chambers investment funds

Chambers USA, 2021. Usually, this is not the case, as partnerships that qualify as AIFs are deemed not to carry out a business. "Advises on a diverse range of funds matters and is particularly well-recognised for its work on the real estate funds side. any changes to the maximum level of leverage that the AIFM may employ on behalf of the AIF, plus any right to the reuse of collateral or any guarantee granted under the leveraging arrangement; and. Our long-standing participation in the industry coupled with our large network uniquely positions us to provide not only legal guidance, but also practical business and strategic advice to our clients. A Part II UCI that qualifies as an AIF must be managed by an AIFM that is authorised or registered (depending on its assets under management) under the AIFM Directive. The fund manager typically makes available the main fund agreement, management agreement and subscription agreement for investors to review. Shay Lydon is recommended. Sub-threshold AIFMs have alternative marketing options based on certain member states' national private placement rules (NPPRs). Generally speaking, no gold plating of the AIFMD has taken place in the Netherlands, which means that, inter alia, the following AIFMD investor protection rules on the following topics should be taken into account: When interests are marketed to non-professional investors that invest less than EUR100,000, additional investor protection rules pursuant to the Dutch retail top-up regime need to be complied with. In addition to its stable business and political environment, the Netherlands has various tax advantages that also make it an attractive fund jurisdiction. Western Balkans 6 Chamber Investment Forum (WB6 CIF) is a joint initiative of chambers of commerce and industry from Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia. This will inevitably bring about a change in investment trends. In Luxembourg, vehicles with the SICAR regime have traditionally been considered to qualify for the benefit of EU directives and double tax treaties. In March 2020 a proposal for the first European Climate Law was published by the European Commission to enact the European Green Deal goal of a climate-neutral Europe society and economy. In certain cases, face-to face meetings with the regulator may be organised. A gain realised by a non-resident investor on a participation in an unregulated fund taking the form of a corporate entity is taxable under Luxembourg tax law if the participation (i) represents more than 10% of the share capital of the unregulated corporate fund and (ii) has been disposed of within six months of the acquisition. Murray is recognized as a leading lawyer for private equity fund formation by Chambers USA (2017) and Chambers Global (2017). A fund organised as a corporate entity is subject to the ordinary corporate taxation regime; ie, subject to (i) CIT and MBT on its worldwide profits (subject to certain exemptions) at a consolidated rate of 24.94% (the rate for 2021 for companies resident in Luxembourg City) and (ii) NWT on the fair market value of its worldwide net assets (again, subject to certain exemptions) at a rate of 0.5% for the first EUR500 million of net assets and 0.05% for the tranche of net assets exceeding EUR 500million. The review period is suspended while additional documents are being requested. Despite the global coronavirus (COVID-19) outbreak, Dutch fund managers have been able to raise significant amounts of capital during the past year. (uitsluiting aansprakelijkheid – exclusion of liability), respectively, have to be added to the name of the Coop to indicate the level of liability of the members. Taxation may arise if the taxing rights on the disposal of the underlying partnership assets are allocated to Luxembourg and fall within the scope of non-resident capital gains taxation. Dutch AIFMs that are registered under the Small Managers Regime should include a selling legend in the private placement memorandum and other marketing materials, in which the Placement Restrictions that will be used by the AIFM (as set out in 2.1.2 Common Process for Setting up Investment Funds) are explained. Also, the legal ownership of the assets under management of the UCITS has to be held by a separate legal entity whose sole object as stated in the articles of association is holding the legal ownership of the assets of the UCITS fund. a description of the circumstances in which the AIF may use leverage; the types and sources of leverage permitted and the associated risks; any restrictions on the use of leverage and any collateral and asset reuse arrangements; and. Nonetheless, the extraordinary debt burden of the governments and corporates after this crisis may result in continued asset purchase programmes by central banks and hence extended periods of very low interest rates. Investment Funds Market Overview p.3 1 . Please see 2.3.8 Approach of the Regulator. Part II UCIs may, in principle, invest in all types of assets but are subject to certain diversification requirements and borrowing restrictions, depending on the target assets. The more obvious negative financial impact is due to global warming. The minimum number of full-time employees who must be located in