Ireland / Cayman : Overview & Outlook

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2 Ireland / Cayman : Overview & Outlook London 16 September, v1

3 Introduction Kate Curneen, Banking and Capital Markets - The Growth of Non-Bank lending in Ireland Brian Kelliher, Asset Management Dublin - UCITS / AIFMD (Regulation / Remuneration etc.) Matt Mulry, Asset Management Cayman - AIFMD Third Country Issues - Cayman Update Sean Murray, Tax - Tax Update

4 Kate Curneen Banking and Capital Markets Growth of Non-Bank Lending in Ireland

5 Growth of Non-Bank Lending in Ireland What is non-bank lending? credit intermediation involving entities and activities (fully or partly) outside the regular banking system

6 Growth of Non-Bank Lending in Ireland What has led to the emergence of non-banking lending in an Irish context?

7 Growth of Non-Bank Lending in Ireland Current situation the funding or credit gap the difference between the banking system s lending capacity and its corporate funding needs The 80/20 rule the Euro area is lagging behind the US in terms of diversification of lending sources

8 Bridging the gap Recent examples of forms of disintermediation in Ireland Direct lending Joint Ventures with local partners Peer to peer lending platforms Use of Section 110 regime

9 Common Structure Finance Provider 1 Finance Provider 2 Funding Irish SPV Lender (Section 110) Funding Loan Borrower Property 1 Property 2 Property 3 Security created by Borrower over real property owned by it

10 Regulatory Considerations Regulatory Considerations Carrying on Banking Business Retail Credit legislation Regulation of Credit Servicing Other considerations e.g. MiFID, Payment Services Regulations, credit intermediation

11 Legal Considerations Legal Considerations Form of Loan and Security Documentation System of Property Registration Enforcement Regime

12 Other Practical Considerations Other Practical Considerations Organisational / servicing requirements Building Relationships

13 Brian Kelliher Asset Management Dublin UCITS / AIFMD (Regulation / Remuneration etc)

14 Overview Product Level Regulation : UCITS V : CBI UCITS Regulations : Loan Origination QIAIFs New Structural Options : ICAV : Latest Structures

15 Overview Fund Governance Next UP : CP 86 Changes : Investor Money Regulations : Extension of AIFMD Passport? : PRIIPS : UCITS VI?

16 Product Level Regulation UCITS V Depositary - Eligibility - Duties - Delegation - Liability Harmonised Sanctions Regime - Minimum Penalties / Measures - Specific Infringements - Minimum criteria

17 Product Level Regulation Remuneration - Remuneration policies and practices - What Remuneration is covered? - Identified Staff - Governance - Pay out Process Fixed and variable remuneration - Proportionality - Application to Delegates - Disclosures in Prospectus / KIID / Accounts Implementation

18 Product Level Regulation CBI UCITS Regulations - Why? - Issues / Implications Loan Origination QIAIFs - Introduced September Certain conditions applicable - Work in Progress

19 New Structural Options ICAV - Introduced March Main Benefits - 59 Registered ICAVs (as of 11 September 2015) - Conversions (6) / Redomiciliations (1) Latest Structures

20 Governance CP 86 Changes - Directors Time Commitments - Reduction / Streamlining of Managerial Functions - Organisational Effectiveness role - Delegate Oversight - Next Steps of Central Bank - Impact for Fund Management Companies

21 Next Up Investor Money Regulations Extension of AIFMD Passport PRIIPS (UCITS) UCITS VI?

22 Matt Mulry Asset Management Cayman

23 Third Countries and AIFMD Extra-territorial application of AIFMD marketing or management Marketing means: any direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM of units in an AIF it manages to or with investors domiciled or with a registered office in the EU Member State patchwork of rules

24 AIFMD Transparency Requirements Annual Report Disclosure to Investors Disclosure to Regulators

25 What is the Passport? Ability to market to EU professional investors Regulator to regulator notification system Not available to 3 rd Country AIFs and AIFMs Subject to a positive decision by ESMA to extend

26 Current State of Play Private Placement Country-by-country approach Awaiting Extension of Passport ESMA Opinion

27 ESMA Opinion ESMA Advice on extension of the Passport Cayman not included in initial assessment Who were assessed Delay in extension of the Passport

28 A Positive Opinion Is Cayman prepared Opt-in regime envisaged Co-Operation arrangements Member state of reference

29 Available Options Private Placement Use the AIFMD Marketing Passport Non-EU Managers - Avoid AIFMD

30 Master / Feeder QIAIF Euro 500,000 minimum Compare Rules applicable to AIFM Professional Investor CAYMAN FUND DISADVANTAGE Question on marketing No passport

31 Passporting Master / Feeder QIAIF QIAIF IRISH FEEDER IRISH MASTER Euro 500,000 minimum Compare Rules applicable to AIFM Professional Investor Cayman Fund Cayman Fund ADVANTAGE Irish Feeder can be passported

32 Cayman Update Redemption Clawbacks - Primeo v Herald Side Letters - Lancelot, KBC v Varga The Common Reporting Standard

33 Sean Murray Tax

34 Tax Update ICAV Irish Tax Matters - Exempt from tax on its Income & Gains - No Subscription or Wealth Taxes - No transfer Taxes on the issue, transfer, redemption or repurchase of shares - Exemption from VAT on material services (e.g. Investment Management, Administration, etc) - No withholding taxes on distributions to investors pertaining to their shares.

35 Tax Update ICAV Cont d US Tax Matters - Ability to check the box for US tax purposes. - US Treaty Access

36 Tax Update VAT - GfBk Case FATCA - Recalcitrant Accounts - Nil Returns XML or.. Common Reporting Standards - Current status in Ireland

37 Tax Update Directors Expenses - Public Consultation on Tax Treatment of Expenses of Travel and Subsistence for Employees and Office Holders. Other

38 Some Recent DE Publications

39 Contact Dillon Eustace 33 Sir John Rogerson s Quay, Dublin 2, Ireland Telephone Fax Website: Dublin Cayman Islands Tokyo New York Hong Kong