jfa legal update n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
JFA – Legal Update PowerPoint Presentation
Download Presentation
JFA – Legal Update

Loading in 2 Seconds...

play fullscreen
1 / 27

JFA – Legal Update - PowerPoint PPT Presentation


  • 184 Views
  • Uploaded on

JFA – Legal Update. 24 October 2013. Robert Milner. LEGAL UPDATE. AIFMD New Prospectuses Order Managed Accounts LLPs FATCA and Son of FATCA New Security Interests Law. FOCUS FOR TODAY – FUNDS PRACTITIONERS. Background? Why should you care? Next Steps?. AIFMD: BACKGROUND.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'JFA – Legal Update' - wray


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
jfa legal update

JFA – Legal Update

24 October 2013

Robert Milner

legal update
LEGAL UPDATE

AIFMD

New Prospectuses Order

Managed Accounts

LLPs

FATCA and Son of FATCA

New Security Interests Law

focus for today funds practitioners
FOCUS FOR TODAY – FUNDS PRACTITIONERS

Background?

Why should you care?

Next Steps?

aifmd background
AIFMD: BACKGROUND

EU legislation seeks to harmonise regulation and marketing of AIFs by AIFMs

Ultimately, aims to provide a ‘passport’ to market throughout the EU (per prospectus directive, UCITs, etc)

Focuses on the AIFM (although does impact AIFs too)

Went through many iterations (political dynamite)

aifmd why should you care
AIFMD: WHY SHOULD YOU CARE?
  • New Jersey laws – apply where any fund is marketing into EU
    • Require all AIFs and AIFMs to be regulated
    • BUT only if AIFMD applies
  • Existing regulated funds and managers pretty much OK
  • Transitional provisions
  • AIFs – AIF certificate
  • AIFM – FS(J)L registration (consent for “sub-threshold”)
  • Horrible consequences of getting it wrong: criminal offences in EU and Jsy PLUS Art 22 FS(J)L – contracts can be void
existing aifs bridging the gap
EXISTING AIFS: BRIDGING THE GAP

AIF Codes of Practice

AIF

Cert

AIF

Cert

Notice

  • AIFMD rules
  • Consent to marketing
  • Supervision
  • Information
  • Authorisation
  • Permission

Very COBORegulated Unregulated

private only / PPF CIF Fund

jersey regulation aifs
JERSEY REGULATION: AIFS

* The Alternative Investment Funds (Jersey) Order 2013, Article 2(3)

** The Alternative Investment Funds (Jersey) Order 2013, Article 2(1)

jersey regulation aifms
JERSEY REGULATION: AIFMS

*The Financial Services (Jersey) Law 1998, Schedule 2, Part 5, Article 23(3)

** The Financial Services (Jersey) Law 1998, Schedule 2, Part 5, Article 23(1)

new structures spotting the issues
NEW STRUCTURES – SPOTTING THE ISSUES
  • What is “marketing”?
  • What is an AIF?
  • What is an AIFM?

Why aren’t the answers clear?

  • 28 interpretations
  • Little guidance outside UK
  • ESMA / EU review
new structures what is an aif
NEW STRUCTURES: WHAT IS AN AIF?
  • Very broad definition - easier to look at what isn’t caught
  • Trading companies – ie commercial activity (not including financial services) or industrial activity is OK
  • Joint-ventures
  • Intra-group: only investors are in manager’s group and none are funds
  • Employee participation schemes
  • Managed accounts
new structures what is an aif1
NEW STRUCTURES: WHAT IS AN AIF?

Other things that aren’t caught:

UCITS

Holding companies

Securitisation special purpose vehicles (SPVs)

Pension funds, insurance contracts

Concerns about club deals, co-invest vehicles etc

new prospectuses order background
NEW PROSPECTUSES ORDER: BACKGROUND

Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012

All certified funds (unclassified, expert, listed) must comply from November 2013

Replaces UFPO and CGPO

new prospectuses order why do you care
NEW PROSPECTUSES ORDER: WHY DO YOU CARE?

