Investment management

Transcription

1 Investment management Industry profile L UXEMBOURG

2 LUXEMBOURG As the dynamics of the market and competitive environment for the financial services sector increase in their complexity, being able to identify and adapt to the new challenges will determine the industry s dominant players. With the further globalisation and convergence of the industry, the increasing pressures on cost control and consistent investment returns and the increasing sophistication of investors, investment managers are having to change the way they operate. To assist financial services organisations, investors and other parties who are exposed to funds and other types of investments, PricewaterhouseCoopers global team of investment management industry experts has produced this profile to provide general, illustrative guidance only. We have focused on highlighting the extent of the industry development in key locations around the world, together with the nature and scope of its regulation. While all reasonable care has been taken in preparing this guide, there is no substitute for regulations. Should readers encounter particular problems or require further information, we encourage you to seek professional advice or to contact one of the members of our global investment management network listed at the end of this publication. Simon Jeffreys Global investment management leader

3 Table of Contents Introduction 1 Legal Provisions 1 Legal Structure 2 Legal Status 3 Size and Structure of the Luxembourg Investment Fund Industry 7 Investment Fund Regulation and Operations 10 Authorisation Procedures and Control 11 Classes of Shares/Units 13 Distributions 13 Pricing of Shares/Units 13 Issuance and Repurchase of Shares/Units 14 Distribution and Marketing 15 Reporting and Audit Requirements 18 The Depositary and the Investment Manager 22 The Depositary: Authorisation and Regulation 22 The Investment Manager: Authorisation and Regulation 24 Taxation of Investment Funds 25 Taxation of Income/Capital Gains 25 Withholding Taxes on Income Received 25 Tax on Distributions 25 Other Taxes 25 Taxation of Share/Unitholders 26 Settlement Procedures/Central Depository System 28 Promotion of Foreign Funds in Luxembourg 29 UCITS Situated in Other EU Member States that Market Their Shares/Units 29 in Luxembourg Promotion of Other Foreign Undertakings for collective Investment 30 Promotion and Distribution of Luxembourg-Domiciled 31 Investment Funds in Other EU Member States Summary of UCITS requirements 31 Formalities 31 Appendix: Industry Trade Association 33 PricewaterhouseCoopers investment management 34 contacts in Luxembourg Our network of investment management specialists 36

4 Introduction 1 Legal Provisions The general legal provisions applicable to investment funds in Luxembourg are established by: The Law of 30 March 1988 The Law dated 30 March 1988 (the Law ) reflects the provisions of the European Directive 85/611 EEC on the co-ordination of laws, regulations and administrative provisions relating to Undertakings for Collective Investment in Transferable Securities (UCITS). The primary purpose of the Law is to ensure effective protection of investors who are solicited by promoters that carry on the activity of collective investment of money raised from the public in accordance with the principle of risk spreading. In accordance with this objective, the Law defines the legal and regulatory framework that governs this activity and the extent to which it is subject to the supervision of the Commission de Surveillance du Secteur Financier (CSSF) 1, the local regulatory authority. The LMI Circular 91/75 dated 21 January 1991 This circular was introduced by the CSSF to clarify the purpose and the scope of the Law of 30 March 1988 and serves to replace former circulars applicable to Luxembourg UCIs. The Law of 19 July 1991 The Law of 19 July 1991 governs undertakings for collective investment, the shares or units of which are not intended to be sold to the public but to institutional investors. Circular CSSF 2000/8 dated 15 March 2000 This circular aims at providing investors in Luxembourg domiciled funds with a higher level of protection by establishing a strict framework ruling investors compensation for losses resulting from material errors in NAV calculations and active breaches of investment restrictions. Law of 17 August 2000 This law mainly provides with a new solidarity principle between sub-funds within an umbrella structure. The new rule is that the assets of a particular sub-fund cover only the debts, engagements and obligations 1 Until 31 May 1998: Luxembourg Monetary Institute (LMI). From 1 June 31 December 1998: Luxembourg Central Bank (LCB). Since 1 January 1999: Commission de Surveillance du Secteur Financier (CSSF).

5 2 related to that sub-fund, except if otherwise stated in the articles of association. Besides, the law allows for the launch of sub-funds or classes of shares sold to institutional investors only even if offered within retail Part (I) or Part (II) funds. UCITS III The long expected UCITS III has eventually managed to materialise early It increases the scope of the UCITS European passport by easing investments in money market instruments, cash instruments and funds. It introduces the concept of simplified prospectus and allows fund management companies to passport their activities providing they can demonstrate a certain level of substance and meet certain capital requirements. UCITS III is expected to be implemented in Luxembourg in Legal Structure The main legal structures of UCIs in Luxembourg are as follows: 1) A Fonds Commun de Placement (FCP) is equivalent to a unit trust in the U.K. Having no separate legal status, it must be managed by a Luxembourg management company. It is, however, not liable for the obligations of the latter. 2) A Société d Investissement à Capital Variable (SICAV) is an investment company with variable share capital at all times equal to the net asset value of the fund. Because it exists as a legal entity, it does not require a management company. 3) Other investment vehicles whether set up in the form of a company or not. One alternative type of legal structure used is the Société d Investissement à Capital Fixe (SICAF), a corporate structure with fixed capital that may operate either as an open-ended or closed-ended fund. Fixed capital in this context means that the par or nominal value of the issued capital does not change. These companies have the right to repurchase their own shares. The size of net assets garnered by the three main structures of collective investment schemes in Luxembourg at 31 October 2001 are shown in the following table: Legal Number of Total Assets Structure Funds (EUR bn) FCP SICAV Other , Source: Commission de Surveillance du Secteur Financier (CSSF) - October 2001

6 Introduction cont. 3 A Luxembourg-domiciled fund may obtain UCITS status only if it is set up in the form of an FCP, a SICAV or some other permissible corporate structure (SICAF, etc.). Except for the exemptions specified in the Law, SICAVs and other investment companies based in Luxembourg are subject to the provisions of the Luxembourg law governing limited liability companies. No specific requirements are imposed on investment schemes domiciled in European Union (EU) Member States or other countries that market, offer or sell their units/shares publicly in or from the Grand Duchy of Luxembourg. They may consequently be organised under any of the structures permitted by their home country legislation. Foreign non-ucits may only be authorised by the CSSF to offer or publicly sell their shares/units in or from Luxembourg if they are subject to a permanent supervision by a regulatory authority set up in their home country to ensure the protection of investors. Legal Status The Law prescribes a number of categories of investment funds authorised to sell shares or units to the public, once approval has been granted by the CSSF. The Law sets out regulations for: Luxembourg-based funds Funds based in other EU Member States, and Funds domiciled in jurisdictions outside the EU The Law differentiates between two categories of Luxembourgdomiciled funds. UCITS, falling under the first category, are regulated by Part I of the Law, while the second category of investment schemes, non-ucits, fall within the scope of Part II of the Law. Armed with the so-called European passport, Part I funds may freely market their shares or units throughout the EU once a Member State has approved them. Conversely, because Part II funds do not comply with the provisions of the EU Directive of 20 December 1985, they are required to meet the specific conditions laid down by the regulatory authorities of the host countries in which they wish to market their shares or units. UCITS (Part I Funds) Any investment fund designed to invest in transferable securities, commonly called a UCITS, is subject to Part I of the Law, with the exception of those described in the following paragraph. These investment funds are always open-ended and are thus

