the AIFMD liquidity-management duties (AIFMD, Article 16). Second, the Rulebook's investment limits apply at purchase and continue to apply after it. The fund must record a passive breach and make fixing it a priority (s.1(i)(10)).

A RIAIF ILP is not ruled out by the statute, and the Rulebook does let a closed-ended retail fund exist (ch.1, Part II, s.6). The RIAIF limits are written around securities, deposits and borrowing, and the chapter does not say how a book of bilateral loans is measured against them. That gap goes to the To-verify list below. The ELTIF is the EU's purpose-built retail route into private credit, compared on the ELTIF 2.0 vs Part II UCI page.

The ILP Act and the AIFM Regulations (S.I. No. 257 of 2013) split the work in a way that differs from the corporate vehicles. The general partner is the legal actor. Limited partners may not contract for the ILP, and the GP signs every document on its behalf (ILP Act s.6(1)). Debts the GP incurs in running the business are debts of the ILP (s.17). The Central Bank will authorise the ILP only if a GP is itself an authorised AIFM, or satisfies the Bank on competence and probity (s.8(1)(a)). No one may act as both GP and depositary (s.8(2)).

The depositary's statutory report on the general partner is specific to the ILP. Section 24(1) requires it for every annual accounting period, in time for the annual report. It must say whether the GP stayed within the investment and borrowing limits. Where it did not, the report has to say how and what the depositary did about it.

Who originates and monitors loans, and who runs capital accounts and waterfalls, is set by the service contracts, not by the ILP Act. Manager thresholds by domicile sit on the sub-threshold AIFM page. Whatever the contracts say, the statutory duties above stay with the GP and the depositary.

The statute gives the partnership agreement wide freedom, and the Rulebook adds the conditions under which the Central Bank accepts the private-markets toolkit. What follows separates the law from the practice it supports.

How do commitments and drawdowns work?

A limited partner need contribute capital only in the circumstances the agreement provides (ILP Act s.20(1)(a)). A capital commitment can meet the €100,000 floor in place of an upfront subscription (Rulebook ch.2, s.1(i)(1), footnote 23). The QIAIF may also issue partly paid units (s.1(ii)(8)). The GP's register must record each amount undertaken and each amount paid, with dates (s.13(1)(b)). Notice periods, call frequency and the cap on calls for fees after the investment period are commercial terms. Nothing in the Act or the Rulebook fixes them.

What happens when an investor misses a call?

In a credit fund, a missed call can leave a loan commitment unfunded. Section 24(6) stops a court from striking down a default remedy solely because it is penal. Section 24(7) lists the remedies that benefit. They include reducing, forfeiting or subordinating the defaulter's interest and forcing a sale. Others cover lending the shortfall to the defaulter and redeeming the interest at an appraised or formula value. A GP acting in good faith on the agreement is not liable for imposing, waiving or partly applying them (s.24(8)). The protection needs a provision in the partnership agreement subjecting a defaulting partner to remedies. Those remedies may be "specified in the partnership agreement or otherwise applicable under any law" (s.24(6)).

Where do capital accounts, later closings and excuse rights come from?

The Rulebook lets a QIAIF use share classes to run commitments, and that is the legal hook for capital accounting in an ILP. A fund that draws down in stages must keep per-investor records of commitments paid and outstanding. The method must be consistent with the AIFMD Level 2 valuation rules (ch.2, s.1(v)(4)(d) and (e)). The same section permits issues at a price other than NAV without prior Central Bank approval. It also permits excuse and exclude rights, stage investing and management classes (s.1(v)(3)). Later investors can come in through a new class that participates in existing investments, future ones, or both (s.1(v)(7)). The guard rail is fairness: an issue below NAV must not materially disadvantage existing holders (s.1(v)(5)). Equalisation interest at a later close is a matter of practice and the agreement.

What limits distributions and the return of capital?

Income goes out as the agreement provides, and the constitutional document must state how income is applied (Rulebook ch.2, s.1(ii)(4)). A return of capital is narrower. Under s.20(1)(b), a limited partner may receive part of its contribution back on two conditions. The GP must have calculated NAV under the AIFM Regulations on the latest occasion it fell due, and that NAV must have been above zero. Recallable distributions are a contractual device, not a statutory one. A limited partner stops being one when it gets its whole contribution back and is released from any undertaking to contribute (s.21).

How do transfers, pledges and fund finance work?

A new limited partner, including a transferee, needs the consent of the GP or all GPs, but not of the other limited partners (s.18(1)). The transferee takes over the duty to fund the unpaid commitment (s.18(2)). A limited partner can mortgage or charge its interest. The charge does not make the chargee a partner, and it does not release the limited partner from its obligations (s.18(3)). Subject to the agreement and the sole-GP rules in s.37(2), neither a change of partners nor security over a partnership interest dissolves the ILP (s.37(1)). On the fund side, the QIAIF may borrow privately and issue debt to lenders, but not to the public (Rulebook ch.2, s.1(i)(5)). A partner may also lend to the ILP on the same footing as an outsider (ILP Act s.19(2)). On a change of GP, the right to make capital calls vests in the incoming GP without further formalities (s.11(5)).

