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    Nov. 28, 2024

Five Essential Articles for Global Private Fund Managers From the PELR in 2024

In light of the Thanksgiving holiday in the U.S., this issue of the Private Equity Law Report features five articles addressing legal issues relevant to global private fund managers. The week starting December 9, 2024, the Private Equity Law Report will resume regular publication of new content focused on regulatory and related considerations applicable to private fund managers in the U.S., the U.K. and other jurisdictions.

Update on Rapidly Evolving Market Trends and Regulations in Europe, Asia and the Middle East

A panel at a Morgan Lewis conference discussed relevant regulatory updates and key trends in Europe; the Middle East and North Africa; Japan; and the rest of Asia (excluding China). The program highlighted the ways in which different regulators are focused on their own jurisdictions or looking to harmonize with other regions and support incomers, and also discussed recent trends, such as sovereign wealth funds keeping capital within their nations and the rise of tokenization. The panel featured Morgan Lewis partners Ayman A. Khaleq, Steven Lightstone, Divya Thakur and Carol Tsuchida. The article summarizes the key takeaways for private fund managers. For additional insights from Morgan Lewis, see “Global Trends and Developments in ESG Regulations: E.U., Middle East, Asia and Africa (Part Two of Two)” (Oct. 31, 2024).

FCA’s Final Rules on Sustainability Disclosure Requirements and Investment Labels

In November 2023, the U.K.’s Financial Conduct Authority released policy statement PS23/16 on Sustainability Disclosure Requirements and investment labels. The rules cover a new “anti-greenwashing” rule; a voluntary labeling regime for products with a sustainability objective as part of their investment objective; product disclosure requirements; sustainability entity reporting; retail investor-specific requirements on naming and marketing; and consumer-facing product-level disclosures. In a guest article, Goodwin Procter attorneys Ajay Pathak, Andrew Henderson, Danielle Reyes and Chris Ormond discuss the key elements set out in PS23/16; examine how those rules compare and contrast with the SEC’s proposed rules on environmental, social and governance investment practices and fund names, as well as the E.U.’s sustainable finance legislation; and offer practical action points for fund managers in scope, both now and in anticipation of the future expansion of the U.K. regime to overseas funds marketed in the U.K. and to portfolio management. See “Rise of SFDR‑Compliant Funds Is Effectively Shifting Private Assets to Support European Net Zero Goals” (Sep. 19, 2024).

Understanding and Preparing for AIFMD 2.0

After substantial deliberation, a final draft of the 2.0 version of the Alternative Investment Fund Managers Directive (AIFMD) was agreed to by representatives of the European Parliament, the Council of the E.U. and the European Commission. The revisions in AIFMD 2.0 aim to modernize the regulations to account for the impact of Brexit, problems surfaced during the coronavirus pandemic and other developments in the private funds industry. Several notable items were not addressed, however, including any updates to the third-country passporting provisions in AIFMD 1.0. To assist alternative investment fund managers in understanding and preparing for AIFMD 2.0, a panel at Dechert’s Luxembourg Annual Funds Conference discussed the current state and future direction of the amended directive. The program featured Dechert partners Angelo Lercara (Munich), Colin Sharpsmith (London), Christine A. Renner (Luxembourg), Cyril Fiat (Paris) and Patrick Goebel (Luxembourg). The first article in a two-part series details material changes to the delegation requirements under the new rules, updates to the Annex I services and certain issues introduced by mandated liquidity management tools. The second article analyzes relevant changes affecting loan origination funds, fallout from the lack of revisions to marketing practices under AIFMD and the ramifications of a handful of omitted items under the new rules. See “The European Commission and ESMA Lay Groundwork for AIFMD II” (Nov. 3, 2020); and “KPMG Reports on AIFMD’s Efficacy Five Years After Implementation” (Apr. 16, 2019).

