PREMIUM SPONSORS 30 March 2017 2 irishfunds.ie SPONSORS 3 - - PowerPoint PPT Presentation

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irishfunds.ie

30 March 2017

PREMIUM SPONSORS

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SPONSORS

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Brown Brothers Harriman, Irish Funds

Alan O’Sullivan

Welcome Address

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Ambassador of Ireland to Great Britain

H.E Daniel Mulhall

Keynote Address

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Moderator: Panellists:

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Investing in Real Assets

Panel Discussion

Michael Humphreys, Davy Isabella Pacheco, Blackrock Alexander Kalis, Milltrust International Vincent Coyne, William Fry

Panellists Moderator

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Moderator: Panellists:

irishfunds.ie

Irish Funds Updates

CP86 - Michael Barr, A&L Goodbody Themes and trends in middle office servicing - Fergus McNally, EY Investment Limited Partnership - Adam Donoghue, Maples and Calder Common Contractual Funds - Philip Murphy, KPMG Damian McAree, MUFG

Moderator Panellists

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A&L Goodbody

Michael Barr

CP 86 Update

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CP 86 AND WHAT IT MEANS FOR YOU

• Background
• Overview of new requirements
• Timetable for implementation

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BACKGROUND TO CP86

• Has been in germination for a couple of years
• Keeping up with and front running good corporate governance requirements
• Addressing the issue of substance
• Who does it apply to?

– Irish UCITS Mancos, UCITS, SMICs, AIFMs and internally managed AIFs (with limited impact on externally managed fund structures) – Non-Irish UCITS Mancos and AIFMs passporting into Ireland are not affected

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OVERVIEW OF THE NEW RULES

• Streamlined managerial functions
• Organisational effectiveness role
• Supervision/location of directors and designated persons
• Rationale for board composition
• Retrievability of records

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TRANSITIONAL ARRANGEMENTS

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Rules and Guidance Fund ManCo Authorised before 1/11/2015 Fund ManCo Authorised between 1/11/2015 and 30/06 2017 (inclusive) Fund ManCo Authorised after 30/06/2017 6 Managerial Functions 1/07/18 Applicable from date of authorisation Performanceof the organisation effectiveness role 1/07/18 Applicable from date of authorisation Effective supervision requirement/ locationrule 1/07/18 1/07/18 TheCBIwill onlyauthorise entities that are

• rganisedinaway that complies with these

provisions. Retrievability of records Guidance: Part I Delegate Oversight 4/11/15 Applicable from date of authorisation Guidance: Part IIOrganisational Effectiveness Applicablefromthe datethat aFundManCohas appointed a persontotheOrganisational Effectivenessrole, or1/07/18 at the latest. Guidance: Part III Directors’ Time Commitments 4/11/15 Applicable from date of authorisation Guidance: Part IV Managerial Functions 1/07/18 1/07/18 Applicable fromdateof authorisation Guidance: Part VOperational Issues Retrievability of records: 1/07/18 Dedicated email address: 30/06/17 (CBI looking for details of address by end April) Retrievability of records: 1/07/18 Dedicated emailaddress: 30/06/17 (CBI looking for details of address by end April) Retrievability of records: Applicable fromdateof authorisation. Dedicated emailaddress: Applicable from dateof authorisation. Guidance: Part VIProcedural matters Thisguidance is a reflection of the existing Fund ManCoguidance. Therefore no transitional arrangements apply.

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EY

Fergus McNally

Themes and Trends in Middle Office Servicing

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Maples and Calder

Adam Donoghue

PE & Investment Limited Partnership

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THE RISE OF REGULATED PE/ REAL ASSET FUINDS

Growth of PE globally EU promotion of non-bank financing Rise of “hybrid” strategies Post-2008 “onshore drift” Increased familiarity with outsourcing

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IRELAND AS A LOCATION FOR PE FUNDS

• Many leading PE managers already active in Ireland
• Irish AIF regulatory framework already allows key PE fund mechanics:
• ICAV is so flexible that it can cater for most PE features

BUT…

• Vehicle of choice in PE/ RE industry is limited partnership
• Ireland does have LP options, but outdated (1907 and 1994) and less flexible than other

leading domiciles Carried interest Multiple and longer initial closings Distribution waterfalls “Excuse and exclude” allocation of assets Capital commitments, drawdowns and partly paid shares Ability to assume management control

• ver an issuer

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PROPOSED LEGISLATIVE REFORM

• Government fully supportive: LP reform is a stated priority in its IFS 2020 strategy
• Investment Limited Partnership (Amendment) Bill is on 2017 legislative programme.
• Many proposals reflect equivalent recent amendments to UK’s 1907 LP Act
• Amendments expected to include:
• Streamlining of redemption procedures
• Conforming liability of service providers with other fund models
• Expanding scope of permitted “safe harbour” activities by LPs
• Ability to make non-material changes to LPA without investor consent
• Ensuring appropriate level of access to register and details of LPs
• Ability to create umbrella partnerships
• Expanding scope of eligible GPs and LPs

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KPMG

Philip Murphy

Common Contractual Funds

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Common Contractual Funds – an overview

• First established for UCITS funds in 2003
• Extended to non-UCITS in 2005

History

• Regulated asset pooling fund structure
• Designed to allow pension fund and other institutional investors avail of

advantages of collective investment, without withholding tax disadvantages

• f investing via a regulated fund vehicle

Purpose

• Unincorporated body established by an Irish management company
• Transparent from an Irish legal and tax perspective – each investor

treated as a tenant in common deemed to hold a proportionate share of the underlying assets in a co-ownership capacity

Legal & tax status

• Over 70 funds created since 2003
• Tax transparency confirmed in over 20 investment jurisdictions including

