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.

There are a number of key asset management industry bodies in the UK. The British Private Equity and Venture Capital Association ("BVCA") is the industry body for the private equity and venture capital industry. Founded in 1983, the BVCA's memberships comprises of investors, fund managers, entrepreneurs and companies, advisers and service providers and represents their interests to government, parliamentarians, officials and regulators, the media and other sections of the business community. Invest Europe is the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, including the UK. Invest Europe is based in Brussels. The Association of Investment Companies ("AIC") is the principal trade body representing listed closed-ended companies in the UK. For open-ended funds, the Investment Association is the trade body that represents UK retail investment managers and promotes UK investment management throughout the world.

Because the UK has a sophisticated judicial system and contracting parties tend to have a high degree of trust in the UK system, fund documents will usually refer to the jurisdiction of the UK courts rather than an arbitration process.

The UK has been one of the leading jurisdictions for investment fund management for a significant number of years and has been one of the leading jurisdictions for requiring regulatory oversight of the investment funds industry. As a result, the level of litigation and arbitration involving the investment funds industry has been relatively low. However, as a counter-weight to this, it should be noted that the FCA has been increasingly active in pursuing both formal and informal regulatory investigations into investment funds and their managers when the regulator considers that certain activity is not up to the high standards expected within the industry.

Fund managers must comply with a range of detailed regulatory reporting obligations. Broadly, managers will be required to make periodic reports to the FCA in accordance with AIFMD or the UCITS Directive, as the case may be, using a set of prescribed forms. In addition to the annual reports in respect of each managed fund, AIFMs will need to provide periodic reports relating to the AIFM itself and in respect of each AIF that it manages (including information in relation to investment strategies, main instruments traded, principal exposures, risk profiles and (where relevant) leverage). UCITS managers will be required to report on the use of derivatives and also the top five execution venues where it has executed client orders and/or the top five execution venues or investment firms to which the fund manager has transmitted orders for execution.

If negotiated between the parties, investors are permitted to give powers of attorney in favour of fund managers.

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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