HM Treasury has published draft versions of the Venture Capital Funds (Amendment) (EU Exit) Regulations 2018 (for the Regulation on European Venture Capital Funds (EuVECA)) and the Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2018 (for the Regulation on European Social Entrepreneurship funds (EuSEF)). The draft SIs are accompanied by an explanatory memorandum which also covers the Regulation on European Long-term Investment Funds (ELTIFs), indicating that the Long-term Investment Funds (Amendment) (EU Exit) Regulations 2018 will be published in due course.
When finalised, the three SIs will:
- enable UK funds managers to register or be authorised with the FCA in order to market EuVECAs, EuSEFs and ELTIFs under new labels:
- Registered Venture Capital Funds (RVECA);
- Social Entrepreneurship Funds (SEF); and
- Long-term Investment Fund (LTIF).
Existing UK managers of EuVECAs, EuSEFs and ELTIFs that are already registered with, or authorised by, the FCA will be automatically transferred to this new UK regime;
- retain the existing investment rules for EuVECAs, EuSEFs and ELTIFs domiciled in the UK. This includes retaining the distinction between investment in EEA assets and non-EEA assets;
- remove the unilateral obligation on UK supervisors to share information or cooperate with EU authorities;
- transfer functions held by the EU Commission to HM Treasury; and
- transfer functions held by the European Securities and Markets Authority (ESMA) to the FCA.
The explanatory memorandum also refers to the temporary permissions regime (TPR) in the Alternative Investment Fund Management (Amendment) (EU Exit) Regulations 2018 (AIFMD Brexit SI). The AIFMD Brexit SI sets out the design and structure of the TPR for all EEA Alternative Investment Funds (AIFs), including EuVECAs, EuSEFs and ELTIFs. It enables EEA funds that have notified their intention to market in the UK via a passport before exit day to continue to access the UK market for a limited period after exit day.
The FCA will update its Handbook and relevant Binding Technical Standards (BTS) to reflect the changes introduced through the SIs and intends to consult on these changes in autumn 2018. HM Treasury plans to lay the instruments before Parliament prior to 29 March 2019.