Worldwide: Global Registration Services - Market Update, Q3 2015

Last Updated: 25 November 2015
Article by Emma Conaty and Dhivisha Jeena


ESMA Q&A on Application of AIFMD

On 21 July 2015 and 1 October 2015, ESMA published Q&A documents on the application of AIFMD and its implementing measures. They clarify the content of certain AIFMD rules and subscribe common approaches and practices to be undertaken by supervisory authorities. In particular, the 1 October 2015 Q&A clarifies that when an AIF depositary sub-delegates custody of the AIF's assets to an EU or third country central securities depositary ("CSD"), that CSD must comply with the delegation provisions under Article 21(11) of AIFMD.

Please click here and here for copies of the respective Q&As.

ESMA MoUs with EU Authorities

On 1 October 2015, ESMA published a table of Memorandum of Understandings signed with EU authorities (updated as at 16 September 2015).

Please click here for a copy of the updated table.

ESMA: Application of AIFMD to non-EU AIFMs and non-EU AIFs and Opinion on functioning of the passport for EU AIFMs and NPPRs

On 30 July 2015, ESMA published advice prescribed under Article 67(1) of AIFMD (the "Advice") relating to the extension of the AIFMD passport to AIFMs and AIFs domiciled in Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the US. For each jurisdiction, the Advice assesses factors including: the level of investor protection; the identification of existing obstacles to competition for EU AIFMs wishing to market funds; whether an extension of the passport would cause EU market disruption; and whether it adequately monitored systemic risk.

The Advice concludes that there are no obstacles to the application of the AIFMD passport to Guernsey and Jersey AIFMs and AIFs and that the remaining obstacles in Switzerland will effectively be removed by pending Swiss domestic legislation.

The Advice gives no conclusion on Hong Kong, Singapore and the US. In relation to Hong Kong and Singapore, ESMA states that it does not have sufficient detailed information in order to complete its assessment and provide positive advice. ESMA's main reason for not recommending the extension of the passport to the US is the difficulty that EU AIFMs face when marketing EU AIFs in the US compared to the relative ease with which US AIFs could be marketed in the EU with the passport. ESMA therefore advises that the passport extension to the US is delayed "until such time as conditions which might lead to a distortion of competition are addressed." ESMA intends to finalise its assessment on Hong Kong, Singapore and the US, and remaining non-EU Member States, in the coming months.

On 30 July 2015, ESMA also published an opinion required under Article 67(a) of AIFMD (the "Opinion") on the current functioning of the EU passport and NPPRs. On areas for improvement, ESMA noted the divergent approaches with respect to marketing rules (including differing fee regimes and differing definitions of professional investors) and varying interpretations of what activities constitute "marketing" and "material changes" in EU Member States. Notwithstanding the above, ESMA opines that it is difficult to give a definitive assessment of the functioning of the AIFMD passport due to the delayed implementation and transposition of AIFMD in EU Member States. In relation to the NPPR, ESMA states that "there is insufficient evidence to indicate that the NPPRs have raised major issues in terms of the functioning and implementation of AIFMD." ESMA proposes undertaking a further opinion after a longer period of implementation.

The Advice and the Opinion have been sent to the European Parliament, Council and Commission (collectively, the "Trilogue"), for consideration on whether to extend the AIFMD passport to the Guernsey, Jersey and Switzerland. ESMA has advised the Trilogue to postpone the implementation of the AIFMD passport in Guernsey, Jersey and Switzerland until ESMA has delivered positive advice on more non-EU countries.

Please click here for a copy of the Advice and here for a copy of the Opinion.

Please also see the Maples and Calder Funds Update – Ireland, Q3 2015 for further information on the Advice and also the Breaking News section on page 4 below for recent news on ESMA's assessment of additional non-EU countries, including the Cayman Islands.

Implementation update


On 23 September 2015, the Finnish Ministry of Finance published Act 1214/2015, which amends the Law on Alternative Investment Fund Managers (164/2014). The Act requires auditors of AIFMs to be authorised public accountants, which is consistent with the Audit Act (1141/2015) and the Companies Act (624/2006). The Act also provides for auditors' liability for damages.

Please click here for a copy of the Act in Finnish. There is no English version available to date.