7 4 obliged to repurchase their shares/units at the request of holders. Other Investment Funds (Part II Funds) Funds investing in transferable securities other than those defined by the 1985 UCITS directive are governed by Part II of the Law. These include: Closed-ended investment funds; that is, funds not required to redeem their shares or units at the request of holders. Investment funds that raise capital without promoting the sale of their shares or units to the public within the EU, including funds aimed at the public that do not engage in any marketing activity within the EU. Investment funds that, under their constitutional documents, may only sell shares or units to the public in non-eu countries; e.g. schemes quoted on the Luxembourg Stock Exchange marketing their shares exclusively outside the EU. Investment vehicles that do not comply with the investment policy and restrictions applicable to UCITS as defined by the 1985 Directive and Chapter 5 of the Law. These are: - Funds that invest 20% or more of their net assets in venture capital entities (e.g. investment in securities of companies which have been recently created or which are still at an early stage of development); - Funds that invest 20% or more of net assets (other than cash) in assets other than transferable securities; - Funds that intend to permanently borrow in excess of 25% of net assets (leveraged funds); - Funds that invest at least 20% of net assets in other open-ended investment funds (fund of funds); - Funds that invest 20% or more of their net assets in money market instruments or liquid assets other than quoted securities (including regularly traded money market instruments with a residual life to maturity under 12 months); - Funds that invest 50% or more of their net assets in liquid assets; - Umbrella funds, one sub-fund of which does not comply with the investment policy and borrowing restrictions laid down in Part I of the Law. In addition to the above, investment funds invested mainly in assets other than transferable securities ( UCIs ) are subject to Part II of the Law. To date, the supervisory authority has set up specific rules for three types of UCIs pursuing one of the following investment objectives: Investment in venture capital, e.g. in securities of unquoted companies. By and large, these are unlisted because they were only formed recently or are still in the early stages of development and therefore lack proper access to stock markets;

8 Introduction cont. 5 Investment in commodity futures contracts and/or financial futures contracts and/or options; Investment in real estate. Last but not least, Part II can allow for the incorporation of regulated alternative investment funds. Although not the object of a specific set of provisions, the combination of rules applying to Part II funds and which are summarized here above constitutes indeed a pretty flexible framework for the launch of funds following alternative investment strategies such as extensive use of derivatives, short selling, leverage and funds of hedge funds. Institutional Funds Funds accessible exclusively to one or several institutional investors are governed by the Law of 19 July These so-called special or institutional funds are subject to the same regulatory requirements as those applicable to funds authorised under Part II of the Law. However, for this particular type of fund, certain derogations to the general rules may be obtained from the CSSF on a case-by-case basis. This piece of legislation aims to provide organisations such as (re)-insurance companies, pension funds, large corporations, private banking clients operating under a discretionary management agreement and social security institutions with a flexible but regulated asset management tool. The table below summarises the number and asset size of Luxembourg funds by legal classification at 31 October 2001: Number of Funds Total Assets (EUR bn) Part I 1, Part II Institutional Funds Total 1, Source: Commission de Surveillance du Secteur Financier (CSSF) - October 2001

9 6 As already indicated, the law dated 17 August 2000 allows for the launch of sub-funds or classes of shares sold to institutional investors only within retail Part (I) or Part (II) funds. In this scenario, these sub-funds or classes of shares have to comply in all respect with rules applicable to Part (I) or Part (II) funds respectively. Umbrella funds Multiple compartment or umbrella funds are another illustration of the flexibility of Luxembourg s legal framework. These funds can be organised under either a contractual (FCP) or corporate (SICAV, SICAF) structure. From a legal perspective, each constituent sub-fund or compartment forms part of one sole legal entity and yet can operate in accordance with a distinct investment objective. As per law dated 17 August 2000 and except if otherwise stated in the fund constitutional documents, the assets of a particular sub-fund cover only the debts, engagements and obligations related to that sub-fund. An umbrella fund generally forms a single entity if the following conditions are met: The different sub-funds have a common generic name; The assets of the different sub-funds are entrusted to and handled by a single custodian; The different sub-funds are audited by a single auditor; The share/unitholders are, in principle, allowed to switch between sub-funds at no or limited additional cost; The umbrella fund is governed by a single set of management regulations/articles which must mention the currency used to consolidate the financial statements of all the compartments of that umbrella fund; Umbrella funds fall within either Part I or Part II of the Law and must comply with the applicable regulations. It should be noted, however, that for an umbrella fund to be authorised under Part I, all sub-funds must comply with the regulations applicable to Part I funds. If one single sub-fund does not meet this requirement, the entire umbrella fund will qualify as a Part II fund. The total number and size of Luxembourg umbrella funds at 31 October 2001 as compared to the total Luxembourg market size is exhibited in the following table: Total Number of Funds 1,895 Number of Stand-alone Funds 766 Number of Umbrella Funds 1,129 Number of Compartments (umbrella funds) 6,701 Total number of funds and compartments 7,467 % of Total Assets 86 Source: Commission de Surveillance du Secteur Financier (CSSF) - October 2001

10 Introduction cont. 7 Size and Structure of the Luxembourg Investment Fund Industry Industry growth: Dec 94 through Oct 01 Number of funds /portfolios oct-01 EURbn d OPC Number of Portfolios EUR bn

11 8 By Asset class At 30 September 2001 Number of Net Assets Net Assets Portfolios (EUR bn) (% of Total) Part I UCITS (1) Fixed Income 1, Equity 2, Balanced Part II Funds (2) Fixed Income Equity Balanced Part II Funds (3) Venture Capital Unlisted Securities Leveraged Fund of Funds Money Market and Cash Cash Other Part II Funds Real Estate Futures and/or Options Institutional Funds Fixed Income Equity Balanced Unlisted Securities Leveraged Fund of Funds Real Estate Futures and/or Options Money Market and Cash TOTAL 7, Source: Commission de Surveillance du Secteur Financier (CSSF) (1) Transferable securities (2) Investment funds that do not qualify as Part I funds either because they - are closed-ended, or - do not promote the sale of their units/shares in the EU or - market their units/shares exclusively to investors of non-eu countries (3) Investment Funds that do not qualify as Part I funds because their investment policy and/or borrowing restrictions do not comply with the provisions of Part I of the Law.

