The MoFo European Private Funds Group knows you are busy so we don’t waste your time. Below are the tracks we are listening to right now – and why they matter:

If “B” Falls Flat

Following Brexit and any agreed upon transition period, the Alternative Investment Fund Managers Directive (“AIFMD”), European Venture Capital Funds Regulation (“EuVECA”) and the European Social Entrepreneurship Funds Regulation (“EuSEF”) will not necessarily apply to UK fund managers. In such a scenario, while UK Alternative Investment Fund Managers (“AIFMs”) would lose the benefits of the AIFMD marketing passport, they would also no longer be subject to AIFMD requirements relating to, for instance, valuation or disclosure. Similarly, UK-based EuVECA and EuSEF managers will need to pay sharp attention to applicable transitional rules. To facilitate marketing, several arrangements may be explored by the UK, for example cooperation agreements with EU states or “third country (marketing) passport” status granted to the UK by the EU. In any case, there appears to be some direction in the fog. Earlier this season, draft post-Brexit legislation was published relating to AIFMD, EuVECA (known as “RVECA”) and EuSEF (known as “SEF”), which add some further colour to the rules which might continue to apply in the UK following Brexit.

Tune in to the British Private Equity and Venture Capital Association’s (BVCA) summary of the key issues post-transition, as well as draft post-Brexit (1) AIFM regulations here and explanatory memorandum here (2) RVECA regulations hereand the explanatory memorandum here and (3) SEF regulations here, along with the explanatory memorandum here.

Accent on the Individuals

From 9 December 2019, virtually all authorised firms (small or large) under the Financial Services and Markets Act 2000 (“FSMA”), regulated solely by the Financial Conduct Authority (“FCA”) will be subject to the new Senior Managers and Certification Regime (SM&CR). The aim of the new regime is to place a greater focus on individuals within firms and ensure that there is clarity of responsibility within financial services firms. The new regime has triplet tiers of application: Baseline Requirements that will apply to the majority of firms in the new core tier of firms; with a Limited and Enhanced regime applicable to firms which may respectively be exempt from certain requirements or may need to be subject to more stringent regulations. Related to this, the FCA will also implement a Financial Services Register, so that the public will know the score on key individuals working in financial services.

The FCA has published helpful guidance on the extended regime. Tune in also to the FCA’s overview video, the FCA consultation on the FS Register and the BVCA response.

ECI Does It

We and our U.S. colleagues are keeping our ears tuned to developments relating to the U.S. Internal Revenue Code, section 1446(f). This relates to withholding rules for dispositions of interests in non-publicly traded partnerships that generate gain which is treated as effectively connected with the conduct of a trade or business in the U.S. and how their composition can affect transfers and secondaries in Europe.

Tune in to The Internal Revenue Service notice here.

Bonus Track

The European Supervisory Authorities and the BVCA have sent their comments to the European Commission and FCA (respectively) on the new Packaged Retail and Insurance-Based Investment Products (“PRIIPs”) regulations, as touched on in our previous playlist.

This season’s Funds anthem is:

It's The Most Wonderful Time of Year - Andy Williams