Last Updated February 27, 2019

Law and Practice

Contributed By Travers Smith LLP

Authors



Travers Smith LLP investment funds group comprises four partners and 15 other dedicated fee earners, based in London. The group focuses on funds, investors and intermediaries in the private equity, infrastructure, debt, real estate and listed equities sectors. It has constantly been at the forefront of developing market practice and thought on relevant changes for the investment funds industry, including the European Alternative Investment Funds Managers Directive and, more recently, the potential impact of Brexit. The funds tax group advises on the structuring of investment funds to maximise their tax efficiency for investors and managers. The investment funds group sits alongside the firm’s market-leading private equity M&A practice, one of the largest transactional teams of private equity lawyers in the City. The funds finance practice combines expertise from the firm’s fund formation and finance practices to advise lenders that provide subscription line and other facilities to real estate funds. Travers Smith also advises real estate funds on the borrower side. The investment funds group is best known for private funds and closed-end listed funds.

Generally, a fund delegates investment management and it is usual to see delegation to either a FCA regulated investment management firm or to an investment manager domiciled outside of the UK. Any firm applying for authorisation or registration by the FCA must have its head office in the UK. Although the FCA will judge each application on a case-by-case basis, the key issue in identifying the head office of a firm is the location of its central management and control.

A non-EEA manager intending to market under the UK national private placement regime must give notice to the FCA under the AIFM Directive and conform to certain transparency obligations. In the future, non-EEA managers may be able to benefit from a marketing passport under the AIFM Directive if the European Commission has adopted a delegated act extending the availability of the passport to the jurisdiction in which they are based. The UK has adopted the Alternative Investment Fund Managers (Amendment) Regulations 2013 (SI 2013/1797), which will give effect to passporting rights of non-EEA managers in the UK, the provisions of which are contingent upon the European Commission first adopting the relevant delegated act.

In respect of closed-ended funds, there are three types of licence which are available to an AIFM which has its registered office in the UK:

  • authorisation under FSMA as a full-scope UK AIFM;
  • authorisation under FSMA as a small authorised UK AIFM; and
  • registration as a small registered UK AIFM.

There are separate application forms in respect of each of these categories. The type of licence which is applicable to the manager will depend on the total amount of assets it has under management and the nature of the AIFs managed.

In respect of open-ended funds, marketing can only be undertaken once the required documents have been filed with the FCA.

Travers Smith LLP

10 Snow Hill
London
EC1A 2AL

+44 20 7295 3000

+44 20 7295 3500

david.patient@traverssmith.com www.traverssmith.com
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Authors



Travers Smith LLP investment funds group comprises four partners and 15 other dedicated fee earners, based in London. The group focuses on funds, investors and intermediaries in the private equity, infrastructure, debt, real estate and listed equities sectors. It has constantly been at the forefront of developing market practice and thought on relevant changes for the investment funds industry, including the European Alternative Investment Funds Managers Directive and, more recently, the potential impact of Brexit. The funds tax group advises on the structuring of investment funds to maximise their tax efficiency for investors and managers. The investment funds group sits alongside the firm’s market-leading private equity M&A practice, one of the largest transactional teams of private equity lawyers in the City. The funds finance practice combines expertise from the firm’s fund formation and finance practices to advise lenders that provide subscription line and other facilities to real estate funds. Travers Smith also advises real estate funds on the borrower side. The investment funds group is best known for private funds and closed-end listed funds.

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