E.U. Harmonizes AML Regulation, Creates New Authority

New E.U. anti-money laundering (AML) legislation seeks to strengthen and harmonize regulations across its 27 Member States. The new legislation also calls for the creation of a new regulatory authority to combat money laundering, with the power to supervise the highest-risk financial players directly and to support and coordinate various countries’ financial intelligence units. The legislative package, collectively dubbed the Anti-Money Laundering and Countering the Financing of Terrorism package, is intended to beef up the monitoring of suspicious transactions and to eliminate loopholes that allow for laundering of illicit proceeds, such as E.U. Member States’ differing rules on companies’ beneficial ownership. The Private Equity Law Report spoke to experts in the field to understand the implications for international business. The article distills the relevant takeaways from those conversations about the new AML regulations. See “2024 Survey Reveals Top Compliance Concerns and Common Industry Practices” (Sep. 19, 2024).

Key Issues When Establishing and Marketing Funds in Dubai and Abu Dhabi

The United Arab Emirates (UAE) is a high-quality financial center and tax-favorable jurisdiction with political stability and a good legal system that is based on the U.K. model. Several large fund managers have set up in the Middle East, which has strengthened the jurisdiction’s credibility and encouraged smaller managers to make the move. The UAE’s positive attributes are even more attractive as other jurisdictions around the globe are faced with political uncertainty and less favorable tax laws. To address some of the key issues for the growing number of fund managers interested in establishing a presence in Dubai or Abu Dhabi for investment management and capital raising purposes, Dechert hosted a webinar moderated by partner Craig Borthwick and which featured Christopher Gardner (partner), Phillip Sacks (partner) and Dounia Mansour (counsel). The article discusses important considerations when setting up a presence in the main jurisdictions, rules for marketing to UAE investors and features of local fund products. See our two-part series on Dechert and Mergermarket’s 2024 PE Outlook: “Navigating Fundraising and Regulatory Headwinds” (Jan. 25, 2024); and “Parsing the Ongoing Growth of GP‑Led Transactions and Other Sectors” (Feb. 8, 2024).

Most-Read Articles

Upcoming Webinar to Examine GP‑Led Restructurings

Please join the Private Equity Law Report on Thursday, March 12, 2020, at 11:00 a.m. EDT, for a complimentary webinar exploring secondary transactions led by GPs. To register for the webinar, click here.

Upcoming Webinar to Explore Best Practices for Alternative Data Use

Please join our sister product – the Hedge Fund Law Report – on Wednesday, January 15, 2020, at 11:00 a.m. EST for a complimentary webinar discussing issues relating to the use of alternative data by private fund managers. To register for the webinar, click here.

The PELR Will Resume Regular Publication in January

Please note that the Private Equity Law Report will not publish during these holiday weeks and will resume its normal weekly publication schedule during the week starting January 6, 2020.

Upcoming Fireside Chat With SEC Commissioner Hester M. Peirce 

Please join our sister product – the Hedge Fund Law Report – on Thursday, October 3, 2019, at 1:00 p.m. EDT for a complimentary webinar during which SEC Commissioner Hester M. Peirce will discuss topics of interest to private fund managers and answer attendees’ questions. To register for the webinar, click here.

Upcoming Webinar to Explore Effective Tabletop Exercises

Please join our sister products – the Hedge Fund Law Report and the Cybersecurity Law Report – on Tuesday, July 30, 2019, at 1:00 p.m. ET for a complimentary webinar discussing the strategies and tactics fund managers can employ to conduct an effective tabletop exercise. GCs and CCOs are encouraged to invite their CISOs and CTOs to join as well. To register for the webinar, click here.

PELR Webinar to Examine Issues and Trends in Impact Investing

Please join the Private Equity Law Report on Wednesday, June 12, 2019, at 2:00 p.m. EDT, for a complimentary webinar exploring impact investing. To register for the webinar, click here.

Webinar to Explore Best Practices for AML Compliance

Please join our sister product, the Hedge Fund Law Report, on Thursday, May 30, 2019, at 11:00 a.m. EDT, for a complimentary webinar discussing the key components of a robust anti-money laundering program. To register for the webinar, click here.

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