Legal & Regulatory Bulletin – Issue No. 17, Spring 2016

In this Bulletin we address a number of commercial, governance, legal and regulatory issues, which we believe are both timely and of broad interest to the emerging market private equity, venture capital, and infrastructure investment community.
We are certain that some of the topics covered will be discussed—vociferously perhaps—at the IFC’s 18th Annual Global Private Equity Conference (GPEC) in association with EMPEA on 10 and 11 May 2016 in Washington DC. If you are attending, do share your views with us.
In this Bulletin we focus on:

Potential conflicts as private equity fund investment increasingly serves as a deal sourcing mechanism for investors with direct investment programs of their own: “Front-running in Private Equity—Conflicts of Interest among Fund Investors” examines the conflicts, which co-investment rights, fund manager seeding/secondment arrangements, investor investment committee representation and investor information access rights can present.

Conduct Risk and its many meanings: “Deciphering Conduct Risk” provides a General Counsel’s perspective of the challenges inherent when one is seeking to define conduct risk and the role played by a firm’s culture to assure impactful ethical behavior, timely compliance, and adequate risk mitigation.

Secondary transactions and conflict in the regeneration of zombie funds: “The Evolution of Secondary Transactions and the Revivification of Zombie Funds” explores fund restructuring challenges, conflicts and complexity noting that the volume of emerging market private equity fund restructuring and secondaries is sure to expand as the asset class matures.

An AIFMD update on the EC’s challenge to ESMA to “assess non-EU jurisdictions” before the extension of the passport to third country fund managers: “Extending the AIFMD Marketing Passport—the Assessment of Non-EU Jurisdictions” summarises new hurdles and the timing implications of the “assessment process” and what will actually be “assessed” as emerging market fund managers reflect on access to the European Union.

The OECD’s Common Reporting Standard, effective 1 January 2016, in “early adopter” jurisdictions and the push for the global exchange of investor and financial information: “Global Information Exchange for Investment Funds: the Common Reporting Standard Enters into Effect” highlights the impact of the common reporting standard on investment funds and fund sponsors making cross-border investments or interacting with non-U.S. banks and other financial intermediaries.