What happens at the end of the term?

A closed-ended QIAIF must have a finite closed-ended period, stated in the prospectus. On the end date it must wind up, redeem all units, convert to open-ended, or extend with investor approval (Rulebook ch.2, Part II, s.3(i)(1)). Extending the term needs a simple majority of votes cast if investors get a realistic chance to exit, and 75% of votes cast if they do not (s.3(iii)(1)). Where the governing documents allow a distribution in kind on a winding up, the prospectus must disclose the terms (s.1(ii)(9)). For a lending book with loans still running at the end date, that disclosure is the route to distributing loans rather than cash.

Under Article 4(1)(at) of the consolidated AIFMD, a loan-originating AIF is one whose strategy is mainly to originate loans. A fund whose originated loans reach 50% of NAV by notional value also qualifies. Some AIFMD II rules apply to any AIF that originates loans, whatever its share of NAV. They include the 20% single-borrower limit for financial borrowers, the connected-party lending bans and 5% risk retention on transferred loans (Article 15(4a) and (4e) to (4i)). Others apply only to a loan-originating AIF. The main ones are the leverage caps in Article 15(4b) and the closed-ended default in Article 16(2a). Leverage there means exposure to NAV on the commitment method, not borrowing to NAV. Borrowing fully covered by investors' capital commitments does not count as exposure. The Ireland vs Luxembourg loan-origination page sets those out with their transitional rules.

Two Irish points sit on top. The July 2026 Rulebook carries no standalone loan-origination chapter. It appears only in the parts for QIAIFs with a registered or non-EU AIFM, which apply the AIFM Regulations' lending provisions to them (ch.2, Parts III and IV, para 1(f)). And a loan-originating QIAIF with a registered or non-EU AIFM must be closed-ended (Part III and Part IV, para 2). The result: an open-ended loan-originating QIAIF needs an authorised EU AIFM from the start, not within the two-year runway. A credit fund below the loan-originating threshold is not caught by that rule.

For a QIAIF, the Central Bank's published process is short once it has cleared every party. It authorises the fund on a complete application, provided the parties were approved in advance and the documents carry the required confirmations. The application goes through the ORION portal by 5pm on the business day before the proposed date. The letter of authorisation then issues by close of business on that date (CBI, Authorisation Process for AIFs). The market calls this the 24-hour process. The Bank returns late or incomplete filings for re-dating.

The 24-hour figure measures only the last step. The approvals that come before it set the real timeline. They include a new AIFM's authorisation, the depositary's and administrator's onboarding, and fitness and probity clearance for directors. For a QIAIF, proposed directors must complete the online Individual Questionnaire at least five working days before filing. For a retail fund the figure is 20 working days before authorisation (CBI authorisation page). A new AIFM's authorisation runs on its own clock. The regulator must decide within three months of a complete application, extendable by up to three more (AIFMD, Article 8(5)). The Bank publishes no end-to-end timetable for a fund launch, so the slowest prior approval sets the date.

An ILP authorised on or after 13 February 2013 is transparent for Irish tax under section 739J of the Taxes Consolidation Act 1997. Income and gains count as arising to the partners in proportion to their allocations. Any unallocated balance goes to the GP (Revenue TDM Part 27-01a-04, sections 2 and 3). The ILP files a Form ILP1 by 28 February after each year of assessment. From the 2026 year, that statement also meets the partnership return obligations, after Finance Act 2025 (section 7 of the same manual, announced in eBrief No. 087/26 on 29 April 2026).

One line in that manual matters to a lender. Although transparent, an ILP "still constitutes a 'person' for interest withholding tax purposes" (section 5). The starting point for interest from an Irish payer is therefore the ILP itself. Revenue will look through to the partners for certain statutory exemptions and for treaty-based self-certification, for payments from 1 January 2023. Every partner must qualify on its own, and the entity must be transparent in every relevant jurisdiction. It must also exist for non-tax commercial reasons (Revenue TDM Part 08-03-06, sections 5.3 and 9.1.1). If any partner fails, the payer deducts tax from the gross interest.

The text used is the consolidated Law of 10 August 1915 on commercial companies applicable at 2 June 2026. The SCSp is a corporate-law form with no product regulation of its own. So the comparison sets a partnership plus a regulated product against a partnership that may or may not sit inside one.

Read across, the SCSp gives the partners more room by default and the ILP gives them more protection by statute. An SCSp's unlimited partner need not manage it, contributions can include services, and the agreement governs almost everything. The ILP fixes more in law, from the default-remedy shield to the umbrella regime. In return, every change to its partnership agreement or name needs the Bank's prior approval (s.11(2)). For cost, speed and fee comparisons across the two domiciles, see the private fund domicile comparison. For a credit fund, that covers changes to the partnership agreement such as new investment terms or a term extension.