Funds Update | June 2018
Published on 18th Jun 2018
Welcome to the latest edition of Osborne Clarke’s Funds Update. We hope that you find it interesting. If you would like to discuss any of the content, or have a subject that you would like us to cover in a future edition, please let one of us know. Our contact details are set out below.
Proposals to Reform UK Limited Partnership Law
On 30 April 2018, the Department for Business, Energy & Industrial strategy published a consultation paper on the reform of UK limited partnership law. The proposed amendments will affect all UK limited partnerships, including private fund limited partnerships and irrespective of whether they are registered in England and Wales, Northern Ireland or Scotland.
The consultation was triggered by evidence that the rise in the number of registrations of Scottish limited partnerships may be linked to their misuse in the furtherance of money laundering activities. They also reflect the desire to bring the law in this area more in line with the law governing limited companies.
Commission issues proposals to reduce regulatory barriers to the cross-border distribution of investment funds
As part of an initiative to minimise trading barriers within the single market and thus deepen the Capital Markets Union, the European Commission has proposed legislation aimed at easing the difficulties associated with the cross-border distribution of investment funds. The proposed measures consist of amendments to the AIFMD, EuVECA and EuSEF rules. The amendments are intended to harmonise the definition of "marketing" within the EU, thereby reducing the cost of cross-border distribution and fostering competition.
FCA policy statement on asset management
As part of a wider package to improve competition in the asset management industry, the FCA has published its first set of rules and remedies aimed at promoting the overall value offered by authorised fund managers to investors. The changes apply to UK AFMs in respect of authorised funds (authorised open-ended collective investment schemes).
The FCA’s well-balanced rules are a display of regulatory pragmatism, which should be welcomed by both consumers and the asset management industry as a whole.
Unauthorised collective investment schemes and misleading statements | High Court gives warning to operators and participants of schemes
A recent case provides a stark warning of the risks to operators and participants of schemes if those schemes are later found to be collective investment schemes. Along with providing clarity on what will constitute a CIS, the decision establishes that the court will take a broad interpretation of who should be considered to be 'knowingly involved' in the CIS.
The case also confirms that, while taking professional advice may be a prudent step, it will not provide a defence against the strict application of the law and its consequences.
CMA working papers on investment consultancy and fiduciary management services in the UK
Following a reference from the FCA as part of its Asset Management Market Study, the Competition and Markets Authority has published the latest working papers as part of its investigation into the supply and acquisition of investment consultancy and fiduciary management services in the UK.
The CMA has identified that the sector is not highly concentrated, but that there are significant barriers to entry and expansion. It is therefore possible that the CMA will decide to act to increase competition and make it easier for new firms to access the sector.
BVCA publishes guide to the GDPR for the Funds Industry
On 25 May the General Data Protection Regulation came into effect. The GDPR imposes significant data protection requirements in relation to the collection, processing, use, and storage of personal data, not only across the EU but also any business outside the EU that processes personal data to individuals within it.
The new legislation will affect private equity and venture capital firms. To that end, the British Venture Capital Association has published a guide to GDPR. The guide describes how key parts of the regulation will apply to firms and key obligations and issues to consider in dealing with the GDPR.
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