Luxembourg (or the closer region) is three. The Investment Management Group represents all types of investment funds and products, including . Authorised AIFMs must comply with the risk, borrowing restrictions, valuation and pricing of the assets held by the AIFs and transparency requirements set out in the AIFM Law or the AIFM Directive, as applicable. Learn more about our methodology. the exercise of partners’ rights under the constitutive documents; any advice given by the limited partners to the SCA, SCS or SCSp; any supervisory authorisation powers given to limited partners under the constitutive documents; and. Investment Funds: Chambers Global 2020. The licence for these authorised AIFMs should specifically include the retail top-up. AIFMs must regularly conduct stress tests, under normal and exceptional liquidity conditions, that enable them to assess the AIF’s liquidity risk, and monitor that risk accordingly. Private debt funds may therefore be a crucial actor in post-COVID-19 long-term growth. Foreign AIFs may only be marketed to retail investors in Luxembourg if they comply with the rules laid down in CSSF Regulation 15-03. Kirkland provides sophisticated advice to investment fund sponsors, institutional investors and other market . Back in 2008–09 during the financial crisis, private debt showed its merits, as private lenders provided for the necessary flexibility to offer alternative financing options. Last Updated: February 09, 2021. BELGIUM Law and Practice Contributed by: Vanessa Marquette, Eveline Hellebuyck, Sara De Moor and Nicolas Bertrand Loyens & Loeff see p.16. UCITS and Part II UCIs must appoint a depositary, and the fund’s assets must be segregated from the depositary’s assets. Effectively, the (foreign) withholding tax levied in connection with the investments of the FBI will be converted into Dutch withholding tax, for which the retail investors may be eligible for a credit or (partial) refund. An applicable tax treaty may set aside this rule and allocate the exclusive taxing right to the country of residence of the investor. Katten advises many of the world's premier domestic and offshore private investment funds, alternative investment managers, investment advisers, commodity pool operators and commodity trading advisors, as well as family offices, investors, administrators, brokers, dealers, insurance companies and international banks to help achieve their business objectives. From a regulatory perspective, AIFMs under the Small Managers Regime may only offer the interests in each AIF in accordance with the Placement Restrictions. Loyens & Loeff N.V. For SIFs, an offering document must be established. The corporate veil may only be pierced in very limited circumstances involving, for example, a mingling of the assets of the partners or shareholders and the assets of the entity. 2. The EEA ManCo will need to obtain separate approval from the AFM for the management of a Dutch UCITS fund in the Netherlands (pursuant to the Dutch implementation of Article 5(3) of the UCITS Directive). An SCS or SCSp, even if it qualifies as an AIF, is still subject to MBT if its general partner qualifies as a Luxembourg capital company holding at least 5% of interests in the partnership or a foreign capital company with a Luxembourg PE through which it holds at least 5% of interests in the partnership. A SICAR is not subject to any diversification requirements. The authorisation process of a UCITS takes, on average, six to ten weeks from the filing of the initial application, while the authorisation process of a UCI Part II lasts, on average, two to five months. A reduction or exemption may apply for qualifying investors. But if they want to benefit from a European marketing passport, they will have to register with the competent authority and be governed by the related rules. The Luxembourg legislator considers, however, that investors in an investment fund generally do not have an effective control over the fund’s investments. This appears to be one of the major goals and also led to the Paris Agreement that was signed in December 2015 under the United Nations Framework Convention on Climate Change. There is an exception from the above-mentioned licence obligation for Dutch AIFMs who can make use of the "small managers registration regime" (Small Managers Regime) of Section 2:66a of the AFS. For resident investors, the ordinary tax rules on the taxation of dividends and capital gains apply. The Dutch government (via the European Investment Fund, or EIF) frequently invests in Dutch funds targeting SMEs. The segregation between the assets and liabilities of each sub-fund is recognised by each of the above-mentioned laws. The BV is a legal entity with capital divided into one or more transferrable shares, and has legal personality. The authors believe that there are no grounds to justify an amendment of the current regime. Holders of a qualifying holding (ie, >10% capital or voting rights) need to obtain a declaration of no objection from the DNB. Alternative investments are now, more than ever, a big trend for investors. As the authorisation pursuant to the AIFMD is, in principle, limited to professional investors, managers who intend to offer interest in the AIF they manage to non-professional investors (retail) in the Netherlands should comply with the so-called Dutch retail top-up regime. However, although the FGR is not a legal entity (rechtspersoon) or a partnership (personenvennootschap), but a contractual arrangement sui generis, the possibility of an FGR being requalified as a partnership (maatschap/vennootschap onder firma) or a limited partnership among the fund manager, the title-holder and the investors (ie, the participants) or among the participants cannot be ruled out if, as a factual matter, it meets the constitutive requirements of such a partnership. The FBI is required to meet statutory requirements as to its shareholders and leverage restrictions. For the sake of completeness, the authors note that a legislative proposal is pending, pursuant to which, EU sub-threshold AIFMs are allowed to manage Dutch AIFs, provided that interests in the AIF are marketed to professional investors. From a tax perspective, in the context of the implementation of ATAD and ATAD 2, Luxembourg introduced interest deduction limitation and controlled foreign companies rules, and made changes to its already existing exit tax, anti-hybrid and general anti-abuse rules. Fund Formation Practice Group of the Year. Regarding the information to be made available when marketing interests in AIFs in the Netherlands, reference is made to 2.1.2 Common Process for Setting up Investment Funds. Fried, Frank, Harris, Shriver & Jacobson LLP, © Copyright 2021 Chambers and Partners |, Investment Funds: Private Equity in UK-wide, Investment Funds: Open-ended Funds - UK-wide, Investment Funds: Closed-ended Listed Funds - UK-wide, Investment Funds: Private Equity: Secondaries - UK-wide, Investment Funds: Private Equity: Credit Funds - UK-wide, Investment Funds: Private Equity: Venture Capital - UK-wide, Investment Funds: Investor Representation - UK-wide. It is important to note that leverage may affect whether an AIF must appoint an authorised AIFM (see 2.1.1 Fund Structures). An FGR that elects to be treated as a VBI is fully tax exempt – ie, the VBI is not subject to Dutch corporate income tax and its profit distributions are not subject to Dutch dividend withholding tax. Gast is listed as one of the leading lawyers in investment funds by IFLR and recommended for his advice in relation to Chinese investments and his work with Asian clients by Chambers and Partners. In an effort to further push harmonisation in the field of management of alternative investment funds, the European Commission issued on 10 June 2020 its report addressed to the European Parliament and the Council assessing the application and the scope of the AIFMD. AIFMs have to prepare a UCITS-like KID (in the Dutch language) for each new AIF they are marketing, and provide this to the investors prior to investing in the AIF. It is a contractual arrangement sui generis (often referred to as its terms and conditions) between a fund manager and each investor (ie, the participants), obliging the fund manager to invest and manage assets contributed by the participants for their joint account. We are consistently recognized as a top law firm for investment funds by a number of publications in the U.S., Europe, Asia and the Middle East, including The Legal 500 and Chambers Global, which noted that Dechert is "Highly respected as a major player in the hedge fund market with strong teams in several key locations worldwide" (2017). Generally, in relation to financing granted to a Dutch fund, a disclosed right of pledges over those receivables or contractual rights is created. In short, the AFM approach can be described as thorough, yet co-operative if possible. Based on the AIFM Law, leverage is defined as any method by which the AIFM increases the exposure of an AIF it manages, whether through borrowing of cash or securities, leverage embedded in derivative positions, or by any other means. Investors in an FCP usually do not have voting rights (except if otherwise provided in the constitutive documents). Similarly, a manager holding a European passport may market a fund in Luxembourg following a simple notification procedure. Our team members are ranked Band 2 by Chambers and Partners UK for Investment Funds: Real Estate. This article first appeared in the Global Practice Guide: Investment . For Dutch AIFMs that are registered under the Small Managers Regime, from a regulatory perspective, there are generally no investor protection rules that should be taken into account. An integrated approach is vital for the firm's investment management practice, but also makes Loyens & Loeff stand out in the market. Partner. With the aim of avoiding the worst and keeping their economies afloat, the various governments and central banks have released unprecedented financial aid. The firm has a strong international capability in relevant jurisdictions. The SA and SCA are incorporated before a Luxembourg notary with a minimum share capital equal to EUR30,000 (or an equivalent amount in any other currency). Shay Lydon is named 'Highly Regarded'. SIFs, SICARs and RAIFs are reserved to well-informed investors. Indeed, it is said that sustainable investments are more profitable in the long term than traditional assets. More than 150 lawyers in offices in the United States, Europe, Australia, and Asia