Private Funds Reforms

The recent private funds reforms in the US and the EU herald a new era for investment advisers, managers and institutional investors wishing to access capital, clients or investment opportunities in those territories. In the US, the Private Fund Investment Advisers Registration Act of 2010, Volcker Rule and the Securities and Exchange Commission “Pay to Play” Rule and in the EU the Alternative Investment Fund Managers’ Directive (AIFM Directive) and reformed UCITS regime are all directly affecting private funds.

Elsewhere in the world, governments and regulators are also introducing new rules regulations for private funds . In China, the foreign-invested limited partnerships (FILPs) rules which came into effect on March 1, 2010 encourage the fast growth of the RMB Funds. Brazil has recently reformed its private funds regime and there is ongoing discussion to issue a Governance Code for Private Equity And Emerging Companies Investment Funds by the Brazilian Association of Private Equity and the Brazilian Association of the Securities and Financial Markets Participants.

Operating in a global environment, private funds cannot ignore these reforms but to understand them. Fund managers and advisers need to be aware of the practical issues and consider the consequences of the reforms in the jurisdictions in which they operate.

With a global team comprising funds, financial services and regulatory and tax lawyers, Baker & McKenzie is able to track the private funds reforms and provide regular updates to you. Through in-house seminars and industry events, we meet with you in person to discuss the reforms, exchange our views and discuss what these changes mean for you.

Through this page you will be able to keep abreast of the developments which affect you and contact our experts in your region.

 

