Getting the Deal Through â Private Equity 2012 â Fund ... - Gowlings

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contents®Private Equity2012Contributing editor:Casey CogutSimpson Thacher & Bartlett LLPBusiness developmentmanagersAlan LeeGeorge IngledewRobyn HetheringtonDan WhiteMarketing managersEllie NotleyAlice HazardMarketing assistantsWilliam BentleyZosia DemkowiczAdmin assistantMegan FriedmanMarketing manager– subscriptionsRachel Nursesubscriptions@gettingthedealthrough.comAssistant editorAdam MyersEditorial assistantLydia GergesSenior production editorJonathan CowieProduction editorMartin ForrestChief subeditorJonathan AllenSubeditorsCaroline RawsonSarah MorganDavet HylandEditor-in-chiefCallum CampbellPublisherRichard DaveyPrivate Equity 2012Published byLaw Business Research Ltd87 Lancaster RoadLondon, W11 1QQ, UKTel: +44 20 7908 1188Fax: +44 20 7229 6910© Law Business Research Ltd2012No photocopying: copyrightlicences do not apply.ISSN 1746-5524The information provided in thispublication is general and may notapply in a specific situation. Legaladvice should always be sought beforetaking any legal action based on theinformation provided. This informationis not intended to create, nor doesreceipt of it constitute, a lawyer–clientrelationship. The publishers andauthors accept no responsibility forany acts or omissions containedherein. Although the informationprovided is accurate as of February2012, be advised that this is adeveloping area.Printed and distributed byEncompass Print SolutionsTel: 0844 2480 112LawBusinessResearchGlobal Overview Casey Cogut, William Curbow, Kathryn King Sudol and Atif Azher Simpson Thacher & Bartlett LLP 3FUND FORMATIONAustralia Deborah Johns and Adam Laura Gilbert + Tobin 6Bermuda Sarah Demerling Appleby (Bermuda) Limited 13Brazil Luciano Fialho de Pinho, Clara Gazzinelli de Almeida Cruz and Bruno Ribeiro CarvalhoCampos, Fialho, Canabrava, Borja, Andrade, Salles Advogados 21Canada Myron B Dzulynsky, Vince F Imerti and Bryce A Kraeker Gowling Lafleur Henderson LLP 28Cayman Islands Bryan Hunter and Richard Addlestone Appleby (Cayman) Ltd 34Chile Felipe Dalgalarrando H Dalgalarrando, Romero & Cía Abogados 41China Caroline Berube HJM Asia Law & Co LLC 48Finland Paulus Hidén and Einari Karhu Attorneys at Law Borenius Ltd 55Germany Thomas Sacher, Michael Schmidt and Steffen Schniepp Beiten Burkhardt 60Guernsey Ben Morgan, Geoff Ward-Marshall and Emma Penney Carey Olsen 67India Siddharth Raja and Chitra Raghavan Narasappa, Doraswamy & Raja 74Jersey Robert Milner and James Mulholland Carey Olsen 82Luxembourg Marc Meyers Loyens & Loeff 87Netherlands Hans van Ramshorst, Floor Veltman, Louis Bouchez and Maurits Bos Kennedy Van der Laan NVJan van den Tooren and Reinier Noort Hamelink & Van den Tooren NV 96Singapore Low Kah Keong and Felicia Marie Ng WongPartnership LLP 104Spain Julio Veloso and Javier Morera Broseta Abogados 110Sweden Anders Lindström and Mikael Knutsson Advokatfirman Delphi 124Switzerland Shelby R du Pasquier and Philipp Fischer Lenz & Staehelin 117United Kingdom Anthony McWhirter and Richard Ward Debevoise & Plimpton LLP 131United States Thomas H Bell, Barrie B Covit, Jason A Herman, Jonathan A Karen, Glenn R Sarno and Michael W WolitzerSimpson Thacher & Bartlett LLP 138TRANSACTIONSAustralia Rachael Bassil and Peter Cook Gilbert + Tobin 148Austria Marco Steiner and Marcus Benes Eisenberger & Herzog 155Belgium Peter De Ryck Lydian 160Brazil Luciano Fialho de Pinho and Flávio Santana Cançado Ribeiro and Bruno Vieira LavallCampos, Fialho, Canabrava, Borja, Andrade, Salles Advogados 167Canada Harold Chataway, Daniel Lacelle, Ian Macdonald and Jason A Saltzman Gowling Lafleur Henderson LLP 173Cayman Islands Stephen James, Simon Raftopoulos and Samuel Banks Appleby (Cayman) Ltd 181Chile Felipe Dalgalarrando H Dalgalarrando, Romero & Cía Abogados 185China Caroline Berube HJM Asia Law & Co LLC 191Colombia Mauricio Rodríguez and Eduardo A Wiesner Wiesner & Asociados Abogados 200Finland Maria Carlsson, Andreas Doepel, Antti Hemmilä, Ari Kaarakainen, Sanna Lindqvist and Jukka LeskinenAttorneys at law Borenius Ltd 205France Pierre Lafarge, Jean-Luc Marchand and Claire Langelier Latournerie Wolfrom & Associés 211Germany Thomas Sacher, Michael Schmidt and Steffen Schniepp Beiten Burkhardt 218Hong Kong Benita Yu and Clara Choi Slaughter and May 224India Siddharth Raja and Neela Badami Narasappa, Doraswamy & Raja 231Indonesia Joel Hogarth O’Melveny & Myers LLP 239Korea Je Won Lee and Geen Kim Lee & Ko 245Netherlands Hans van Ramshorst, Floor Veltman, Louis Bouchez and Maurits Bos Kennedy Van der Laan NVJan van den Tooren and Reinier Noort Hamelink & Van den Tooren NV 251Norway Susanne Schneider and Odd Moe Advokatfirmaet Steenstrup Stordrange DA 258Russia Anton Klyachin and Igor Kuznets Salomon Partners 264Singapore Wai King Ng and Kenneth Leong Tay WongPartnership LLP 270South Africa Lele Modise, Mogola Makola and Hannine Drake Bowman Gilfillan 278Spain Julio Veloso and Javier Morera Broseta Abogados 289Sweden David Aversten, Clas Romander, Michael Juhlin and Fredrik Mörner Advokatfirman Delphi 295Switzerland Shelby R du Pasquier and Philipp Fischer Lenz & Staehelin 303Taiwan Robert C Lee, Claire Wang and Candace Chiu Yangming Partners 309Turkey Ismail G Esin Esin Attorney Partnershp 315United Kingdom David Innes, Guy Lewin-Smith and Daisy Raven Debevoise & Plimpton LLP 321United States William Curbow, Kathryn King Sudol and Atif Azher Simpson Thacher & Bartlett LLP 327www.gettingthedealthrough.com