12 Introduction cont. 9 Main EU/EEA target markets for true Luxembourg Cross-Border UCITS** Country of notification Country of domicile Bel. Fra. Ger. Irel. Lux. Neth. Switz. UK Others Total Austria , ,464 Belgium , ,405 France , ,293 Germany , ,953 Ireland Italy , ,622 Luxembourg Netherlands , ,004 Norway Spain ,585 1,662 Switzerland* , ,228 UK , ,786 Others , ,293 TOTAL ,918 18, ,791 Market Share 2% 1% 2% 13% 80% 0% 0% 1% 1% 100% Source: Lipper Analytical Services Note: *no detailed changes available for Switzerland. positive development compared with negative development compared with ** excluding pure round trip funds and funds selling in only one country other than their domicile

13 10 Investment Fund Regulation and Operations As previously mentioned, the Law distinguishes between UCITS, governed by Part I of the Law, and non-ucits, subject to the regulations of Part II. Only funds authorised under Part I of the Law may be notified for distribution in other EU Member States, subject to limited formalities. Luxembourgdomiciled funds are exempt from Luxembourg tax on income and capital gains as well as withholding tax on distributions or redemptions; however, a tax of 0.05% p.a. ( taxe d abonnement ) is levied on the fund s net assets. It is calculated by reference to the total net assets of the investment fund as computed on the last valuation day of each quarter and is payable quarterly. Effective 1 January 1997, the rate was reduced to 0.01% p.a. for institutional funds, while the charge on investments in other Luxembourg funds was abolished altogether. The normal rate of 0.01% p.a. is applicable to money market, cash funds, institutional sub-funds and classes of shares. All Luxembourg funds are required to appoint a depositary bank and an investment manager. These may be related parties. In addition, under the provisions of the Law of 30 March 1988, the central administration of any Luxembourg fund must be located in Luxembourg. Based on the UCITS Directive which requires the central administration of a UCITS to be situated in its home country, this provision mainly aims to facilitate the execution of the legal duties of the supervisory authority, the depositary bank and the auditor. The LMI circular 91/75 states that the functions of the Luxembourg central administration are confined to accounting and administrative tasks. As a result, the accounts must be kept, and the accounting documents must be available in Luxembourg; the subscription and redemption of shares or units must be carried out in Luxembourg; the register of share/unitholders must be kept in Luxembourg;

14 Investment Fund Regulation and Operations cont. 11 the prospectus, financial reports and any other document intended for investors must be prepared in co-operation with the central administration in Luxembourg; the correspondence with investors, including the dispatch of financial reports and any other documents must, in principle, be carried out from Luxembourg under the responsibility of the central administration situated in Luxembourg; the calculation of the net asset value must be performed in Luxembourg. These regulations do not, as a matter of fact, preclude the delegation of certain tasks, such as the management of the fund s assets, to financial intermediaries based outside of Luxembourg, nor do they preclude that decisions in relation with the foregoing be taken or executed abroad. Chapter D of LMI circular 91/75 details the practical aspects of the organisation of the central administration and specifies the tasks that must be carried out in Luxembourg, as summarised above. The circular also sets out the conditions applicable to intermediaries involved in the share/unit subscription and redemption process. Furthermore, it defines the responsibilities of the central administration and marketing intermediaries in connection with the prevention of money laundering. In addition, the circular sets out the rules for a number of functions including the maintenance of the share/unitholders registers, the drafting of prospectuses, financial reports and other documents intended for investors. Authorisation Procedures and Control Regulatory Authority Investment funds in Luxembourg are subject to the approval, oversight and control of the CSSF, which acts exclusively in the public interest. An investment fund shall be authorised only if the supervisory authority has approved its constitutional documents, the choice of its custodian and of its auditor. Obtaining Approval Investment funds that wish to publicly sell their shares or units to or from Luxembourg may

15 12 only do so after the prior authorisation from the CSSF. Once a fund has been granted official approval, it will be recorded on a list of approved investment schemes. The list of authorised funds and subsequent amendments thereto are published in the Luxembourg official gazette ( Mémorial ). To obtain approval, an investment fund must submit an application file to the CSSF comprising the following documents or information: a) draft constitutional documents: articles of incorporation (SICAV, SICAF) or management regulations (FCP), prospectus and any other document intended for prospective investors, any agreements between the fund and third parties (fund advisor, depositary bank, domiciliation agent, registrar and transfer agency, ); b) name of the Luxembourg depositary bank, with a detailed description of the human and technical resources it can draw upon to accomplish its duties; c) name of the independent auditor; d) to the extent that it would be unknown to the CSSF, description of the organisation of the fund s central administration in Luxembourg, including a detailed description of the human and technical resources it can draw upon to accomplish its duties; e) information regarding the promoter(s) of the fund, e.g. recent financial statements; f) curricula vitae of the directors and officers; g) information on the fund s distribution or marketing strategy, countries of distribution and targeted investors. Information requirements under b), d), e) and f) must only be resubmitted for approval if changes occurred in the interim. Supervision and Control Investment funds are subject to the permanent supervision and control of the CSSF. Related filing requirements are as follows: audited annual report to be published and sent to the CSSF within 4 months of the financial year end; unaudited semi-annual report to be published and sent to the CSSF within 2 months of the period end; monthly statement to be submitted to the CSSF within 20 days of the month end. On an ongoing basis, any information necessary for the understanding of the general financial policy of the fund could be required by the CSSF. Also, if deemed appropriate, a full audit of the fund s activities, documents, books and records may be carried out by the CSSF or by an intermediary on their behalf. This will, however, happen very rarely in practice, because the CSSF generally relies on external auditors to verify that the fund is operating in accordance with its own rules and those laid down by law and that the information provided in the financial statements is fairly presented.