Forthcoming Events	Current Client Alerts 13 March 2012 Modernization of the Luxembourg SIF Law The approval of the draft law amending the Luxembourg law of 13 February 2007 on specialized investment funds is expected to bridge the gaps between Luxembourg's current alternative investment fund regime and certain areas of the AIFMD directive. February 2012 Are You Ready for the New Reporting Requirements for Private Fund Advisers? The Securities and Exchange Commission (SEC), jointly with the Commodity Futures Trading Commission, recently adopted new rules that will require certain advisers to private funds to periodically file reports on new Form PF. The new rules implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The information collected on Form PF will generally be kept confidential and used primarily by the Financial Stability Oversight Council to monitor and assess systemic risk in the US financial system. This alert discusses the new Form PF reporting requirements and what you should do to prepare for them. 18 July 2011 Beijing Releases Details of Pilot Scheme for Foreign-invested RMB Funds Following on the heels of Shanghai, Beijing has recently released details of its pilot scheme for the establishment of foreign-invested RMB funds and fund management enterprises in Beijing. This makes Beijing the second location in China to put in place a pilot scheme that facilitates foreign investors' investment in onshore RMB funds. 12 July 2011 EU Directive on Alternative Investment Fund Managers Alternative Investment Fund Managers Directive to become EU law on 21 July 2011 30 June 2011 Depositary Liability Under The Future UCITS V  The duties and responsibilities of the fund depositary have been the subject of intense debate since the collapse of Lehman Brothers and the Madoff fraud in 2008.    14 April 2011 NA – SEC Proposes Rules for Compensation Committee Members and Compensation Advisers This client alert summarizes the rule proposals expected to be finalized by the SEC and exchanges later this year.  9 March 2011 UAE – UAE Investment Fund Regulation Threatens Fund Raising Activity The alert highlights the two draft regulations published by the Emirates Securities and Commodities Authority (“ESCA”). (1): a decision on investment funds regulation and (2): a decision on investment management activity regulation. Most importantly for our fund manager and adviser clients, these proposed rules will affect the way foreign funds can raise capital in the Emirates, a jurisdiction long seen as a fertile ground for fundraising. 21 January 2011 China –  Shanghai Issues Rules on Foreign Invested Onshore Funds The client alert discusses the Implementing Measures on the Pilot Programme for Foreign-invested Equity Investment Enterprises that will come into force on 24 January 2011. 21 December 2010 EU – Luxembourg becomes first to transpose UCITS IV into national law Since early days, Luxembourg has always been at the forefront of financial regulations and maintained a solid reputation as a pioneer jurisdiction for investment funds. Luxembourg is now the first EU member state to implement Directive 2009/65/EC (UCITS IV) through the new law on undertakings for collective investment voted by Parliament on December 16, 2010. 15 November 2010 EU – European Parliament Approves AIFM Directive On 11 November 2010, the European Parliament voted on and approved the final Alternative Fund Managers Directive (the Directive) by 513 votes to 92 (with three abstentions). For the first time, managers of non-UCITS private funds, including private equity, venture capital, hedge, real estate, infrastructure, and funds of funds in the European Union (EU) and beyond face the prospect of coming under the cloak of EU regulation following the final approval of the Alternative Fund Managers Directive on 11 November 2010. November 2010 EU – Client Money, Client Assets and Insolvency - The New Rules The UK's Financial Services Authority (FSA ) has recently proposed new rules to address deficiencies in the FSA's Client Assets Sourcebook (CASS) highlighted by the collapse of Lehman Brothers International (Europe) (LBIE).
Past Presentations Luxembourg, September 19, 2011 - UCITS V: New Challenges for Asset Servicing Providers by Baker & McKenzie Key Contact: Laurent Fessmann Hong Kong, March 3, 2011 - Foreign Investment in RMB Funds - An Update by Baker & McKenzie Key Contacts: Jason Ng, Steven Sieker Zurich, December 2, 2010 – European Financial Services Regulation – Overview and Impact on Doing Business in the EU by Baker & McKenzie Key contacts: Maria Rubio Gracia, Mark Simpson, Manuel Lorenz, Ian Mason, David Freedman, Ella van Kranenburg and Pierre Berger London, November 30, 2010 – AIFM Directive 2010 Conference – Ensuring you are prepared for the latest legislation and beyond by Private Equity Forum Ltd Key contact: James Burdett  Hong Kong, October 14, 2010 – US and European Private Funds Reforms – A New Era for Asia Pacific Funds and Investors Accessing US and EU Markets by Baker & McKenzie Key contacts: Addison Braendel, James Burdett and Jason Ng Singapore, October 13, 2010 – US and European Private Funds Reforms – A New Era for Asia Pacific Funds and Investors Accessing US and EU Markets by Baker & McKenzie Key contacts: Addison Braendel, James Burdett and Kelvin Poa Sydney, October 12, 2010 – US and European Private Funds Reforms – A New Era for Asia Pacific Funds and Investors Accessing US and EU Markets by Baker & McKenzie Key contacts: Addison Braendel, James Burdett, Lewis Apostolou and Paula McCabe US, September 16, 2010 – Hedge Fund Roundtable: A Compliance Review of Changes Under Dodd-Frank and Recent SEC Developments for Hedge Fund Managers by Baker & McKenzie Key contact: Margaret Paradis US, September 15, 2010 – A Review of the Impact of the Dodd-Frank Act of 2010 on Investment Advisers, Broker Dealers and the Financial Companies Subject to Regulation by The Bureau of Consumer Financial Protection Key contacts: Roy Larson, Simon Beck and Frederic Taubman US, September 14, 2010 – Focus on What the Reform Means to Broker-Dealers and Investment Advisors by Baker & McKenzie Key contacts: Elizabeth Yingling and Margaret Paradis US, May 12-19, 2010 – China Update 2010 – Recalibrating Your China Operations by Baker & McKenzie. RMB Funds: Breakthroughs for foreign institutional investors for raising and deploying RMB funds Key contact: Jason Ng London, November 12, 2009 – Bureaucrats at the Gate: A new direction for alternative fund regulation? by Baker & McKenzie Key contacts: James Burdett, Margaret Paradis, James macLachlan	Past Client Alerts September 2010 US and EU – Notice 2010-60 Provides Initial IRS Proposed Guidance on Implementation of New Withholding Tax Regime Enacted by FATCA 21 July 2010 US – Unprecedented US Regulation of Private Fund Activities 10 August 2010 US – Dodd-Frank Act Investor Protection Changes for Broker-Dealers and Investment Advisers 28 July 2010 US and EU – EU and US Private Fund Regulation - Impact on Foreign Fund Managers In this memorandum we set out: (1) the current state of proposed reforms in the EU and look at the likely path ahead for non-EU fund managers, and (2) the recently adopted regulatory reforms in the US and their impact on on-US fund managers. 28 July 2010 US and EU – EU Private Fund Regulation - Impact on Foreign Fund Managers This client memorandum discusses the current state of proposed reforms in the EU and the recently adopted regulatory reforms in the US; and how these new reforms will affect fund managers and investors from outside those territories. 28 July 2010 US and EU – US Private Fund Regulation - Impact on Foreign Fund Managers This client memorandum discusses the current state of proposed reforms in the EU and the recently adopted regulatory reforms in the US; and how these new reforms will affect fund managers and investors from outside those territories. April 2010 Brazil – Governance Code for Private Equity And Emerging Companies Investment Funds The Brazilian Association of Private Equity and the Brazilian Association of the Securities and Financial Markets Participants are expected to issue a code (the "Code") in the near future that will impose additional rules and requirements on the vehicles typically used for private equity funds in Brazil.  December 2009 China – China Issues Foreign-Invested Partnership Rules The amended Partnership Law of the People’s Republic of China (“Partnership Law”) came into effect on 1 June 2007. While the Partnership Law allows businesses to be set up as general partnerships or limited partnerships, Article 1081 effectively blocked foreign investors from forming foreign-invested partnerships (“FIPs”) in China. September 2009 US – Investor Protection Act of 2009 On 10 July 2009, the Obama Administration proposed the Investor Protection Act of 2009 (Investor Protection Act).1 The Investor Protection Act proposes to amend portions of all four main securities acts: the Securities Act of 1933 (Securities Act), the Securities Exchange Act of 1934 (Exchange Act), the Investment Company Act of 1940 (Investment Company Act) and the Investment Advisers Act of 1940 (Advisers Act). August 2009 US – Private Fund Investment Advisers Registration Act of 2009 On July 15, 2009, the Obama Administration proposed the Private Fund Investment Advisers Registration Act of 2009 (“Advisers Registration Act”). The effect of the Advisers Registration Act would be to require most U.S. investment advisers that advise Section 3(c)(1) and Section 3(c)(7) exempt investment companies to register with the SEC. Such investment advisers would be subject to new records and reporting requirements. June 2009 EU – Draft EU Directive on Alternative Investment Following earlier initiatives, the European Parliament adopted, on 23 September 2008, a Resolution with recommendations to the Commission on hedge funds and private equity.
SEC Materials Rules Implementing Amendments to the Investment Advisers Act of 1940 Exemptions for Advisers to Venture Capital Funds, Private Fund Advisers With Less Than USD150 Million in Assets Under Management and Foreign Private Advisers Implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act SEC Proposes Rules to Improve Oversight of Investment Advisers	Industry Reports ESMA's Technical Advice to the European Commission on Possible Implementing Measures of the Alternative Investment Fund Managers Directive November 16, 2011 - This paper sets out ESMA's technical advice on the content of the implementing measures for the AIFMD. European Venture Capital & Private Equity Association December 2010 - AIFMD Essentials The paper combines all contributions and feedback from both Technical Group and Tax and Legal Committee members. This paper was published by the European Venture Capital & Private Equity Association (EVCA) and is made available here with the permission of EVCA. European Commission December 2, 2010 - Provisional Request to CESR for Technical Advice on Possible Level 2Measures Concerning the Future Directive on Alternative Investment Fund Managers
News Press Mentions November 8, 2010 Source: Reuters New EU rules may hit Asia hedge fund and buyout industries "Some private equity firms may want to move their headquarters to Hong Kong or Singapore as a result of the directive," said James Burdett, a co-chair of Baker & McKenzie's global fund practice. This article appeared in its entirety in the November 8, 2010 edition of Reuters News.
Press Mentions October 15, 2010 Source: Asia Asset Management EU and US to clip the wings of alternatives managers “Addison Braendel, a partner of Baker & McKenzie in US, estimated that for the EU, the various reforms will become operative in 2012. For the US, the reforms could come into play by next July. In advance of the reforms, Mr. Braendel suggested the Asian and Australian fund managers should talk to their advisors to establish whether they need to register or engage in some form of record-keeping and recording with respect to the EU and US regulatory regimes.” This article appeared in its entirety in the October 15, 2010 edition of Asia Asset Management News.
In the news October 14, 2010 Asian and European reforms affect Australian funds Impending changes in the United States and Europe will raise the bar for Australian and Asian funds looking to market and attract investors in these jurisdictions. Our Asia Pacific Funds Roadshow in Sydney, Singapore and Hong Kong brought lawyers from Chicago and London to speak to local clients about what the changes mean for them. Read more.