Transitional provisions about to expire

All open-ended funds will be caught

Closed-ended funds – impact if they started marketing before November 2012

Requirement for ongoing revision (can be done by supplement) if new offer or material change

Criminal offence- 5ys and/or fine

new prospectuses order next steps
NEW PROSPECTUSES ORDER: NEXT STEPS

Beat the rush!

If UFPO compliant, should be straightforward

Can get derogations – need to be reasoned and specifically requested

managed accounts background
MANAGED ACCOUNTS: BACKGROUND

What is a managed account?

Art 2 FS(J)L – distinguishes FSB and IB based on who the client is

FSB regime less onerous than IB

Fund managers prejudiced – need IB as well as FSB for doing exactly the same job

Proposed new class of FSB and IB exemption

Hopefully in force early 2014

managed accounts why should you care
MANAGED ACCOUNTS: WHY SHOULD YOU CARE?

Can streamline regulation for existing Jersey fund managers

Can attract new managers to the Island and encourages substance

Provides clarity on tax position

Potentially neat solution to AIFMD

managed accounts criteria
MANAGED ACCOUNTS: CRITERIA

Minimum investment US$1,000,000

Single Individual (includes couples and family offices) or Corporate client

Discretionary investment management

Investment policy/restrictions either the same or substantially similar to existing fund

Subject to change!

managed accounts next steps
MANAGED ACCOUNTS: NEXT STEPS

Tell people!

See if suitable for fund manager clients - MoME’d or otherwise

Convert existing structures?

Develop custody products?

llps background
LLPs: BACKGROUND

Introduced in 1997

Supposed to attract international professional partnerships

Combination of £5m ‘deposit’ and UK government pressure on HMRC meant no-one used them

UK LLPs have since became popular structures for fund managers

LLP law changing - £5m requirement already gone - and wholesale modernisation in progress

llps why should you care
LLPs: WHY SHOULD YOU CARE?

Key product for fund managers looking to set up in Jersey

Combination of separate legal personality, tax transparency and limited liability

Other tax advantages in UK

More flexible than companies - like a ‘general’ partnership but with limited liability

More flexible than limited partnerships – every partner can take part in management without losing limited liability

llps next steps
LLPs: NEXT STEPS

Get familiar with the structure – basic filing and solvency requirements

Spread the word

Await new LLP law later this year

New UK proposals may drive existing LLPs offshore

fatca son of fatca background
FATCA/SON OF FATCA: BACKGROUND

The US wants the rest of the world to help it collect taxes

This is done by identifying US investors in local structures and providing information on their interests or by making foreign financial institutions withhold tax on payments they make

If you don’t comply, the US can impose withholding taxes on any US investments

Everyone hates FATCA – delayed and possibly diminished – 1 Jan 2015 now deadline for FFIs

UK wants in on the act – Son of FATCA

Stop Press: Jsy/UK IGA signed up this week

fatca son of fatca why should you care
FATCA/SON OF FATCA: WHY SHOULD YOU CARE?

Withholding tax = very unhappy investors (particularly non-US)

Either Fund or Administrator/Custodian will be responsible

Need to know who your investors are

Deemed compliance

Data Protection issues?

Son of FATCA could drive UK investors elsewhere

fatca next steps
FATCA: NEXT STEPS

FATCA: Wait for Guidance Notes

Son of FATCA: IGA details to follow

In the meantime, identify existing US investors

Identify new US investors – use subscription agreement reps

Sort potential Data Protection issues – use subscription agreement

New world order on tax network agreements by 2015?

new security interests law background
NEW SECURITY INTERESTS LAW: BACKGROUND

Old law was old

New law is new

New not necessarily better but coming in on 1 January 2014 anyway

new security interests law why should you care
NEW SECURITY INTERESTS LAW: WHY SHOULD YOU CARE?

If your structures lend against Jersey-situate collateral, all security must be taken in accordance with new law from 1/1/14

Existing security OK – but could it be improved?

More certainty on non-sale enforcement

Register introduced so need to check when buying Jersey assets

If you are a bank or custodian, you may have to be party to SIAs

Third party security now officially OK

contact details

CONTACT DETAILS

Robert Milner

Partner, Carey Olsen

T 01534 822 336

E robert.milner@careyolsen.com