Global Investment Law Watch – Page 24 – Exploring the legal and regulatory issues affecting the worldwide investment community.

APAC: Managed Accounts and Conflicts—Part 4: Separate Managed Accounts vs. Funds-of-One

May 03 2023

In our last post, we highlighted a key difference between separate managed accounts (SMA) and funds-of-one. By virtue of a power of attorney granting authority to a fund manager to trade assets of an account, the account owner can terminate the power of attorney (POA) at any time, with little recourse left to the fund manager other than hoping to recoup start-up expenses incurred in establishing the SMA. This is so even though the investment management agreement governing the SMA may have specified a very different set of termination rights and obligations. As between the POA and the investment management agreement, the POA is given greater weight on the basis that general principles of fiduciary duty would not generally permit a fund manager to compel an investor to have an advisory relationship with the fund manager

Australia: Why You Should (or Shouldn’t) Use a CCIV

May 03 2023

By Kane Barnett

Australia’s new fund vehicle, the corporate collective investment vehicle (CCIV) came in to effect on 1 July 2022. Since then adoption has been meagre to say the least.

United States: SEC Staff Finds Safeguarding Policies and Procedures Lacking at Branch Offices

May 01 2023

By: Keri Riemer and Brian Doyle-Wenger

On 26 April, 2023, shortly after the U.S. Securities and Exchange Commission (SEC) proposed rule amendments that would require broker-dealers and investment advisers (collectively, firms) to comply with enhanced compliance requirements relating to sensitive customer information, the SEC’s Division of Examinations (staff) issued a risk alert highlighting the need for firms to have written policies and procedures for safeguarding customer records and information at their branch offices.

Europe: Central Bank’s Dear CEO Letter Highlights Actions to be Addressed by FMCs and AIFMs Without Delay

Apr 28 2023

By Gayle Bowen and Áine Ní Riain

On 24 March, the Central Bank of Ireland issued a “Dear Chair” letter following its review in 2021 of the costs and fees charged to UCITS as part of the ESMA Common Supervisory Action (the CSA).

The letter, which is addressed to Irish UCITS fund management companies (FMCs), sets out the Central Bank’s main findings from the 2021 review and its expectations on actions to be taken by FMCs to address deficiencies identified. Despite the focus being on UCITS FMCs, the Central Bank specifically emphasises that it will expect its findings and actions to be considered also by Irish AIFMs with reference to AIFs under management.

Australia: Ongoing Regulatory Requirements for Issuers Under the Trans-Tasman Mutual Recognition Scheme

Apr 24 2023

By Lisa Lautier and Alexander Lalor

The formal warning recently issued by the New Zealand Financial Markets Authority (FMA) to Vanguard Investments Australia Limited (Vanguard Australia) on 29 March 2023 provides a timely reminder of the ongoing notifications requirements applicable to New Zealand and Australian financial product issuers relying on the trans-Tasman mutual recognition scheme (TMRS).

APAC: Managed Accounts and Conflicts—Part 3: Separate Managed Accounts vs. Funds of One

Apr 19 2023

By Scott Peterman

In our last post, we itemized several incentives motivating many institutional investors to favor management of their investment assets in a separate managed account (SMA) or fund-of-one as opposed to investing those assets in a commingled fund. A key distinction between investing assets in an SMA or fund-of-one that is often overlooked is that the owner/investor in an SMA directly owns those investment assets. This is not true of an investor investing in a fund-of-one. In the latter, the fund owns those assets, not the investor.

Europe: Proposed German Legislation Will Support Investments in Renewable Energy Facilities

Apr 14 2023

By Hilger von Livonius

On 12 April 2023, the German Ministry of Justice (Bundesministerium der Justiz) published a legislative proposal which would broaden the eligible assets for German open-ended real estate funds to include certain renewable energy assets. The proposal mentions both facilities for the generation, transport and storage of electricity, gas or heat from renewable energy sources, and charging stations for electric vehicles and bikes. The proposed rules would, for the first time, allow investment in facilities which are on open land and not directly connected with a building held by the fund. The new rules may also have an impact on non-German real estate funds available to certain German investors. For example, German pension schemes may require that non-German real estate funds share certain features with similar German funds.

Singapore: MAS Publishes Observations From Inspection of Venture Capital Fund Managers

Apr 12 2023

By Edward Bennett and Jordan Seah

Earlier this year, selected market participants were issued a report from MAS on observations from its 2022 inspection of licensed Venture Capital Fund Managers (“VCFMs”).

Having requested that MAS publish its report more widely, the circular is now publicly available here.

People’s Republic of China: Overseas Listing via VIE Structure Becoming Subject to CSRC Filings

Apr 12 2023

By Chloe Duan and Grace Ye

As one of a series of new regulations reforming the securities offering regime by China Securities Regulatory Commission (CSRC) released in February 2023, Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the Measures) came into effect on 31 March 2023. The Measures require companies incorporated within Mainland China seeking offerings and listings of securities in overseas markets (Overseas Offering and Listing) to make filings with CSRC. The Measures are applicable to both direct listings and indirect listings (e.g., red chips, via Variable Interest Entity (VIE) structure, or via Special Purpose Acquisition Company). Hence, VIE is no longer a grey-area scheme for Chinese companies to be listed in overseas markets.

Europe: UK Government Proposes To Regulate ESG Ratings Providers

Apr 11 2023

By Philip Morgan and Zainab Kuku

Responding to encouragement from both the FCA and IOSCO, HM Treasury has proposed regulating ESG ratings providers in a consultation paper dated 30 March 2023. It primarily aims to improve the transparency of the methodologies and governance objectives adopted by ESG ratings providers, as well as to mitigate risks arising from conflicts of interest where the rating provider also provides other services to the rated entity.