Legal & Regulatory Bulletin – Issue No. 6, Summer 2012
We were delighted with the warm reception the EMPEA Legal and Regulatory Guidelines received on their recent release. The EMPEA Guidelines are a pioneering reference for policymakers and regulators wishing to understand the elements of legal and tax regimes most critical to the development of private equity in developed and developing economies.
Whether from a packed lunchtime session at May’s Global Private Equity Conference in Washington, a 250-strong audience for July’s EMPEA webcast, or private conversations with policy makers and regulators in Africa and Asia, we are seeing genuine industry interest in addressing the challenges that sub-optimal regulatory regimes pose for private equity investment in developing countries.
Too often regulatory issues are addressed at the (albeit commendable) initiative of a single investor or firm, or on the margins of a broader conversation regarding financial reform but without the benefit of an overarching framework. We believe that the EMPEA Guidelines will enable fund managers, investors, law firms and other advisors to engage with policymakers more effectively using a common framework. We also believe that they will provide governments with a tool to evaluate the attractiveness of legal and tax regimes from the perspectives of providers of long term, patient equity capital.
The EMPEA Guidelines demonstrate a firmly held belief that supportive legal and regulatory frameworks are critical to the development of sustainable private equity investment in developing economies. We believe that there is an addressable knowledge gap between governments, regulators and investors and moreover, that private equity capital is an important tool for development and a source of attractive financial returns. We are not advocating for any more or any less regulation. A measure of regulation is essential to preserve the interests of all stakeholders, investors included. The key though is to strike a balance between effective protections on the one hand, and overly restrictive regulatory approaches, which stymie investment flows on the other.
EMPEA and members of the EMPEA Legal and Regulatory Council are working to share the EMPEA Guidelines with governments, policy makers and regulators seeking benchmarks and resources to inform their regulatory approaches as they try to increase foreign direct investment inflows. We are also enlisting other key influencers— multilateral organisations and development finance institutions—to broaden awareness of these issues by referencing the EMPEA Guidelines in their discussions with governments and in advisory mandates.
Over the coming months we shall be working with our membership to develop tools and resources, such as market assessments, which will elevate these issues even further. We welcome your ideas, input and involvement in this effort.
On a personal note, many members of the EMPEA Legal and Regulatory Council will be attending the October EMPEA conference in London. If any EMPEA member is interested in engaging with us at the conference, particularly in relation to the use of the Guidelines in their country, I trust that they will not hesitate to do so.
Finally, I’m pleased to announce that this is the first issue of the EMPEA Legal and Regulatory Bulletin made available to public. In future, all issues will be available through the EMPEA website along with archived individual articles. We look forward to continuing to provide thoughtful commentary and original research on legal and regulatory developments impacting private equity investment in the emerging markets.
Mark Kenderdine Davies
General Counsel and Company Secretary, CDC Group plc
Chair, EMPEA Legal and Regulatory Council
in this issue
Alternative Investment Funds Regulation in India: A Changed Regulatory Landscape
Vineetha MG, Divaspati Singh and Aditya Jhaveri, AZB & Partners, Advocates & Solicitors