Legal & Regulatory Bulletin – Issue No. 15, Fall 2015

This issue of the Legal Bulletin reflects the changing nature of the legal and regulatory environments in which emerging market private capital investors raise capital, operate and invest. Our contributors explore themes discussed at the EMPEA Legal and Regulatory Council’s May meeting, provide guidance to fund managers on assorted topics and address issues which will impact our industry in future.

In this Bulletin we focus on:

  • CDC Group plc’s recently updated, web-enabled environmental, social and governance (ESG) management system toolkit for private equity fund managers. This toolkit is gradually becoming an industry standard for the implementation of ESG management systems at emerging market private equity funds—find out why: CDC Group plc’s Dr. Samantha Lacey and Edgar Buckley review the toolkit and its practical applications. This article will be of particular interest to fund managers raising capital from development/international finance institutions and their counsel;
  • Hong Kong’s recently expanded offshore funds tax exemption, which benefits non-resident private equity funds: Proskauer Rose’s Jeremy Leifer reviews significant taxation changes, which evidence Hong Kong’s intent to develop its private equity funds industry and take advantage of the jurisdiction’s growing network of double taxation treaties;
  • Increased private equity investment in Africa despite the perception that many African jurisdictions are “difficult”. How, when and why should one engage experienced counsel to provide investor protections: Norton Rose Fulbright’s Gabriel Meyer and Simon Thompson share their thoughts on the availability and timing of investor protections; and
  • European Securities and Markets Authority (ESMA) advice to the European Commission, Parliament and Council that the Alternative Investment Fund Managers Directive (AIFMD) marketing passport could be extended to some, but not all, non-EU managers and funds marketing to professional investors in the EU as non-EU countries are not treated as a single block-what are the implications? Clifford Chance’s Owen Lysak examines the recommendations, implications, next steps and practical impact on fund managers seeking to market funds in the EU.

We are committed to exploring the ways that our members can use EMPEA’s resources, including its advocacy and research capabilities, its publications and the Legal and Regulatory Council, to enhance their businesses. We welcome suggestions for topics to be explored in future issues of the Bulletin. We have a wide panel of potential contributors and wish to put them to work!

In the next issue, we plan to focus on the US regulator’s evolving approach to private equity fund managers, including its guidance on expected behaviors. We shall consider the impact of current regulatory signaling on fund structuring, expense/co-investment allocation and conflict of interest management.

EMPEA’s Regulatory Affairs unit works closely with our Legal & Regulatory Council, Board and members to develop and oversee efforts to support optimal legal, regulatory and tax practices and policies in emerging markets that facilitate efficient private equity investment and foster private capital’s role as a contributor to economic growth, job creation, infrastructure development and retirement security.

Finally, I am delighted to share with readers the success of the inaugural EMPEA/International Law Institute course for regulators, government policy officials and pension authorities from emerging markets: Private Equity, Venture Capital and Infrastructure Funds in Emerging Markets: Practical Solutions for Building an Effective Private Equity Sector and Policy Environment, which attracted officials from countries as disparate as Angola, Ghana, India and Laos. The course focused on the major building blocks to support an effective private investment sector and examined issues relating to the development and regulation of private capital in developing economies. EMPEA is currently planning future courses on the same theme as part of its broader regulator education agenda.

Enjoy the Bulletin—we hope that it piques your interest. Best wishes as the autumn unfolds, Mark Kenderdine-Davies, General Counsel, CDC Group plc Chair, EMPEA, Legal & Regulatory Council