The Act Implementing the AIFM Directive - Norton Rose

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The Act Implementing the AIFM Directive 12 Norton Rose December 2012 This position is confirmed also at the EU level, as structured products are subject to the Packaged Retail Investment Products Regulation (PRIPs Regulation 16 ) and it is, therefore, not considered to extend the scope of the AIFM Directive. The non-applicability of the KAGB-E to delta-1 certificates and hybrid instruments results from the fact that these instruments do not enable the investor to participate fully in the vehicle’s performance, but instead give him the status of a creditor. Therefore, they do not constitute capital investments for the benefit of the investor. The future legal environment under the KAGB-E is likely to be quite similar to the situation that existed historically between 2004 and 2007 when a material fund definition applied. At that time, both the tax department of the Federal Ministry of Finance (Bundesfinanzministerium) 17 and BaFin 18 issued decrees pursuant to which fund-linked certificates were not to be construed as fund units. 1.4.2 Issuing entities in the context of group financing Issuing entities, which are often used in the context of group financing, do not fall within the scope of the KAGB-E either. The issuing entity (which is often either a Delaware LLC or Dutch BV) issues bonds that replicate the debt or equity capital performance of the domestic parent company. In principle, the statements made above on structured products apply mutatis mutandis, because in this situation also, no company shares, but only hybrid instruments, are issued. 1.5 Structural considerations In view of the changing environment, the asset management industry will have to decide whether to meet the requirements of the KAGB-E or change to other forms of capital investment products. In this context, in particular, the following criteria will be relevant: • administrative expenses and costs incurred due to the AIFM Directive and KAGB-E, respectively, in particular, the costs of the mandatory depositary • treatment of fund units and capital market products under Solvency II, as insurers are the most important group of investors and, therefore, their regulation is a decisive factor when determining the structure of investment products • corporate law issues arising from legal action taken by limited partners if they are unsatisfied and • tax treatment of investment products at fund and investor level; the tax burden depends on the asset class and the investor type and, thus, the potential for tax optimisation exists. 16 Proposal for a Regulation of the European Parliament and of the Council on key information documents for investment products, 2012/0169 (COD), http://ec.europa.eu/internal_market/finservices-retail/docs/investment_products/20120703-proposal_en.pdf. 17 Federal Ministry of Finance, tax guideline on investment taxation, dated 2 June 2005, annotation 9. 18 BaFin, decree on the regulatory adoption of the tax guideline on investment taxation, dated 22 August 2005.
nortonrose.com FINANCIAL INSTITUTIONS ⋅ ENERGY ⋅ INFRASTRUCTURE, MINING AND COMMODITIES ⋅ TRANSPORT ⋅ TECHNOLOGY AND INNOVATION ⋅ PHARMACEUTICALS AND LIFE SCIENCES Contacts If you would like further information please contact: Dr. Caroline Herkströter Partner Tel +49 (0)69 505096-300 caroline.herkstroeter@nortonrose.com Dr. Martin Krause Partner Tel +49 (0)69 505096-490 martin.krause@nortonrose.com Dr. Ludger Verfürth Partner Tel +49 (0)40 970799-160 ludger.verfuerth@nortonrose.com Norton Rose Norton Rose is a leading international legal practice. With more than 2900 lawyers, we offer a full business law service to many of the world’s pre-eminent financial institutions and corporations from offices in Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia. We are strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences. On June 1, 2013 Norton Rose will join forces with leading U.S. law firm Fulbright & Jaworski L.L.P. to form Norton Rose Fulbright. With 3800 lawyers and 54 offices, including 11 in the USA, Norton Rose Fulbright will be one of the largest global legal practices, with significant depth of expertise in the world’s leading business and financial centres. Norton Rose is the business name for the international law firm that comprises Norton Rose LLP, Norton Rose Australia, Norton Rose Canada LLP and Norton Rose South Africa (incorporated as Deneys Reitz Inc) and their respective affiliates (“Norton Rose entity/entities”). The purpose of this publication is to provide information as to developments in the law. It does not contain a full analysis of the law, nor does it constitute an opinion of Norton Rose on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose. No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose entity (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this publication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton Rose Canada LLP or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their respective affiliates. © Norton Rose LLP NR14304 12/12 (UK) Extracts may be copied provided their source is acknowledged.
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