 

Key Contacts

Asia Pacific
Lewis Apostolou Partner - Sydney T +61 2 8922 5531	Jason Ng  Partner - Hong Kong T +852 2846 2443
Yusaku Ono Partner - Tokyo T +81 3 5157 2716	Kelvin Poa Associate Principal - Singapore T +65 6434 2524
Europe
Bruno Bertrand Partner - Paris T  +33 1 4417 5398	James Burdett Partner - London T +44 20 7919 1540
Laurent Fessman Partner - Luxembourg T +352 26 184 4205	Jean-Francois Findling Partner - Luxembourg T +352 261844 207
Manuel Lorenz Partner - Frankfurt  T +49 69 29 908 606	James MacLachlan Partner - London T +44 20 7919 1935
Ian Mason Partner - London T +44 20 7919 1811	Marnin Michaels Partner - Zurich  T +41 44 384 1208
Maria Gracia Rubio Partner - Madrid  T +34 91 230 4533	Arun Srivastava Partner - London  T +44 20 7919 1285
Latin America
Claudia Prado Partner - Sao Paulo   T +55 11 3048 6928	Lara Schwartzmann Partner - Sao Paulo T +55 11 3048 6828
North America
Roger Bivans Partner - Dallas T + 1 214 978 3095	Addison Braendel Partner - Chicago T  +1 312 861 2827
Niamh Curry Partner - New York T +1 212 626 4474	Michael Fieweger Partner - Chicago T  +1 312 861 8232
David Freedman Partner - New York T  +1 212 891 3988	Todd Golub Partner - Chicago  T +1 312 861 6595
Richard Lipton Partner - Chicago  T +1 312 861 7590	Creighton Meland Partner - Chicago T +1 312 861 2990

 

Resources Contacts

Michelle Tan  Global Private Equity Businesss Development Manager - Hong Kong          T +852 2846 1658

Christina Wilhelm Global Private Equity Knowledge Management Director - Melbourne T +61 3 9617 4479