16 Investment Fund Regulation and Operations cont. 13 Classes of Shares/Units Investment funds may issue different classes of units/shares as required. Common examples include: - Accumulation/distribution Accumulation shares/units imply an automatic reinvestment of income earned by the fund, while distribution shares/units give rise to dividend payment to investors. - Hedged/non-hedged Currency or similar exposure is hedged for the first type of shares/units, while this will not be the case for the second type. Such hedging may be performed either with regard to the portfolio or with regard to the underlying exposure of the share/unitholders provided that this is foreseen in the prospectus. - Institutional/retail and load/no load The level of expenses and of front-end/back-end fees varies between the different classes of shares/units. Again institutional shares can access the reduced subscription tax rate i.e. 0.01% even if offered within a Part (I) fund. Distributions Distributions by FCPs and SICAVs are not restricted provided total net assets after distribution exceed the minimum amount of EUR 1,240,000 at all times. The nature of the distribution (capital or income) must nevertheless be disclosed. A SICAF, however, is subject both to legal reserve and interim dividend payment obligations. Luxembourg-domiciled investment funds are exempt from withholding tax. Pricing of Units/Shares Investment fund subscriptions and redemptions may be priced on either an historical or forward basis. Under historical pricing, funds are generally valued daily with prices remaining effective until the next valuation. Purchases and redemptions of units/shares are transacted at the latest valuation price. Under the second alternative, prices are calculated at the end of the dealing period to which they relate. Accordingly, purchases and redemptions are transacted at the price computed at the following valuation. The investment fund can elect which type of pricing it uses.

17 14 Issuance and Repurchase of Shares/Units Minimum Net Assets Total net assets of a Luxembourg investment fund may not be less than EUR 1,240,000. Once a fund has gained official approval from the CSSF, it must reach this minimum within a six-month period. Subsequently, a fund s net assets may fall below the legal requirement set out above. In the event, however, that they have fallen below two thirds of the EUR 1,240,000 limit, the following course of action needs to be taken: in the case of an FCP, the management company must immediately report the occurrence to the supervisory authority who may require the fund to be put into liquidation; in the case of a SICAV or SICAF, the directors must submit the question of dissolution to the shareholders. For umbrella funds, the minimum net asset level applies to the umbrella as a whole and not to each individual compartment. Issuance Shares or units of funds may be represented either by bearer or registered certificates. Although not specified by law, they may be denominated in any convertible currency. The issuance of fractions of shares/units is permitted (thus enabling the automatic reinvestment of dividends or the conversion from one sub-fund to another in an umbrella fund), but voting rights are restricted to whole shares only. Redemptions Redemptions of shares/units have to take place in accordance with the conditions laid down in the management regulations (FCP) or the articles of incorporation (SICAF, SICAV). In certain circumstances, redemptions may be suspended with the main reasons being: exceptional circumstances as defined in the management regulations/articles of incorporation; at the request of the supervisory authority acting in the interest of share/unitholders, for example in the event of nonobservation of the provisions of the Law or the fund s regulations. Apart from the circumstances specified above, Part I UCITS are not allowed to set restrictions aimed at hindering or preventing the redemption of shares/units. Investment companies that do not specifically provide for the redemption of their shares may nevertheless qualify as Part I funds if they satisfy a number of very onerous conditions. In practice though, only a very limited number of funds are structured this way. Investment funds which do not fall under the provisions of Part I

18 Investment Fund Regulation and Operations cont. 15 of the Law are not required to redeem their shares/units provided the repurchase procedures or restrictions are clearly indicated in the fund s documents (management regulations, articles of incorporation, prospectus). Subscription/redemption price The issue and redemption price of shares/units in an investment fund is equivalent to the net asset value per share/unit, adjusted by a specific percentage to cover issue/redemption fees and expenses. Although the Law does not impose a maximum fee, the supervisory authority may monitor fees and commissions and react whenever the applied charges seem out of line with market practice. Investment funds may also be priced on a bid/offer spread basis. For Part I UCITS, the subscription/redemption price must be calculated at least twice a month, while this calculation must be performed at least once a month for other investment funds investing in transferable securities. Special rules exist for certain categories of funds (e.g. venture capital and real estate funds). Determination of the Net Asset Value General rules prescribed by law for the calculation of the net asset value of a fund are summarised as follows: Listed securities are valued at the last available stock exchange quotation, unless such quotation would not reflect their fair market value (e.g. a real market does not exist even if a price is quoted); Unlisted securities (and quoted securities for which the last known price does not reflect their fair market value) are valued with prudence at the estimated realisation price. Distribution and Marketing Intermediaries may participate in subscription and redemption transactions provided they observe a number of conditions. Conditions Applicable to Distributors Distributors are intermediaries who are part of the distribution process and who either actively market a fund s shares/units or receive subscription and

19 16 redemption orders as appointed agents on behalf of the fund. For the purposes of processing the collected subscription and repurchase orders, the distributors must immediately transmit all relevant data to the central administration in Luxembourg to allow the timely execution of the related duties and tasks. For subscription/redemption orders concerning registered units/shares, distributors shall provide the central administration in Luxembourg with the registration data necessary to accomplish the related tasks on an individual basis. This obligation does not apply to orders in connection with bearer shares/units. In those circumstances, distributors act in their capacity as subscribers visà-vis the central administration in Luxembourg. They may therefore bundle individual subscription and repurchase orders and transmit them as a combined order to the central administration in Luxembourg. In proceeding in this fashion, the distributors may purchase or sell the total amount of units/shares subscribed by or repurchased from investors to subsequently match them to orders received individually. Distributors need not necessarily forward documentation regarding investors subscription and repurchase orders to the Luxembourg central administration. However, they must grant unrestricted access to all the documents at the request of the Luxembourg central administration. In the event that distributors are authorised to receive and make settlement payments in connection with the subscription and repurchase orders collected by them, they may bundle and set off, where appropriate, individual payments in order to deal on a net basis with the central administration in Luxembourg. This procedure may apply to bearer and registered shares alike. In order to facilitate delivery of bearer certificates, a Luxembourg UCI and its depositary may enter into an agreement to allow distributors to hold a stock of unissued certificates. In this case, the distributors must be expressly authorised to deliver certificates to subscribers in accordance with the instructions of the Luxembourg central administration. Conditions Applicable to Nominees A nominee acts as an intermediary between investors and the UCI of their choice. Where the involvement of a nominee is an integral part of the distribution arrangement set up by a promoter, the relationship between the UCI, the nominee, the central administration in Luxembourg and the investors must be determined by a contract which sets out the obligations of the parties concerned. In addition, the promoter must ensure that the nominee provides sufficient guarantees to enable the proper execution of its obligations towards investors who utilise the services of the latter.

