Funds Update | February 2018

Written on 26 Feb 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.

Amended EuVECA Regulation and EuSEF Regulation in force from 1 March 2018

A number of changes to the EU regulations covering European venture capital funds (EuVECA funds) and European social entrepreneurship funds (EuSEF funds) will be in force from 1 March 2018. The text of the regulation amending the EuVECA Regulation and the EuSEF Regulation (Regulation (EU) 2017/1991) was published on 10 November 2017.

The changes are intended to encourage a greater uptake in these fund types, which are designed to raise capital for SMEs and social undertakings throughout Europe.

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Unlocking the UK venture capital market: government measures to support innovative firms and increase independence of UK sector

A raft of recently-announced government measures aim to plug a gap that has been identified in patient capital for innovative businesses. They are also needed to increase the independence of the UK venture capital sector in preparation for Brexit.

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SMCR regime update: FCA consults on transition regime

The FCA has launched a consultation on the process for all regulated firms to transition to the new Senior Managers and Certification Regime (SMCR). The FCA’s aim is to make the transition process as simple, clear and proportionate as possible, with different requirements depending whether a firm falls into the limited, core or enhanced category under the regime.

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MiFID II | 2018 update

The Markets in Financial Instruments Directive was replaced by MiFID II on 3 January 2018, following an extensive period of consultation at both a European and domestic level. The extent to which MiFID II has impacted on firms operating within the investment management space has varied depending on regulatory classification, but there is little doubt that its presence has been, and will continue to be, keenly felt across the industry.

In this article, we clarify some of the issues that remained unresolved in the months leading up to implementation.

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Changes to CGT rules for UK property held by non-residents

As part of the Autumn Budget 2017, the Chancellor announced plans to bring gains realised by non-residents on the disposal of all UK property within the scope of UK tax. The intention is to create one regime for disposals of interests in residential and commercial property and reduce the incentive for holding UK property in offshore structures in low or no-tax jurisdictions.

In essence, the government is proposing to tax all gains derived from UK immovable property and indirect holdings of such property (over and above the value at April 2019) to UK capital gains tax or corporation tax, regardless of the residence of the party disposing.

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Key information documents and the PRIIPs Regulation

In our Winter 2016 Quarterly Funds Update, we set out the new requirement to publish a key information document (KID) to prospective retail investors in investment funds under the Packaged Retail Investment and Insurance-based Investment Product Regulation. The PRIIPs Regulation, along with a delegated regulation containing the technical standards in respect of KIDs, is now in force as of 1 January 2018.

In this article, we provide a brief reminder and update regarding the requirements and the scope of the PRIIPs Regulation, together with a summary of the technical standards.

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ILPA releases Model Subscription Agreement

In an effort to streamline fundraising, increase clarity and improve the efficiency of capital formation, on 12 December 2017 the Institutional Limited Partners Association released a standardised subscription agreement for private equity funds.

A copy of the model subscription agreement can be found here.

Updates from the Commission on AIFMD

On 8 February 2018, the European Commission published a ‘Notice to Stakeholders’ relating to the withdrawal of the UK from EU rules on asset management (available here). The notice serves as a reminder to asset managers that the UK will become a ‘third country’ for the purposes of AIFMD and the UCITS Directive from 30 March 2019 (unless a ratified withdrawal agreement establishes another date) and that they need to start planning accordingly.

The European Commission has also tasked KPMG with carrying out a review on how the AIFMD has worked in practice and to what extent its objectives have been met. The review will be informed by a survey on matters set out in Article 69 of the AIFMD, including marketing via the national private placement regimes and the marketing and management of AIFs via the passport regime.

The survey can be found here and will close on 15 March 2018.