spend the majority of their time providing legal services to a range of investment funds across the globe. CNPLaw LLP (CNP) is proud to announce that in the 2021 edition of Chambers Asia-Pacific, the firm has received a Band 4 ranking for its Investment Funds practice, with Mr Bill Jamieson, Partner at CNP recognised as a Notable Practitioner and is ranked under Band 3.. As quoted from Chambers, the Investment Funds team at CNP is known for "a wide range of investment fund matters including fund . Combined with an improved European long-term investment fund (ELTIF) regime, which is already on its way, and some improvements to the European venture capital fund (EuVECA) and European social entrepreneurship fund (EUSEF) regimes, an appropriate, but limited and specified, access of further investors could be achieved. A CSSF Circular 18/698 on authorisation and organisation of Luxembourg investment fund managers has unified the licensing process for UCITS managers and authorised AIFMs. The formation process of a Luxembourg fund depends on its legal form. to offer a wider range of strategies and asset classes; to reduce costs and benefit from economies of scale; to hire and retain best-in-class portfolio managers; and. In no event will Chambers and Partners be liable for any damages including, without limitation, indirect or consequential damages, or any damages whatsoever arising from use or loss of use . The filing was for a pooled investment fund: hedge fund The notice included securities offered of Equity,Pooled Investment Fund Interests offers for which the total consideration in the EU is less than EUR8 million over a period of 12 months. AIFs in the Netherlands are often structured as a tax-transparent CV. Managers or directors of a regulated retail fund must be authorised by the CSSF. It is, in principle, prohibited in the Netherlands for an AIFM to manage an AIF or to market interests in an AIF without having obtained a licence from the AFM. An EU sub-threshold AIFM is, pursuant to the Dutch implementation of the AIFMD, not allowed to manage a Dutch AIF. Investment Funds (PRC Firms) - Band 1 Chambers Asia-Pacific, 2012-2021; Investment Funds Firm of the Year Asialaw Asia-Pacific Legal Practice Awards, 2017 One of the consequences of such high indebtedness will most likely be the continuance of very low interest rates and quantitative easing by central banks, which will, in turn, have a considerable impact on the returns on fixed-income instruments. The same will apply to unregulated funds once the AIFMD third-country passport under Article 38 of the AIFM Law is made available to non-EU AIFMs. A Soparfi, on the other hand, may not be structured as an umbrella fund. A SICAR is the appropriate regulatory regime for investment vehicles whose object is to invest their assets in securities representing “risk capital”. Two-time winner of the Award for Excellence presented by Chambers to the pre-eminent U.S. investment funds practice (2009, 2012) Diverse Practice Clients benefit from attorneys well-versed in the investment management industry, as well as our lawyers across the firm, who possess deep knowledge and vast experience in every critical discipline of . Such adjusted action plan is expected to be published during the first quarter of 2021. Any direct or indirect offering or placement at the initiative of a manager or on behalf of this manager of units, shares or interests of a fund it manages with investors domiciled in Luxembourg requires a prior notification to the CSSF. Luxembourg is the world’s second-largest fund domicile after the USA, as the assets under management of Luxembourg-domiciled funds stood at EUR4,674.665 billion as at 31 October 2020. AIFMD Level 1 and Level 2 provisions provide for an already solid framework that has been complemented by guidance from ESMA. The world's top asset management groups, hedge funds, private equity and venture capital firms domicile their funds in leading offshore financial centres like Bermuda, the British Virgin Islands and the Cayman Islands due to the operational efficiencies, speed to market and progressive legislation offered by those jurisdictions. The Intelligent Investing Podcast, Don Chambers: The Proxy Battle at Firsthand Tech Value Fund About Donald Chambers Mr. Alternative Investment Funds 2.1 Fund Formation 2.1.1 Fund Structures Entity options available for structuring investment funds include exempted limited partnerships, exempted companies, limited liability companies and trusts. When choosing a regulatory regime, the main considerations are the type of: Part II UCIs are open to retail investors in Luxembourg, but benefit from the “European passport” under the AIFM Directive only with respect to professional investors. Less frequently, hybrid products mixing capital call financing and NAV financing features may also be used by Luxembourg funds. Such information includes the identity of the five largest sources of borrowed cash or securities and the amounts of leverage received from each of those sources. During these discussions, the fund manager will decide on the structure (thereby taking into account the outcome of discussions on the various tax aspects, the investor type it wishes to bind and the type of investments and investment purposes of the fund) and will prepare a term sheet setting forth the main terms and conditions of the investment fund. Leading Law Firm for Investment Funds: Real Estate Global-Wide. Non-EEA AIFMs making use of the Dutch NPPR may only offer interests to “qualified investors” within the meaning of the AFS.      