Australia, Canada, Germany and the US

Position to date

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Common Contractual Funds – overview of tax efficiencies

• Intention of a CCF is to ensure investors are subjected to the same tax treatment in a

collective investment vehicle, as if they held underlying assets directly

Dutch pension fund US Equity US Equity US equity

Distributions 0% WHT Irish corporate fund (ICAV) Dividends 30% WHT

Indirect investment via corporate fund – Irish fund subject to 30% US dividend withholding tax, which represents an ultimate cost and drag on return to the pension fund

Dutch pension fund US Equity US Equity US equity

Irish CCF

Indirect investment via an Irish CCF – 0% withholding tax rate applicable under the US- Netherlands Double Taxation Agreement applicable, given transparency of the CCF from investor and investment jurisdiction perspectives

Dividends 0% WHT

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Common Contractual Funds – other advantages

Risk diversification from collective investment Potential VAT savings More efficient governance for pension trustees Track record – in existence over 10 years Established infrastructure in Ireland – intellectual and IT

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Common Contractual Funds & Alternative Investments

• While CCFs were initially designed for pension funds, they may be used by any entity,
• ther than individuals, seeking to avail of a tax transparent structure.
• CCFs may in some case represent a suitable regulated collective vehicle for aggregating

interests of investors requiring a regulated transparent structure.

• In a post BEPS world, treaty access of corporate regulated funds may be more difficult to

manage in practice – CCFs may represent a suitable alternative in some instances!

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Coffee Break

Kindly sponsored by Intertrust

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Moderator: Panellists:

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Strengthening our partnership in a post Brexit world

Ireland

Denis Curran, IDA Manish Vekaria, Credit Suisse Lara Aherne, SSGA

Kieran Fox, Irish Funds

Moderator Panellists

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Moderator: Panellists:

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De-mystifying Brexit Solutions in Ireland

Panel Discussion

Ross Thomson, Fundrock Gayle Bowen, Walkers Pete Townsend, Norio Ventures

Moderator Panellists

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Structuring options: detail

SMIC Super ManCo w/ Delegates (‘v1’) Super ManCo w/ Add-on Authorisations (‘v2’) MiFID Firm Authorisation timeline 3-4 months 3-4 months 4-6 months 5-9 months Activities (PM = portfolio

management, RM = risk management)

Retain oversight of PM & RM but delegate day to day activities Retain oversight of PM & RM but delegate day to day activities Performs day-to-day PM & RM Full range of services Manage other fund umbrellas? No Yes Yes Yes Manage/advise Segregated Mandates? No No Yes, via add-on licenses without need for MiFID delegate Yes Substance requirements

• 2 Irish-resident

directors

• 2-3 Designated

Persons1

• 2-3 Irish-resident

directors1

• 2-3 Designated

Persons1

• 2-3 Irish-resident directors
• 2-3 Designated Persons1
• Chief Investment Officer /

Managing Director

• Head of Risk/Compliance

and Finance, internal audit.2

• Substantive presence

required in Ireland3

• Specific roles based

in Ireland2:

• Legal & compliance
• Financial control
• Risk Management

Delegation / Outsourcing CBI permits delegation

• f day-to-day PM and/or

RM activities CBI permits delegation of day-to- day PM and/or RM activities CBI permits delegation of day-to-day PM and/or RM activities Outsourcing allowed (including to other EEA states or 3rd countries) if in line with applicable law and best practice

1. Designated persons not all required to be Irish resident and can be directors or employees of the Investment Manager. For ‘low’ PRISM rated firms, half of the directors and at least 2 Designated Persons performing half of the managerial functions are required to be EEA-resident. For ‘medium’ PRISM rating firms, 3 directors or 2 directors plus 1 designated person should be Irish resident. 2. The need for specific roles may differ on a case-by-case basis. 3. ‘Substantive presence’ for MiFID: the firm’s board and management run the firm from Ireland and make decisions in Ireland with sufficient staff and resources to manage the risks.

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SMIC Super ManCo w/ Delegates (‘v1’) Super ManCo w/ Add-on Authorisations (‘v2’) MiFID Firm Capital Required €300,000 initial capital (which can be met using shareholder funds) One quarter of its total expenditure in its most recent annual accounts and €125,000 plus an additional amount of up to 0.02% of any AUM exceeding €250m whichever is greater, subject to a maximum amount of €10million One quarter of its total expenditure in its most recent annual accounts and €125,000 plus an additional amount of up to 0.02% of any AUM exceeding €250m whichever is greater, subject to a maximum amount of €10million Will be calculated in accordance with CRD IV / CRR requirements Pros

• Works well if no
• ther funds managed
• Less staff on the

ground

• Can manage multiple fund

umbrellas

• Can passport to other EEA

jurisdictions

• Less staff on the ground

than v2 or MiFID option

• Can perform full PM activities
• r delegate
• Can manage multiple fund

umbrellas & mandates

• Can passport to other EEA

jurisdictions

• Less staff on the ground than

MiFID option

• Wide range of

permissions/potential business lines available

• Can passport throughout

EEA without seeking additional authorisations Cons

• Cannot perform all

PM activities

• Cannot manage or

advise mandates

• Must delegate to

regulated investment manager

• Cannot perform all PM

activities

• Cannot manage mandates
• More staff on the ground than

SMIC or v1 option

• Add-on authorisations

possible, which may be subject to local review when passporting to other EEA jurisdictions

• More staff on the ground
• Subject to CRD IV / CRR

requirements

• MiFID 2 changes in Jan-

2018

Structuring options: pros & cons

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Networking Drinks

Kindly sponsored by Capita Asset Services