AIFMD, alternative asset management made in Gibraltar

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1 International Lawyers AIFMD, alternative asset management made in Gibraltar Speakers: Peter Montegriffo & James Lasry Date: 4 April 2014

Passporting Speaker: James Lasry AIFMD Overview What s new?

2 Presentation Overview Speaker: Peter Montegriffo Gibraltar in Europe Position Legal system Implementation of EU legislation Passporting Speaker: James Lasry AIFMD Overview What s new? Application process Experienced Investor Funds Gibraltar Swiss solutions

3 GIBRALTAR IN EUROPE Peter Montegriffo

4 Gibraltar in Europe Position Gibraltar is part of the EU and has been since the accession of the UK on 1 January Article 355(4) of the Treaty on the Functioning of the European Union applies the Treaty to European territories for whose external relations an EU Member State is responsible. UK is responsible for the external relations of Gibraltar. Gibraltar is not in the Customs Union, VAT does not apply. Legal system Law of Gibraltar is based on that of England and Wales, and the common law and the rules of equity apply. As part of the EU, Gibraltar is subject to European law. The European Communities Act 1972 gives legal effect to the European Treaties in Gibraltar without further enactment.

5 Gibraltar in Europe Implementation of EU Directives Gibraltar implements EU Directives by local legislation. Financial Services Directives implemented through close co-operation between Industry, Government and Regulator. Passporting As part of the EU: Gibraltar authorised firms may passport their services throughout the EU (by way of either direct notification or via the post box arrangement); and EU authorised firms may market into Gibraltar. Passporting under AIFMD: Notification to the FSC with supportive documentation FSC to notify AIFM within 20 business days Can commence marketing after 20 business days if no response received

6 AIFMD James Lasry

7 AIFMD Overview AIFM Authorisation Authorisation conditions Capital requirements Specific Investment Provisions Leverage Investment in securitisation positions Acquisition of major holdings and control of non-listed companies AIFM Reporting and Disclosure Annual reports Disclosure to investors Reporting to regulators Marketing Marketing conditions AIFM Conduct of Business Rules of conduct Remuneration Conflicts of interest Risk management Liquidity management AIF Service Providers Valuation Delegation Depositary

8 AIFMD What s new? Conflicts of interest Risk management Liquidity management Organisational requirements (Four-eyes/staff) Annual audited reports Reporting obligations to regulator Requirement to have a depositary

9 AIFMD What s actually new? Some NEW requirements imposed by AIFMD Capital requirements Self-managed: 300,000 External managers: 125,000 Plus 0.02% on amounts exceeding 250 million AuM Delegation requirements Gibraltar taking a flexible approach to letter-box provisions Remuneration 40%-60% that deferred for 3 to 5 years and at least 50% in shares of the AIF concerned Gibraltar will adopt the FCA approach of proportionality to disapply these specific provisions with respect to larger managers Local depositary Not relevant until July 2017 UCITS V introduction of depositary passport?

10 Difficulties for non-eu AIFMs/AIFs Marketing passport not available Earliest late-2015 Member States where private placement unavailable Spain, Latvia Member States restricting NPPRs Must apply to regulatory authority for authorisation prior to private placement: Denmark Germany Italy Offering restricted to maximum 150 investors and minimum investment of 100,000: Bulgaria Croatia Cyprus France

AIFM Application Process FSC Universal Application Form Business Plan Financial Projections Applicant s Policies on: Risk management Remuneration Liquidity management Conflicts of interest Delegation

11 AIFM Application Process FSC Universal Application Form Business Plan Financial Projections Applicant s Policies on: Risk management Remuneration Liquidity management Conflicts of interest Delegation Valuation Presence in Gibraltar Four-eyes principle: 2 individuals effectively directing business in Gibraltar Presence in Gibraltar: (i) rent office space, or (ii) engage with providers of supportive solutions

Advantages of an EIF in Gibraltar Quickest time to market in EU Competitive costing No statutory investment or borrowing restrictions Listing possible /

12 Advantages of an EIF in Gibraltar Quickest time to market in EU Competitive costing No statutory investment or borrowing restrictions Listing possible / Bloomberg pricing Access to EU Parent Subsidiary Directive No licenced Promoter required Common law jurisdiction (English mother tongue) LIGHT TOUCH not SOFT TOUCH

EIFs & AIFMD EIF Regime + AIFMD Regime = Super EIFs EIF regime combined with no gold-plating in AIFMD transposition provides the greatest flexibility for fund structures in the EU EIF

13 EIFs & AIFMD EIF Regime + AIFMD Regime = Super EIFs EIF regime combined with no gold-plating in AIFMD transposition provides the greatest flexibility for fund structures in the EU EIF Regime does not require Custodian to be local, in addition, Regulator will allow EU depositaries to be appointed for full-scope AIFs until 2017 EIF Regime works TOGETHER with the AIFMD Regime

14 Timeline AIFM setting up new AIF Gibraltar 20 days On day 1: EIF launch Submit EIF notification form AIFM submits notification file On or before day 20: AIFM receives FSC notification AIFM can market EIF under EU passport Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 ~~~ Week 18 Week 19 Week 20 Week 21 Other EU jurisdictions ~~~ 6 to 18 weeks + 20 days On day 1: Submission of AIF registration documents After 6 to 18 weeks: AIF approved and registered AIFM submits AIFMD notification file (On or before 20 days later): AIFM receives regulator notification AIFM can market AIF under EU passport

Gibraltar: Gateway to EU for Swiss fund managers AIFM versus FINMA Process is equally onerous: Authorised AIFMs benefit from EU marketing passport Small AIFM light

15 Gibraltar: Gateway to EU for Swiss fund managers AIFM versus FINMA Process is equally onerous: Authorised AIFMs benefit from EU marketing passport Small AIFM light touch regime AIFMD stamp of approval It is expected that the AIFMD product may create its own brand and reputation similar to the UCITS product in the retail sector

16 Gibraltar Swiss Solution 1 Gibraltar EIF self-managed by its Board of Directors EIF is the AIFM Administrator Secretary Auditor Board: 2 Gibraltar EIF Directors + additional director(s) Your Fund PCC Limited Swiss Investment Adviser Depositary Cell A Cell B Assets Assets

17 Gibraltar Swiss Solution 2 Swiss manager sets up an AIFM in Gibraltar Swiss manager will advise the Gibraltar AIFM The AIFM can passport its services and its AIFs throughout EU Gibraltar AIFM Swiss Investment Adviser/Manager Administrator Secretary Auditor Board: 2 Gibraltar EIF Directors + additional director(s) Your Fund PCC Limited Depositary Cell A Cell B Assets Assets

18 International Lawyers THANK YOU Peter Montegriffo Partner James Lasry Partner HASSANS INTERNATIONAL LAW FIRM Tel: Fax:

Regulatory Aspects Impacting Investment Funds: A Non-European Perspective

Regulatory Aspects Impacting Investment Funds: A Non-European Perspective Gavin Farrell Partner Robin Fuller Director What we ll cover Impact of AIFMD on Guernsey AIFMs/AIFs AIFMD timeline Preparedness