FUND FORMATIONCanadaCanadaMyron B Dzulynsky, Vince F Imerti and Bryce A KraekerGowling Lafleur Henderson LLPGowling Lafleur Henderson LLPFormation and terms operation1 Forms of vehicleWhat legal form of vehicle is typically used for private equity fundsformed in your jurisdiction? Does such a vehicle have a separate legalpersonality or existence under the law of your jurisdiction? In eithercase, what are the legal consequences for investors and the manager?The most common, if not sole, vehicle for a private equity fund inCanada is a limited partnership. For the purposes of this article, it isassumed that, in all cases, the form of vehicle is a limited partnership.Limited partnerships are formed under provincial laws. The specificcharacteristics of a limited partnership (including matters such as creationformalities and disclosure of limited partners’ names) is dependent,in part, on the applicable laws of the province of formation. Alimited partnership generally does not have status as a separate legalentity in Canada, although for certain purposes it is treated as if ithas similar characteristics to such an entity.A limited partnership is required to have at least one general partnerand at least one limited partner. Any type of entity can be either alimited partner or a general partner. A general partner’s liability in alimited partnership is unlimited. As such, a special purpose corporationor management limited partnership is normally formed to actas the general partner. The liability of a limited partner generally islimited to its capital, as further described below.Depending upon the management structure of a fund and relateddetails, further securities law formalities may also apply. To the extentthat a manager needs to make formal securities law filings, timing forsuch filings needs to be contemplated, though it need not in practicedelay the formation of the limited partnership. Further details as tosecurities law matters are set out below.In addition to securities laws, a number of Canadian provincestreat an offering of limited partnership interests in such jurisdiction ascarrying on business in such province, thereby triggering a pro formaextra-provincial registration filing in such jurisdiction.While the formal formation process is unlikely to be overly costlyor time intensive (subject to the caveats noted above), a significantamount of time is typically spent on disclosure documentation (usuallyan offering, information or private placement memorandum),attracting investors, negotiating terms and conditions of contributionsand drafting appropriate documentation giving effect to theintentions of the parties. Fees are mainly driven by the costs of preparingand, to the extent applicable, negotiating such documents, aswell as the overall complexity of the fund, any parallel fund structuresand underlying acquisition structures below the fund. Lawyers typicallyare involved in negotiating and drafting the limited partnershipagreement, though financial, accounting and other advisers may alsobe involved.There are no minimum capital requirements for limitedpartnerships.2 Forming a private equity fund vehicleWhat is the process for forming a private equity fund vehicle in yourjurisdiction?A limited partnership is generally created when a fund sponsor’slegal counsel files a declaration or certificate of limited partnershipwith the relevant provincial department. The form and thedetails required in connection with this filing vary from provinceto province. While there are different approaches, fund sponsorsor their special purpose general partner entities often enterinto a short pro forma limited partnership agreement with aninitial (usually related) limited partner, then register the limitedpartnership so that it can proceed to market to investors. If anon-Canadian general partner is contemplated, the formation processmay be delayed by the requirement (and inherent processing time)to extra-provincially license the foreign general partner to carry onbusiness in the jurisdiction of the limited partnership’s formation.As the offering of limited partnership interests to investorsis subject to applicable provincial securities laws, prospectusand registration requirements must also be satisfied. Typically,private equity limited partnership interests are intended for ‘accredited’investors, and such interests are not intended to be publiclytraded. Consequently, statutory exemptions from the prospectusrequirements are generally available, though pro forma filings(with more than nominal fees in some cases) may be required.3 RequirementsIs a private equity fund vehicle formed in your jurisdiction required tomaintain locally a custodian or administrator, a registered office, booksand records or a corporate secretary, and how is that requirementtypically satisfied?Except as noted below, there are no such legal requirements, thoughin practice either the general partner or the manager of the fundmay fulfil such role. Most Canadian provinces do, however, require alimited partnership either formed under the laws of such province orextra-provincially registered in such province to maintain within theprovince a registered office, place of business or attorney for serviceor other representative, as well as basic records such as the names,addresses and amount contributed or agreed to be contributed bylimited partners.4 Access to informationWhat access to information about a private equity fund formed inyour jurisdiction is the public granted by law? How is it accessed?If applicable, what are the consequences of failing to make suchinformation available?Most Canadian jurisdictions require a limited partnership tomaintain a current record of its limited partners and the amountcontributed or agreed to be contributed by each limited partner.28 Getting the Deal Through – Private Equity 2012
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