Ireland: AIFMD Q&As

On 15 July 2015, the Central Bank of Ireland ("Central Bank") published the 14th edition of its AIFMD Q&A. A new question (ID 1094) covers the regulatory requirements that apply to an Irish authorised AIF seeking to acquire Chinese shares through the Shanghai-Hong Kong Stock Connect structure, and particularly the depository's obligation to comply with AIFM regulations and conditions imposed by the Central Bank.

Please click here for a copy of the Q&A.

On 12 August 2015, the Central Bank published the 15th edition. A new question (ID 1096) on Feeder AIFs confirms that where a QIAIF raises capital from investors on a formally agreed commitment basis, reference to "assets" (net assets) in the definition of "feeder AIF" in Regulation 5 of the AIFM Regulations refers to committed capital, provided the QIAIF remains closed for redemptions during the capital commitment period.

Please click here for a copy of the Q&A.

On 5 October 2015, the Central Bank published the 16th edition. New questions ID 1097 (Directed Brokerage), ID 1098 (Board Composition) and ID 1099 (Non-material change) are included.

Please click here for a copy of the Q&A.


On 5 August 2015, the Luxembourg Minister of Finance submitted Bill no. 6845 to the Luxembourg parliament amending the Law of 12 July 2013 (transposing AIFMD). The Bill transposes UCITS V into the Luxembourg Law of 17 December 2010.

Please click here for a copy of the Bill in French. An English version is not available to date.

Luxembourg: FAQ on AIFMD Marketing Rules

On 10 August 2015, the CSSF published the 9th version of its FAQ on the Law of 12 July 2013 (transposing AIFMD).

The FAQ clarifies the scope of pre-marketing activities that an AIFM may conduct in Luxembourg without triggering the requirement to passport the AIF into Luxembourg.

The FAQ also sets out the definition of reverse solicitation in the Luxembourg context and the fact pattern that the AIFMD must demonstrate in order to rely on same. Please click here for a copy of the FAQ.

Please contact a member of the Maples GRS team for further information.

UK: AIFMD Annex IV Transparency Reporting Q&A

On 29 July 2015, the FCA published a Q&A on the submission of accurate, consistent and complete data for the purpose of AIFMD Annex IV transparency reporting.

Please click here for a copy of the Q&A.


European Commission Action Plan on CMU

On 30 September 2015, the European Commission released its Action Plan on Building a Capital Markets Union (the "Action Plan") (SWD (2015) 183/184 final). It considers how to deliver an effective UCITS passport that eliminates key barriers such as inconsistent marketing rules, regulatory fees, tax regimes and other administrative practices imposed by host countries. Now that a strong EU legal framework is in place, the Action Plan shifts the Commission's focus to the effective and consistent implementation and enforcement thereof. The Commission undertakes to work with Member States to identify and dismantle unjustified national barriers through a collaborative approach and release a report by the end of 2016.

The Action Plan considers industry responses to the Commission's green paper on Building a Capital Markets Union (COM/2015/063 final) (the "Green Paper"). ESMA's response in particular, released on 10 June 2015, sets out how ESMA's main objectives of enhancing investor protection and promoting stable and orderly financial markets contribute to the Capital Markets Union. In response to Question 17 of the green paper, i.e. "How can cross border retail participation in UCITS be increased," ESMA identifies possible operational barriers to setting up and marketing funds across the EU and to cross-border retail participation in UCITS. For each barrier ESMA proposes specific corrective actions.

Please click here for a copy of the Action Plan and here for a copy of ESMA's response to the green paper.

Germany: Draft German Investment Tax Act

On 21 July 2015, the German Federal Ministry of Finance issued a Draft of the German Investment Tax Act. It introduces considerable changes to the German tax system, particularly for domestic and foreign mutual funds. It effectively removes the principle of tax transparency and introduces a lump sum taxation as from 1 January 2018.

Please click here for a copy of it in German. There is no English version available to date.