20 Investment Fund Regulation and Operations cont. 17 The participation of a nominee is subject to a number of prerequisite conditions, some of which may be waived under certain circumstances. Conditions Applicable to Market Makers Market makers are intermediaries that participate on their own account and at their own risk in the subscription and repurchase process of shares/units of UCIs. Where the organisation of a market by such intermediaries is an integral part of the distribution arrangement set up by the promoters, the relationship between the UCI, the central administration in Luxembourg and the market makers must be determined by contract and certain additional conditions must also be met. Duties relating to the Prevention of Money Laundering The law of 7 July 1989 introduced the notion of laundering proceeds of an illegal activity (defined as drug trafficking) as a criminal offence. Professional misconduct involving the misuse of UCIs for money laundering purposes falls under the scope of this law. The law of 5 April 1993 on the financial sector saw the definition of rules of professional conduct, including obligations imposed on financial sector players to combat the laundering of drug trafficking proceeds. LMI circular 94/112 supplements this law in providing detailed guidance to financial professionals, specifically to custodian banks and distributors of UCI shares/units, on how to observe the provisions of the 1993 piece of legislation. The existing framework was overhauled with the law of 11 August 1998, which extends the notion of money laundering to activities other than drug trafficking (arms trafficking, procuring, abductions of minors, corruption, offences made by criminal organisations,...). Money laundering corresponds now to all offences as defined by the Criminal Code (art ). As in the past, the professionals of the financial sector must, at their own initiative, inform the authorities of any fact that might be related to a money laundering activity as defined above. Since the issue of the CSSF circular 2001/40, this duty also applies to information obtained from an informal contact even if no business relationship is developed thereafter.

21 18 Other professionals now also fall under this obligation of cooperation with the authorities: independent auditors (réviseurs d entreprises), casino owners, and notaries. An amendment to the directive 91/308/CEE (to be implemented within 18 months in each EU Member State) will further extent the above obligation to real estate agents, lawyers, dealers in high value goods (precious stones, metals, works of art), auctioneers and transporters of funds. Reporting and Audit Requirements General Although not prescribed by law, financial statements are generally prepared in the currency of denomination of a UCI s shares/units. Financial Year End In principle, the financial year end of a UCI will coincide with the last day of a calendar month. However, in certain exceptional circumstances, the CSSF may decide to accept a different financial year end (e.g. 10 March). In practice, UCIs that determine the net asset value on a daily basis would retain this method to calculate the net asset value at their financial year end. Consequently, a UCI with a financial year ending on 31 December, may use prices of 30 December (or 29 December, as the case may be) to value its securities portfolio. In this case, the UCI is to ensure that the year end net asset value calculation would not be unduly affected in the event of major stock market fluctuations. Annual Report An audited annual report is to be made available free of charge to share/unitholders and sent to the supervisory authority within 4 months of the financial year-end. Both Luxembourg and foreign funds are to observe the legal provisions regarding the format and the content of the annual report. These rules may be relaxed by the CSSF for investment funds other than Part I UCITS, if the information provided to investors is deemed appropriate and sufficient. The annual report must contain the following information: Report on the activities and statement of operations of the financial year. Any significant information enabling investors to make an informed judgement on the development of the activities and results of the UCI and its constituent sub-funds. Report of the auditors. Statement of assets and liabilities disclosing the following: - transferable securities, - debt instruments as defined in article 40(2)(b) of the Law, - bank balances, - other assets, - total assets, - total liabilities, - net asset value.

22 Investment Fund Regulation and Operations cont. 19 Number of shares/units in circulation, net asset value per share/unit. Portfolio of investments, distinguishing between: - transferable securities listed on an official stock exchange, - transferable securities traded on another regulated market, - recently issued securities not yet admitted to official stock exchange listing, - unquoted transferable securities. Other debt instruments as defined in article 40(2)(b), and analysed in accordance with the most appropriate criteria in light of the investment policy of the UCI (e.g. in accordance with economic, geographical or currency criteria), and stated as a percentage of total net assets. Statement of changes in the composition of the portfolio during the reference period. The CSSF generally allows this disclosure to be omitted from the annual report if it is clearly mentioned therein that such statement is made available free of charge to investors on request. Statement of the developments concerning the assets of the UCI during the period including the following: - income from investments, - other income, - management fees, - custodian fees, - other charges and taxes, - net income, - distributions and reinvested income, - changes in capital account, - appreciation or depreciation of investments, - any other changes affecting the assets and liabilities of the UCI. A comparative schedule covering the last three financial years and including, for each year, at the end of the financial year: - the total net asset value, - the net asset value per share/unit. Details of the use of various investment techniques and instruments used by the UCI during the reference period to cover transferable securities, to hedge currency

23 20 and other risks, and a note detailing the outstanding commitments at the end of the financial year. Market value of securities lent at financial year end. Total amount of repurchase agreements outstanding at the end of the financial year, clearly distinguishing between short and long positions. Semi-annual Report In addition to the audited annual financial statements, UCIs marketed in Luxembourg (whether domestic or foreign) are required to publish an unaudited semi-annual report within 2 months of the period end. The disclosure requirements for the semi-annual report are identical to those for the annual report except that the following items may be omitted: Statement of operations Statement of changes in net assets Statistical information over a three-year period Management report Monthly Statement UCIs must provide the CSSF with a monthly set of figures within 20 days after the reference date, which would typically be the last day of the month. Total net assets - Net asset value per share/unit - Percentage change of the net asset value per share/unit over the previous month. Any change in excess of 10% needs to be duly explained to the CSSF Value of the portfolio expressed as a percentage of aggregate net assets Information about the amount of shares/units issued and redeemed in the course of the month of reference: - Net proceeds of issues - Payments for redemptions - Net amount of shares/units issued/redeemed Information about distributions declared: - Total amount (in millions) - Amount per share/unit It should be noted in this context that the term portfolio refers to the totality of investments made in accordance with the investment policy of the fund. For example, a UCI invested essentially in term deposits would list all term deposits under this caption. This allows the CSSF to verify that a fund s assets are invested in accordance with its stated investment policy. Audit The accounting information included in the annual report of a Luxembourg fund is to be audited by a Luxembourg authorised auditor ( réviseur d entreprises ). The auditor s report must at least certify that the accounting information presents a true and fair view of the financial position of the UCI. The auditor also has a legal obligation to inform the CSSF if the accounting information does

24 Investment Fund Regulation and Operations cont. 21 not present a true and fair view of the UCI s financial position. In addition, he is also bound by such reporting obligation if he becomes aware that the assets of the UCI are not or have not been invested in accordance with the respective legal requirements or the provisions of the prospectus. UCIs are further required to transmit to the CSSF immediately upon receipt, any certificate, report or written commentaries (specifically, the management letter ) issued by the independent auditor. Reporting of errors and investment breaches As already indicated, circular CSSF 2000/8 has introduced a strict reporting mechanism for all material errors in NAV calculations and any active breach of investment restrictions. Those need to be reported to the CSSF as soon as they arise or they are detected. Annual Report of Management Companies of FCPs Once approved by the shareholders Annual General Meeting, the management company of an FCP must immediately submit its annual accounts to the CSSF, together with the report of the independent auditors. Changes in a Fund s Regulations Any changes in the operations of a UCI which are already foreseen in the articles of incorporation, the management regulations and the prospectus must solely be communicated to shareholders/unitholders. Filing of Annual Reports An abridged or full version of the annual report of a UCI company must be registered at the Registrar of Companies (Greffe du Tribunal) in French, German, Luxembourgish or English.

