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26 November 2015
Arendt Intelligence Seminars
New opportunities for Luxembourg: how to structure AIFs in a global environment
2 Arendt Intelligence Seminars – 26 November 2015
Agenda
Introduction Paul Mousel
Plenary Session I Inbound structuring opportunities for Luxembourg AIFs in a global environment Claude Niedner, Patricia Volhard, Stéphane Puel, Matthieu Taillandier, Pierre-Michaël de Waersegger
Plenary Session II Outbound structuring issues for Luxembourg AIFs in an international context Gilles Dusemon, Patricia Volhard, Stéphane Puel, Thierry Lesage
3 Arendt Intelligence Seminars – 26 November 2015
PLENARY SESSION I
Inbound structuring opportunities for Luxembourg AIFs in a global environment
4 Arendt Intelligence Seminars – 26 November 2015
Panelists: Patricia Volhard, Partner, P+P Pöllath + Partners, Frankfurt Stéphane Puel, Partner, Gide Loyrette Nouel, Paris Matthieu Taillandier, Partner, Arendt & Medernach Pierre-Michaël de Waersegger, Senior Associate, Arendt & Medernach Claude Niedner, Partner, Arendt & Medernach
Agenda: Luxembourg - A preferred choice for setting up your AIF? Investors’ expectations and requirements
5 Arendt Intelligence Seminars – 26 November 2015
LUXEMBOURG – A PREFERRED CHOICE FOR
SETTING UP YOUR AIF?
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Net assets and net sales in Europe
EFAMA Factsheet, September 2015
7 Arendt Intelligence Seminars – 26 November 2015
89 authorised 51 registered
335 fully subject 203 partially subject
118 authorised 210 registered
419 full-scope 424 small
authorised 120 small registered
FCA, January 2015 BAFIN, November 2015
CBI, November 2015 AMF, November 2015
207 authorised 624 registered
AIFM at EU level
8 Arendt Intelligence Seminars – 26 November 2015
Luxembourg toolbox – constant evolution
Regulated investment funds UCITS
‐ SICAV (corporate) ‐ FCP
UCI Part II ‐ SICAV / others (corporate) ‐ FCP
SIF ‐ SICAV / others (corporate) ‐ FCP
SICAR (corporate)
Unregulated investment funds CLP/SLP not qualifying as SIF or SICAR
SOPARFI
FIAR SICAV/others (corporate &
partnership)
FCP
9 Arendt Intelligence Seminars – 26 November 2015
FIAR
Non-regulated fund regime reserved for authorised AIFM
Well-tested structuring flexibility and the tax efficiency of a SIF or a SICAR
Choice of legal forms: Partnerships (SCS, SCSp and SCA) Corporations (SA, Sàrl, SCOSA) Contractual (FCP)
Speed to market to qualifying investors
Conversion options
Diversification of risks
Bill of law to be deposited with Parliament - Expected vote: Q2 2016
10 Arendt Intelligence Seminars – 26 November 2015
On the “sell side” – French funds
Pre-AIFMD regulatory framework:
French investment vehicles divided into two separate bodies of rules:
« Regulated vehicles »: Ucits, non Ucits « Non regulated vehicles » : regular commercial companies (eg real estate, PE)
Post-AIFMD regulatory framework: Most of these vehicles are now deemed AIFs
Broad definition of AIFs under French laws
Further, AIMFs can not manage vehicles which are not AIFs
11 Arendt Intelligence Seminars – 26 November 2015
AIFs distributed to non-
professional investors
Authorised EU AIFM
Managing EU AIF
Sold to professional investors only in the EEA countries
Through a direct / indirect offering or placement
at the initiative (or on behalf) of the AIFM
Marketing and distribution of AIFs in the EU
Third country set ups
Sub-thresholds AIFM
Marketing Passport National regimes
AIF distribution
12 Arendt Intelligence Seminars – 26 November 2015
July 2013
July 2014
2015 + 2018 +
AIFM Directive
entry into
force
Trans-position period ends
EU AIFM to get
authori-zation
EU passport for third
countries
End of EU
NPPRs
December 2012: Level 2 measures
AIFM Directive
July 2011
Reg
ulat
ory
agen
da
Non-EEA AIFM and/or non-EEA AIF M
arke
ting
AIF
EU passport required EU/EEA AIFM with EU/EEA AIF
Transition from NPPRs to passport
EU/EEA passport or NPPRs, subject to conditions
EU/EEA passport required
EU NPPRs continue, subject to additional conditions
Luxembourg AIFM Law adopted AIFM Directive applicable
30 July 2015: ESMA opinion on third country passport: country by country assessment necessary
Marketing timeline
13 Arendt Intelligence Seminars – 26 November 2015
INVESTORS’ EXPECTATIONS & REQUIREMENTS
14 Arendt Intelligence Seminars – 26 November 2015
Typical Closed-ended Fund Structure
26.11.2015 |
► Tax exempt pension funds cannot invest in partnerships which are deemed to be in business (by their form or by their activity)
► Securitization structure will help
S(P)V
LP
Notes (“securities”)
German Tax Exempt Pension Funds
GP S.à r.l
SCS(p) (SIF)
15 Arendt Intelligence Seminars – 26 November 2015
Typical Closed-ended Fund Structure
26.11.2015 |
S(P)V LP
Alternative 1: investment via Notes
German Spezial-Sondervermögen
Family Offices/Stiftung/InsuranceCo/PensionFund
LP
Alternative 2: Qualification of LP interest as “security”
Managed by German
ManCo
Securitisation vehicle*