Switzerland: FAQ on Swiss Representatives and Paying Agents for Foreign CIS distributed to QIs

On 25 August 2015, SFAMA released an FAQ on the implementation of the requirement (under Art.120 para. 4 of the Collective Investment Schemes Act of 1 March 2013 as amended ("CISA")) for foreign collective investment schemes distributed in Switzerland to qualified investors to appoint a representative and paying agent. The FAQ acknowledges that the applicable section of CISA was drafted for foreign collective investment schemes requiring approval for non-qualified investors, and that its application to collective investment schemes for qualified investors is often unclear.

The FAQ prescribes that the Swiss key data set out in the SFAMA "Guidelines on the Calculation and Disclosure of the TER of Collective Investment Schemes" (i.e. the calculation and disclosure of the Total Expense Ratio and the publication of performance data in financial reports) applies to collective investment schemes approved for distribution in Switzerland only. The key data is therefore not required to be included in financial reports for collective investment schemes exclusively distributed to qualified investors only.

The FAQ also prescribes applicable rules on: the point in time from which it is compulsory to appoint a representative and paying agent; whether pre-sales and pre-marketing activities trigger a duty to appoint a representative and paying agent; and the duties of a representative after the cessation of distribution to qualified investors.

Please click here for a copy of the FAQ.

Asia Pacific

India: Non-retrospective Application of Minimum Alternate Tax

On 1 September 2015, the Indian Finance Ministry announced that India's Minimum Alternate Tax ("MAT") does not apply retrospectively prior to 1 April 2015 to foreign institutional investors or foreign portfolio investors who do not have a "place of business" or "permanent establishment" in India. This announcement addresses uncertainty that arose following a provision in the Indian Budget 2015 which exempted foreign investors from MAT from 1 April 2015. This exemption raised questions on potential retrospective tax liabilities prior to 1 April 2015. The Indian Finance Ministry is to amend the Income Tax Act 1961 in order to clarify the position.

Please click here for a copy of the press release.

Singapore: Proposed Amendments

On 24 August 2015 and 18 September 2015 respectively, MAS issued consultation papers on proposed amendments to the Securities and Futures Act (Cap. 289) ("SFA"), the Financial Advisers Act (Cap. 110) ("FAA") and the Trust Companies Act (Cap. 336) ("TCA"). The amendments make it an offence under the above acts where a regulated financial institution ("Regulated FI") fails to take reasonable care to ensure the accuracy of information submitted to MAS. The penalty for the submission of material false information is set at S$50,000 under the SFA and S$25,000 under the FAA and TCA, while the proposed penalty for failure to exercise reasonable care in submission of information is set at S$25,000 under the SFA and S$12,500 under the FAA and TCA.

In addition, the amendments revise section 199 of the SFA which is currently concerned with the impact that the dissemination of materially false or misleading statements or information has on the market as opposed to the wrongful act of the dissemination itself. The amendments shift focus from the impact of the dissemination and require the following to be proven in order to establish a case under section 199:

  1. The statement or information disseminated must be materially false or misleading and must either likely induce others to subscribe for or trade in securities, or likely have the stated effects on the price of thesecurities with no requirement of a material price impact; and
  2. When making the statement or disseminating the information, the person does not care whether the statement or information is true or false, or the person knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.

Please click here and here for copies of the respective consultation papers.

Upcoming News

Hong Kong: On 9 October the SFC launched new authorisation periods for the inward marketing of foreign UCITS effective from 9 November 2015

AIFMD: On 13 October 2015 ESMA announced that it will begin to assess the following non-EU countries for the extension of the AIFMD passport: Australia, Canada, Japan, the Cayman Islands, the Isle of Man and Bermuda

Please click here for the Maples article on Cayman Islands' prospects for extension of the AIFMD passport.

Further details on this Breaking News section will be included in the Global Registration Services - Market Update, Q4. Should you have any questions in the interim, please do not hesitate to contact the Maples GRS team as per the contact details below.

How Maples can help

Maples Global Registration Services ("Maples GRS") supports UCITS1 and AIFMs in their multi-market distribution strategies by providing an integrated global network of experts coordinated by a dedicated central team supporting all legal and regulatory aspects governing the cross border marketing of investment funds on both a private placement and public offer basis.

Should you require any further information or assistance in this regard, please do not hesitate to contact a member of the Maples GRS team.

1 Domiciled in Ireland and Luxembourg

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Emma Conaty
Dhivisha Jeena
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