Â. The depositary and the auditor of a regulated AIF and of an AIF managed by an authorised AIFM must also have their registered office in Luxembourg. Also, semi-annual accounts with respect to the AIFs will have to be published. Investment Funds: Chambers Global 2019 Tara Doyle is a "great representative, not just of the firm but for funds in Ireland." Chambers Europe 2019. In the context of this reform, it may be that the unanimous consent requirement for admissions and substitutions of limited partners in a CV (see 2.6 Alternative Funds Tax Regime) will be abolished. The Dutch legal forms commonly used for investment fund formations are a CV, a Coop, an FGR and/or a BV. Part II UCI, SIFs, SICARs, RAIFs and unregulated AIFs that are managed by authorised AIFMs must appoint a depositary, and the fund’s assets must be segregated from the depositary’s assets. If the AIF is marketed under the Dutch retail top-up regime to non-professional investors that invest less than EUR100,000, additional disclosure requirements apply, as set out under 3 Retail Funds. With respect to custody services, a licence pursuant to MiFID II (2014/65/EU) may be required. Part II UCIs that intend to target retail investors in other member states must meet specific conditions laid down by the regulatory authorities of the host member states. Asset Management and Investment Funds. The scope of investors considered eligible for AIF (marketing) at EU level, meaning professional, would be enlarged but not extended to “real” retail investors, which would be inappropriate. Please see 3.2.1 Types of Investors in Retail Funds. Regulated retail funds are subject to the direct supervision of the CSSF and require prior CSSF approval before they can be set up. The manager of an AIF is also subject to periodic reporting obligations. According to the last White Paper co-written by CGAP and Symbiotics, “Microfinance Funds – 10 Years of Research & Practice”, Luxembourg is a leading jurisdiction for microfinance investment vehicles (MIVs) and as of December 2015 accounted for 61% of the MIV market size. Over the past two decades, Luxembourg has actively supported the development of microfinance and inclusive finance as tools for promoting development and ending poverty. The AIFM concerned must provide investors with disclosures in respect of the AIF in which they intend to invest, including: In addition, AIFMs managing EU AIFs employing leverage or marketing AIFs employing leverage in the EU must disclose to the investors, on a regular basis, for each AIF: In addition to the disclosures to be made, AIFMs must also provide the competent authorities of their home member state with information in respect of the AIFs they manage. The authorised AIFM with a retail top-up will have to meet all requirements that apply for authorised AIFMs under the fully licensed regime. Annually we collect hundreds of thousands of responses from clients, the majority via in-depth interview. enthusiastic, reliable and efficient, with a good bench strength on real estate funds and all tax matters related to real estate investment. This became the Taxonomy Regulation (Regulation (EU) 2020/852), which entered into force in July 2020 and of which certain articles will only apply as of January 2022 and 2023 depending on the environmental objectives concerned. to anticipate subscriptions, provided that the investor is irrevocably obliged to pay within a short timeframe. The 17 Sustainable Development Goals adopted by the United Nations in 2015, in the context of the 2030 Agenda for Sustainable Development setting out a 15-year action plan to achieve these goals, include climate action. Our comprehensive research ensures you have . Advising on the activities of hedge and private equity funds certainly keeps lawyers on their toes. The FGR is established by the execution of a notarial or private deed setting out its terms and conditions. The rules of both regulations only apply if a fund wishes to use the EuVECA or EuSEF label; ie, funds exempt from the AIFM Law are not, per se, obliged to meet the provisions of the regulations. Retail funds are all subject to borrowing and other related limitations. In respect of private equity and venture capital funds, leverage existing at the level of a portfolio company is not intended to be included when referring to those financial or legal structures, to the extent the AIF does not have to bear potential losses beyond its investment. Contents 1. The Legal 500 U.S., 2020. Distributions made by funds subject to a specific regulatory regime (SICAR, SIF, RAIF) are not subject to withholding tax. Also, all information provided by the AIFM or ManCo may not be detrimental to the information to be supplied or made available pursuant to the AFS, and it should be made clear whether documents are commercial. The Luxembourg team comprises more than 60 dedicated fund lawyers combining banking and finance, corporate, real estate, regulatory and tax expertise.