25 22 The Depositary and the Investment Manager The Depositary: Authorisation and Regulation Qualifications As previously mentioned, Luxembourg authorised investment funds are generally required to appoint a custodian bank, although it is possible for corporate funds to be exempt from this obligation if certain onerous criteria are met. The custodian must be a banking and savings institution within the meaning of the Luxembourg law concerning the supervision of the financial sector. In addition, the registered office of the depositary of a UCITS fund must be located in Luxembourg. Alternatively, it must be established in Luxembourg if its registered office is situated in another EU Member State. Hence, a Luxembourg subsidiary of an American bank would be eligible, while a branch of such a bank would not qualify as depositary of a UCITS fund. The choice of the depositary is subject to the prior authorisation of the CSSF. Such approval will only be granted if the custodian bank can demonstrate that it can draw on the necessary human and technical resources to perform the tasks pertaining to its duties. Duties The responsibilities of Luxembourg fund depositaries, whether the fund be of the corporate or the contractual type, may be summarised as follows: Safekeeping of the assets of the UCI Ensure that issues and redemptions of shares/units are made in accordance with the Law and articles of incorporation/management regulations Ensure that settlements are executed in a timely manner Ensure that income is applied in accordance with the articles of incorporation/management regulations. Furthermore, the duties of an FCP s depositary extend beyond those of the depositary of a corporate type fund and include the following additional obligations: Carry out all operations

26 The Depositary and the Investment Manager cont. 23 regarding the day-to-day administration of the assets of the FCP Carry out the instructions of the management company, provided they do not conflict with the Law and the management regulations For FCPs set up under Part I of the Law, ensure that the net asset value is calculated in accordance with the Law and the management regulations. Chapter E of the LMI circular 91/75 clarifies the practical applications of the duties of a fund s depositary. The circular specifies that the notion of safekeeping is to be understood in the sense of supervision, which implies that the depositary must be aware at all times how the assets of the fund are invested and when and how such assets are available. The physical deposit of all or part of the assets may consequently be kept with the depositary itself, with any of its sub-custodians or with any other institution designated by the UCI in agreement with the depositary. The circular also sets out the circumstances under which the depositary may be part of a global custody system. Responsibilities The fact that the custodian entrusts a third party with the safekeeping of a fund s assets does not affect its responsibility in any way. It will retain ultimate responsibility for any improper or wrongful execution of the delegated tasks. Any contract between the fund and its custodian must clearly define the following responsibilities: Responsibility of the custodian for the tasks imposed by the Law of 30 March 1988 in the event that the fund s assets are deposited with a third party; Responsibility of the custodian if it has been entrusted with the safekeeping of the fund s assets; Responsibility of the custodian relating to any obligations specifically set out in such contract, although they may not necessarily be covered by the provisions of the Law of 30 March 1988.

27 24 The Investment Manager: Authorisation and Regulation Management of an FCP The management company draws up the management regulations and is responsible for managing the FCP in the interest of the unitholders in compliance with those management regulations. It is liable to the unitholders for any damage resulting from the non-fulfilment or improper fulfilment of its obligations. The management company of an FCP must be a Luxembourg-based company with a paid-up capital of at least LUF 5 million. The management company s activity is limited to the management of investment funds, but these can be of any type or form. The management of its own assets may only be an ancillary activity. The management company may, and generally will, delegate the role of investment adviser to a specialist, individual or company, without restriction. Management of an Investment Company For a SICAV or other types of investment companies, there are no restrictions as to the nationality of the individuals/company responsible for managing the fund or for providing investment advice. Any investment company (SICAV or SICAF) may appoint a Luxembourg advisory company, which must have a fully paid-up share capital of at least LUF 3 million. Such companies are generally only created for tax purposes. Authorisation Any investment manager and/or investment adviser is required to obtain the CSSF s formal approval before operating a Luxembourg-based investment fund. Moreover, the prospectus or the management regulations of a Luxembourg-based investment fund, which require CSSF approval, need to include all the information deemed necessary in respect of the investment manager and/or adviser. The agreement of the CSSF obviously takes into account the experience, the reputation and the quality of such service providers. Management companies of FCPs/advisory companies of SICAV/SICAF which manage/advise only one fund generally have only limited reporting requirements and are tax exempt in Luxembourg.

28 Taxation of Investment Funds 25 Taxation of Income/Capital Gains Luxembourg Investment Funds (UCITS and non-ucits) are not subject to income/capital gains taxes in Luxembourg. Withholding Taxes on Income Received Withholding taxes levied at source on income received by a Luxembourg UCI are normally not refundable. While UCIs formed as investment companies may benefit from certain double taxation treaties, FCPs will generally not benefit unless the unitholders themselves are able to claim the reduced rate under the double taxation treaty. Tax on Distributions Distributions by investment funds, whether paid to resident or non-resident investors, are not subject to any Luxembourg withholding tax. The tax position of the investor depends on the legislation applicable in his/her country of residence. Other Taxes Value Added Tax (VAT) Luxembourg UCIs (SICAV/SICAF/FCP) are considered as non-vatable persons when they invest in shares or securities. On the other hand, they must be considered as VATable persons when they invest in real estate properties or in other tangible goods such as work of arts or wine. Services performed by advisory companies advising a sole SICAV/SICAF and management companies managing a sole FCP and benefiting from the 1929 holding company status are outside the scope of VAT, but these companies might be liable to pay the Luxembourg VAT on goods received from outside Luxembourg. Services rendered directly to UCIs are exempted from VAT if they qualify as management services of investment funds. Services covered by this definition are,

29 26 on the one hand, administrative services (accounting services, computation of the NAV, transfer agent fees, etc) and, on the other hand, investment advice services. Some services, even if they are rendered directly to the UCIs are not exempt from VAT, for example, audit and legal services. Sub-contracted services are also exempt from VAT if they qualify as management services of investment funds and as final product. A final product is a service rendered and re-invoiced as such by the main contractor to the UCIs. At last, distribution services are also exempt from VAT if they qualify as services related to negotiation of shares. Registration Duty At the set-up of a Luxembourg fund, a one-time capital duty of EUR 1,240 is due. Any future capital increases or issues of shares will not give rise to further taxation. Taxe d abonnement An annual taxe d abonnement of 0.05% of net assets is payable and calculated quarterly, based on a UCI s net asset value at the end of each quarter. The rate is reduced to 0.01% p.a. for UCIs invested solely in money market instruments and bank deposits. It should be noted that the criterion for defining money market instruments for tax purposes differs from that which will determine if a UCI will qualify as a Part 1 UCITS. A reduced tax of 0.01% p.a. is levied on the total net assets of institutional UCIs, which are governed by the Law of 19 July 1991 and of institutional sub-funds and classes of shares even if offered within retail Part (I) and Part (II) funds. The portion of a UCI s assets invested in other Luxembourg UCIs, which have already been subject to subscription tax, are excluded for the purposes of computing the tax. Taxation of Share/ Unitholders Luxembourg Resident Investors The taxation of investors residing in Luxembourg depends upon whether they are corporations or individuals. (a) Corporate investors Dividends and realised capital gains are subject to tax in Luxembourg as they are deemed to be part of the commercial profit of the investor. Investor share/unitholdings must be valued at the lower of cost or market value. As a result, any unrealised gains will not be included in the financial statements and hence, not be subject to income tax. (b) Individual investors Distributions by investment funds Individual investors must declare any distributions received and will be taxed at progressive tax rates. In addition a 1% dependency contribution is due. UCIs may neither reclaim foreign withholding taxes on

