Arendt Intelligence Seminar aif structuring.pdf · Arendt Intelligence Seminars – 26 November...

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


PLENARY SESSION I

Inbound structuring opportunities for Luxembourg AIFs in a global environment


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


LUXEMBOURG – A PREFERRED CHOICE FOR

SETTING UP YOUR AIF?


Net assets and net sales in Europe

EFAMA Factsheet, September 2015


89 authorised 51 registered

335 fully subject 203 partially subject


419 full-scope 424 small

authorised 120 small registered

FCA, January 2015 BAFIN, November 2015

CBI, November 2015 AMF, November 2015


AIFM at EU level

https://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjyw4iujqnJAhVL2BoKHaMVDDYQjRwIBw&url=https://openclipart.org/detail/170030/uk-union-flag&bvm=bv.108194040,d.bGg&psig=AFQjCNGJXxWeUmWbByUngm03AcZnExr8uw&ust=1448456303136831

http://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiEn8q9jqnJAhUFtBoKHUoSDt4QjRwIBw&url=http://www.flags.net/GERM.htm&bvm=bv.108194040,d.bGg&psig=AFQjCNFGTTtDy-ylXF4aXv0VafEbDWGgyA&ust=1448456333970716



https://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwio59TVjqnJAhWG2xoKHdbpBUEQjRwIBw&url=https://en.wikipedia.org/wiki/Flag_of_France&bvm=bv.108194040,d.bGg&psig=AFQjCNFNcn2DVLlAZ411xgdma4FPrshvxA&ust=1448456383560094

http://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjnurbrjqnJAhUBDBoKHYZSDdUQjRwIBw&url=http://festbutikken.dk/varegrupper/364-hurraflag-danske-og-udenlandske/10134-papirflag-irland-paa-pind-a4/&bvm=bv.108194040,d.bGg&psig=AFQjCNE8o9bmrw8xv-zBpWxntpKyGhGu6Q&ust=1448456431054984

http://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjD4vufjqbJAhWDfnIKHYTTB4MQjRwIAw&url=http://www.crwflags.com/fotw/flags/lu.html&psig=AFQjCNGv_xlrpYvaMKvOKml8nCcDfvMIaQ&ust=1448353197379978


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


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


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


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


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


INVESTORS’ EXPECTATIONS & REQUIREMENTS


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)


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)


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


Investment Advisor

GP GP

Cayman LP AIFM DEPOSITORY

SPV

Lux SLP

GP Investor

Parallel Funds

http://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjJo_XD6qjJAhVDchQKHQCpC5oQjRwIBw&url=http://www.flags.net/CYIS.htm&psig=AFQjCNFychd8j8kcCwsrMQncooQ8UpAxzw&ust=1448446686665340



Master - Feeder - Parallel Structure

Investors

Feeder Fund

Master Fund

25% threshold tax issue

Master Fund

http://www.worldatlas.com/webimage/flags/countrys/europe/france.htm

http://www.google.lu/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjwgO6AjKbJAhXCa3IKHXQzC5AQjRwIBw&url=http://hongkongflag.facts.co/hongkongflagof/hongkongflag.php&psig=AFQjCNG2BZajS9EcDxKgZqhQjyKdUG802w&ust=1448352560388566



PLENARY SESSION II

Outbound structuring issues for Luxembourg AIFs in an international context


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


TAX STRUCTURING SOLUTIONS AS FROM 2016


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


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


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


alternative financing: credit funds real estate funds

OUTBOUND STRUCTURING: FOCUS ON ASSET CLASSES


Credit & debt funds

Lux GP

AIFM

Investors

LuxHoldCo

AIF

Debt/loan portfolio

Market opportunities & trends

Regulatory status in Germany, France & Luxembourg

Regulatory outlook


Real estate funds

AIF

REIF

Investors

Lux GP AIFM

Lux GP AIFM

Investors

LuxHoldCo

AIF

SPPICAV

http://www.schalltechnik-drmueller.de/buro_verwalt_.html





AIF GOVERNANCE


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


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: [email protected]

Paul Mousel, Co-Chairman Tel: +352 40 78 78 217 Email: [email protected]

Thierry Lesage, Partner Tel: +352 40 78 78 328 Email: [email protected]

Matthieu Taillandier, Partner Tel: +352 40 78 78 797 Email: [email protected]

Pierre-Michaël de Waersegger, Senior Associate Tel: +352 40 78 78 258 Email: [email protected]

Claude Niedner, Partner Tel: +352 40 78 78 515 Email: [email protected]

mailto:[email protected]






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