SCS(p) (SIF)
16 Arendt Intelligence Seminars – 26 November 2015
Solvency II – Insurance and Reinsurance Companies
Solvency II Pillar 1 – Quantitative
requirements Pillar 2 – Supervisory
review Pillar 3 – Disclosure
requirements
Assets and Liabilities Management
Solvency Capital Requirements (SCR)
Minimum Capital Requirement (MCR)
System of governance
Own Risk and Solvency
Assessment (ORSA) Supervisory process
Transparency
Reporting to supervisory
authorities
Disclosure to the public
17 Arendt Intelligence Seminars – 26 November 2015
Investment Advisor
GP GP
Cayman LP AIFM DEPOSITORY
SPV
Lux SLP
GP Investor
Parallel Funds
18 Arendt Intelligence Seminars – 26 November 2015
Master - Feeder - Parallel Structure
Investors
Feeder Fund
Master Fund
25% threshold tax issue
Master Fund
19 Arendt Intelligence Seminars – 26 November 2015
PLENARY SESSION II
Outbound structuring issues for Luxembourg AIFs in an international context
20 Arendt Intelligence Seminars – 26 November 2015
Panelists: Stéphane Puel, Partner, Gide Loyrette Nouel, Paris Patricia Volhard, Partner, P+P Pöllath + Partners, Frankfurt Thierry Lesage, Partner, Arendt & Medernach Gilles Dusemon, Partner, Arendt & Medernach
Agenda: Tax structuring solutions as from 2016 Debt funds / real estate funds Governance related issues
21 Arendt Intelligence Seminars – 26 November 2015
TAX STRUCTURING SOLUTIONS AS FROM 2016
22 Arendt Intelligence Seminars – 26 November 2015
Tax structuring developments post 1 January 2016 – focus on the GAAR
General anti-abuse rule (“GAAR”) in the implementation of the European Parent-Subsidiary Directive (“PSD”) as from 2016.
The benefit of the PSD must be denied: “in the framework of an arrangement or a series of arrangements which, having been put in place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purposes of the PSD [main purpose test], are not genuine having regard to all relevant facts and circumstances. An arrangement or a series of arrangements shall be regarded as not genuine to the extent that they are not put in place for valid economic reasons which reflect economic reality [substance test]”.
Very broad wording
Much leeway for interpretation given to tax authorities
23 Arendt Intelligence Seminars – 26 November 2015
Risk assessment under the new GAAR : - in the source country? - in Luxembourg
Tax structuring developments post 1 January 2016 – focus on the GAAR
GP
AIFM
Investors
LuxHoldCo
AIF
EUCo
dividends
24 Arendt Intelligence Seminars – 26 November 2015
OECD BEPS Action 6 – prevent treaty abuse
Risk under BEPS - Application of Foreign / Luxembourg treaty
denied
GP
AIFM
Investors
LuxHoldCo
AIF
EUCo
dividends
dividends
Principal Purposes Test (PPT): general anti-abuse rule which includes situations not covered by the LOB
substance increase Treaty entitlement to non-CIV:OECD
recognises the economic importance for the non-CIV to get treaty entitlement but 2 main concerns: Non-CIV may be used to provide treaty
benefits to investors not eligible for treaty benefits
Investors may defer recognition of income on which treaty benefits have been granted.
More work to be published first half 2016
25 Arendt Intelligence Seminars – 26 November 2015
alternative financing: credit funds real estate funds
OUTBOUND STRUCTURING: FOCUS ON ASSET CLASSES
26 Arendt Intelligence Seminars – 26 November 2015
Credit & debt funds
Lux GP
AIFM
Investors
LuxHoldCo
AIF
Debt/loan portfolio
Market opportunities & trends
Regulatory status in Germany, France & Luxembourg
Regulatory outlook
27 Arendt Intelligence Seminars – 26 November 2015
Real estate funds
AIF
REIF
Investors
Lux GP AIFM
Lux GP AIFM
Investors
LuxHoldCo
AIF
SPPICAV
28 Arendt Intelligence Seminars – 26 November 2015
AIF GOVERNANCE
29 Arendt Intelligence Seminars – 26 November 2015
I. Structure
[Lux] GP + [Lux] AIF + [English/French/Italian] AIFM
II. Allocation of functions
Who does what?
III. Legal & regulatory considerations
Conflicting theories?
[Lux] AIF
[Lux] SPV
[UK/F/I] AIFM Autorisation &
Substance
AIFMD Management Passport
= AIFM
Domicile of depositary?
[Lux] GP (=gérant)
investors
30 Arendt Intelligence Seminars – 26 November 2015
Contact us
This presentation does not constitute legal advice and is merely intended to raise awareness on specific topics. This presentation however is not a substitute for seeking appropriate commercial and legal advice and should not be relied on in this manner.
Gilles Dusemon, Partner Tel: +352 40 78 78 986 Email: gilles.dusemon@arendt.com
Paul Mousel, Co-Chairman Tel: +352 40 78 78 217 Email: paul.mousel@arendt.com
Thierry Lesage, Partner Tel: +352 40 78 78 328 Email: thierry.lesage@arendt.com
Matthieu Taillandier, Partner Tel: +352 40 78 78 797 Email: matthieu.taillandier@arendt.com
Pierre-Michaël de Waersegger, Senior Associate Tel: +352 40 78 78 258 Email: pierre-michael.dewaersegger@arendt.com
Claude Niedner, Partner Tel: +352 40 78 78 515 Email: claude.niedner@arendt.com
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