30 Taxation of Investment Funds cont. 27 behalf of their investors nor transfer foreign tax credits to them, although these may in theory be available through double taxation treaties. In principle, FCPs should be considered as transparent from a tax point of view so that any income received by an FCP should be immediately taxable at the investor level according to its nature. In practice, however, they are often assimilated to SICAVs/SICAFs. Capital gains Capital may either: (i) be taxed as speculative profit or as sale profit, or, (ii) be exempt from taxation. A Luxembourg resident investor is deemed to make a speculative profit when he sells or exchanges his shares/units within a 6-month period following the acquisition. To the extent that the annual global amount of speculative profit exceeds EUR 250, the said profit is taxed at progressive tax rates. In addition a 1% dependency contribution is due. A Luxembourg resident investor is deemed to make a sale profit when he sells an important shareholding interest over the above-mentioned 6-month period. Generally speaking, a shareholding interest is deemed to be important when the sellor holds, or held at any time during the five previous years, alone or together with the spouse and his minor children, directly or indirectly, more than 10% of the capital (or of social assets if there is no capital). This treshold is increased to 25% when the shareholding interest has been acquired before January 1, 2002 and has not been further increased as from that date. Sale profits are taxed according to favorable tax rules. Gains derived from the sale of shares/units, which have been held for more than 6 months and that do not qualify as important shareholding interest are tax exempt. Non-Resident Investors Under Luxembourg law, income paid to non-resident investors holding shares/units in Luxembourg UCIs is tax-exempt. The same applies to capital gains, unless these investments are held less than 6 months and represent an important shareholding interest (subject to tax treaties provisions). However, this exemption applies in Luxembourg only and does in no way preclude the taxation of investors in their home country.

31 28 Settlement Procedures/Central Depository System On the Luxembourg stock exchange, delivery of both bearer and registered certificates must take place no later than three business days ( jour de bourse ) after the conclusion of the transaction. The Stock Exchange Committee may ease this rule under certain exceptional circumstances where the market conditions of a certain type of securities would not be compatible with the present provisions. Such securities, hereinafter referred to as securities with differentiated settlement, are listed separately in the official journal of quotations. Nearly all transactions are settled via Clearstream, the international clearing system located in Luxembourg. The counterparties to the deal are free to choose other means of settlement or other international clearing houses. Very rarely, delivery upon payment still implies the physical exchange of the traded securities at the Chambre de Liquidation located in the same building as the Exchange itself. There currently is no central depository system in Luxembourg.

32 Promotion of Foreign Funds in Luxembourg 29 UCITS Situated in Other EU Member States that Market Their Shares/Units in Luxembourg UCITS situated in other EU Member States which market their shares/units in Luxembourg must also comply with the laws, regulations and administrative provisions in force in Luxembourg outside the scope of the Law of 30 March The UCITS must appoint a banking and savings institution within the meaning of the Luxembourg law on the supervision of the financial sector to ensure that facilities are available in Luxembourg to make payments to share/unitholders and to repurchase their shares/units. The UCITS must ensure that the information it is required to provide is made available to share/unitholders in Luxembourg. If a UCITS situated in another EU Member State proposes to market its units in Luxembourg, it must inform the supervisory authority in Luxembourg and simultaneously send to the latter authority: an attestation by the competent home supervisory authorities to certify that it fulfils the conditions imposed by the Council Directive of 20 December 1985 (85/611/EEC) on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities; its constitutional documents; its prospectus; where appropriate, its latest annual report and any subsequent half-yearly report; details of the arrangements made for the marketing of its shares/units in Luxembourg. Unless it is informed by the Luxembourg supervisory authority within two months that its marketing and distribution arrangements do not comply with the provisions of the Law, the foreign UCITS may begin to market its shares/units in Luxembourg. A foreign UCITS marketing its shares/units in Luxembourg must distribute in either the Luxembourg, French, German or English language the documents and information which must be published in its home country in accordance with the same procedures as those provided for in the latter State.

33 30 Promotion of Other Foreign Undertakings for collective Investment Undertakings for collective investment (UCI) formed or operating under foreign laws, which publicly announce, offer or sell their units/shares in or from Luxembourg, must be submitted in their home country to a permanent supervision by a supervisory authority set up to ensure the protection of investors. Moreover, such a UCI must appoint a banking and savings institution within the meaning of the Luxembourg law on the supervision of the financial sector to ensure that facilities are available in Luxembourg for making payments to share/unitholders and repurchasing shares/units. Undertakings for collective investment formed according to or operating under foreign laws must be authorised by the Luxembourg supervisory authority in order to carry out their activities in Luxembourg.

34 Promotion and Distribution of Luxembourg-Domiciled Investment Funds in Other EU Member States 31 To market the shares/units of a Luxembourg UCI abroad, the UCI must comply with the legal, regulatory and administrative provisions which govern the use of prospectuses and periodical financial reports in the respective countries of distribution. Summary of UCITS requirements The detailed requirements to obtain UCITS status are set out in the various sections of this brochure. Apart from the conditions applicable to Luxembourg investment funds in general, the key points to be observed are as follows: Investment policies need to comply with the limits set out in Part I of the Law on UCITS funds; Borrowing restrictions must be in accordance with the limits laid down in Part I of the Law regulating UCITS funds. Once granted UCITS status, an investment fund must remain a UCITS fund or be put into liquidation if it wishes to relinquish its so-called UCITS passport. Formalities To markets its shares/units in another EU Member State, a Luxembourg UCITS must first inform the CSSF and the supervisory authority of the host country accordingly. It must simultaneously send to that competent authority: an attestation by the CSSF to confirm that it meets the conditions imposed under Part I of the Luxembourg Law (i.e. it qualifies as a UCITS); its management regulations/articles of incorporation; its prospectus; where appropriate, its latest annual report and any subsequent semi-annual report; details of the arrangements made for marketing its shares/units in that other Member State. Facilities must be available in the host Member State to meet redemption requests on the part of investors, to make payments to share/unitholders, and to provide them with all required information.

35 32 To the effect that the supervisory authority of the host Member State does not object to the UCITS intent to market its shares/units in that Member State within two months following the submission of above documentation, the UCITS may begin distributing its shares/units in the country of notification. It should also be noted that an adverse decision by the host EU Member State can only be made in relation to marketing arrangements. In addition, the regulations of the host Member State may not discriminate between domestic and Luxembourg-domiciled funds. Documents intended for the public in that host EU Member State must be published in at least one of the official languages of that state. Advertising is permitted so long as it is in accordance with the regulations in application in the targeted EU Member State.

36 Appendix: Industry Trade Association 33 Association Luxembourgeoise des Fonds d Investissement (ALFI) ALFI was established in 1988 to protect the interests of its membership and promote the Luxembourg investment fund industry. As the representative body of Europe s leading crossborder distribution gateway, ALFI exerts a considerable influence on the regulatory and fiscal environment at both the national and European level. The permanent secretariat can draw on the expertise and know-how of the members of its 5 technical committees (legal, marketing, statistics, tax, and training) that are composed of fund managers, marketing specialists, auditors, bankers, and legal and tax advisors. ALFI offers a multi-faceted information programme that comprises a two-day international industry conference, a quarterly newsletter and an annual membership directory. Additionally, it produces specific reports, surveys and studies. In May of 1995, ALFI formed a co-operation agreement with the National Investment Company Service Association (NICSA) to foster the development of the investment fund industry on both sides of the Atlantic. Each autumn, the two associations organise jointly the wellattended Luxembourg-USA investment funds forum in Luxembourg. Further information can be obtained from the permanent secretariat at (phone) (fax) info@alfi.lu Web site: Mailing address: 20, rue de la Poste L-2346 Luxembourg

37 34 PricewaterhouseCoopers investment management contacts in Luxembourg Local web address: Didier Mouget * Tel: didier.mouget@lu.pwcglobal.com Marc Saluzzi ** Tel: marc.saluzzi@lu.pwcglobal.com Assurance Thierry Blondeau *** (1) Tel: thierry.blondeau@lu.pwcglobal.com Marie-Jeanne Chèvremont-Lorenzini Tel: marie-jeanne.chevremont-lorenzini@lu.pwcglobal.com Walter Koob Tel: walter.koob@lu.pwcglobal.com Jean-Robert Lentz jean-robert.lentz@lu.pwcglobal.com Mervyn R. Martins Tel: mervyn.martins@lu.pwcglobal.com John Parkhouse Tel: john.parkhouse@lu.pwcglobal.com Valérie Piastrelli (2) Tel: valerie.piastrelli@lu.pwcglobal.com Pascal Rakovsky Tel: pascal.rakovsky@lu.pwcglobal.com Dominique Robyns Tel: dominique.robyns@lu.pwcglobal.com

38 PricewaterhouseCoopers investment management contacts in Luxembourg cont. 35 Günter Simon Tel: Amaury Evrard Tel: Laurent Marx Tel: Tax Services René Beltjens Tel: Jörg-Peter Bundrock Tel: Laurent de la Mettrie*** Tel: Business Advisory Services Vincenzo Lomonaco Tel: Olivier Mortelmans Tel: Olivier de Vinck*** Tel: * Leader Investment Management Europe, Middle East and Africa ** Leader Investment Management Luxembourg *** Primary contacts (1) Head of regulatory practice (2) Head of our UcitsEuroFile service

39 36 Our network of investment management specialists PricewaterhouseCoopers ( the world s largest professional services organisation, helps its clients build value, manage risk and improve their performance. As a leading provider of professional services to investment managers, PricewaterhouseCoopers has a multi-disciplinary team of proven professionals comprised of business advisors and consultants dedicated to the industry and spanning over 68 countries worldwide. This team includes over 500 partners, supported by a network of professionals, whose specialist knowledge and experience enable us to provide our clients with insights into marketplace developments and global opportunities. PricewaterhouseCoopers offers industry-focused solutions and strong implementation capability, providing a globally co-ordinated approach to the investment management industry s business needs. To find out more about our services, contact your usual PricewaterhouseCoopers representative or one of the following Investment Management Leaders: Global Simon Jeffreys: Asia Pacific Robert Grome: Europe, Middle East and Africa Didier Mouget: North America Lloyd Voneiff: Global Corporate Finance & Recovery Richard Thompson: Global Management Consulting Services Robert Gould: Global Risk Management Services Thomas Barrett: Global Tax Services David Newton:

40 Our network of investment management specialists cont. 37 Argentina Santiago Mignone Australia David Prothero Austria Christian Kraetschmer Bahamas Clifford Johnson Barbados Michael Bynoe Belgium Emmanuèle Attout Bermuda George Holmes Brazil João Manoel dos Santos British Virgin Islands Meade Malone Canada Barry Myers Cayman Islands Noel Reilly Central & Eastern Dariusz Nowak Europe Coordinator Channel Islands Guernsey Michael Bane Jersey Brendan McMahon Chile Alfredo Rossi China Alex Wong Cyprus Costas Mavrocordatos Czech Republic François Mattelaer Denmark Mikael Sørensen Estonia Urmas Kaarlep Finland Juha Wahlroos France Jacques Lévi Germany Markus Burghardt Gibraltar Colin Vaughan Greece Lorraine Scaramanga Hong Kong Robert Grome Hungary Mike Birch Iceland Hjalti Schiöth India Kersi Vachha Ireland, Republic of Marie O Connor Isle of Man Mike Simpson Israel Joseph Fellus Italy Fabrizio Piva Japan Thomas Romeo

41 38 Korea Jae-Hyeong Joo Latvia Juris Lapshe Lithuania Cameron Greaves Luxembourg Marc Saluzzi Malaysia Mohammad Faiz Azmi Malta Joseph Camilleri Mauritius Jean-Paul de Chazal Netherlands Sonja Barendregt-Roojers New Zealand Paul Mersi Norway Geir Julsvoll Philippines Blesilda Pestaño Poland Brian O Brien Portugal António Assis Romania Joe Kerrane Russia Richard Munn Singapore Bin Hwee Quek Slovakia Paul Barnes South Africa Deon Viljoen South & Central Santiago Mignone America Coordinator Spain Antonio Greño Sweden Sussanne Sundvall Switzerland Thomas Huber Taiwan James Huang Thailand Unakorn Phruithithada Ukraine Jorge Intriago United Kingdom Lynne Ed United States Lloyd Voneiff

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