Fund News
Issue 110 - January 2014

Investment Fund Regulatory and Tax developments in selected jurisdictions


This month developments from:

European Union

ESMA updates UCITS Risk Measurement Q&A

On 19 December the European Securities and Markets Authority (“ESMA”) issued an update of its Questions and Answers (“Q&A”) on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS, to include a new question five on the calculation of counterparty risk for exchange-traded derivatives and centrally-cleared OTC transactions. Read more

ESMA consults on revision of Guidelines on ETFs and other UCITS issues

On 20 December ESMA issued a consultation to amend provisions of their Guidelines on ETFs and other UCITS issues on the diversification of collateral received by UCITS in the context of efficient portfolio management techniques and OTC transactions. The proposed revision comes from the fact that ESMA has been asked by stakeholders to reconsider its position given its adverse impact on UCITS collateral management policies, in particular Money Market Funds that place their money in reverse repos. The consultation closes on 31 January 2014 and is available at the following link:

Joint Committee Consultation Paper on draft guidelines for complaints-handling for the securities (ESMA) and banking (EBA) sectors

The European Securities and Markets Authority (“ESMA”) and the European Banking Authority (“EBA”) launched a consultation on draft guidelines for complaints handling addressed to authorities that would apply in relation to complaints about activities carried out by: UCITS Managers; AIFMs that provide investment services of individual portfolio management and non-core services; investment firms; payments institutions; and banks. Read more


FCA consults on extending electronic communication with unitholders

On 6 December the Financial Conduct Authority (“FCA”) issued its miscellaneous quarterly consultation paper (‘CP 13/18’) which, in section four, proposes amendments to the Collective Investment Schemes sourcebook (“COLL”) in relation to extending the ability for authorised fund managers (“AFMs”) and others to communicate with unitholders electronically, including the use of web-based communication. Read more

FCA publishes additional guidance on use of the terms ‘absolute return’; ‘total return’ and similar

On 9 December the Financial Conduct Authority’s (“FCA”) Collective Investments department issued supplement guidance regarding the implementation of COLL 4.2.5R (3)(ca) as to how it is seeing and expecting to see this new rule applied. This new rule was implemented in July 2013 and applies to funds that use terms such as ‘absolute return’, ‘total return’, or similar in the funds name or literature correlated to the intention, stated or implied, of delivering positive returns in all market conditions. Read more

Draft Finance Bill 2014 – measures relevant to the management of funds

On 10 December HM Treasury (“HMT”) published draft legislation which will be included in the Finance Bill 2014 and which are due to come into effect in 2014. There are several important measures including: the repeal of Schedule 19 SDRT; other stamp duty changes and proposals; and an extension of existing provisions to allow non-UK AIFs to be managed from the UK without the fund becoming UK tax resident. In addition a number of anti-avoidance measures will also be introduced, including: changes to the taxation of partnerships; new measures to prevent the abuse of the retained ‘bond fund’ rules; and measures to prevent the use by VCTs of converted share premium accounts to make tax-free payments to the VCT’s investors. While much of what was presented had already been announced, the Chancellor also made a number of new announcements in the Autumn Statement on 5th December, these are considered further below. Read more

AIC issues the Exposure Draft for the revision of the SORP for financial statements of ITCs and VCTs

On 20 December the Association of Investment Companies (“AIC”), the body responsible for the maintenance and development of the Statement or Recommended Practice for the financial statements of Investment Trust Companies (“ITCs”) and Venture Capital Trusts (“VCTs”) (“the SORP”), issued the exposure draft (“SORP (Draft)”) for revision of the SORP with a consultation period of three months to 19 March 2014. Read more


VAT exemption of risk management services

On 7 November 2013, the Luxembourg VAT authorities published a Circular (36kb) specifying the scope of VAT exemption applicable to the management of investment funds. It has been confirmed that services of risk management are part of fund management services as stated in Article 44, 1, d) of the Luxembourg VAT Law (VATL). Therefore, the risk management services provided by the management company should, in principle, be VAT exempt. This should apply equally in the case of management of alternative investment funds. Read more

Luxembourg tax treaty update

Luxembourg has further expanded its Asian tax treaty network: concluding a tax treaty with Laos which is expected to become effective very soon; and a new tax treaty with the Seychelles which entered into force on 1 January 2014.

Aberdeen e-Alerts

The Aberdeen E-Alert (tax newsletter focusing of withholding tax reclaims based on the Aberdeen case law) latest issues are available via the following web link:

Alert 2013-11 - Claiming interest on already paid WHT refunds in Finland

Alert 2013-12 - No Dutch withholding tax refund on dividends paid to Finnish investment fund


CBI Publishes 6th Edition of AIFMD Q&A and Forms on the Marketing of AIFs

On 13 December the Central Bank of Ireland (“CBI”) published a sixth edition of the AIFMD Q&A which includes three new questions. Read more

CBI amends UCITS Notice 10 for EMIR

The Central Bank of Ireland (“CBI”) has made an important change to UCITS Notice 10 regarding the valuation of OTC derivatives on the basis that EMIR requires counterparties to value outstanding non-centrally cleared OTC derivative contracts on a daily mark to market basis or, where market conditions determine otherwise, a ‘reliable and prudent marking to model’ may be used. Read more

New Corporate Fund Structure for Funds – ICAV

Legislation is expected in 2014 that will provide for a new corporate structure for Irish investment funds; the Irish Collective Asset-management Vehicle (“ICAV”). The ICAV (once available) can be used for both UCITS and Non-UCITS funds and will complement other structures available for funds such as the public limited company (“PLC”), the unit trust, the common contractual fund (“CCF”) and the investment limited partnership, with existing PLC structures having the option to convert to the new ICAV structure. Read more

ISE launches Pre-LEI codes

The Irish Stock Exchange (“ISE”) has launched Pre-Legal Entity Identifier (“Pre-LEI”) codes which uniquely identifies a legal entity that engages in financial transactions and will assist regulators in analysing financial transactions data from across different jurisdictions. Funds are among a range of entities which will require a Pre-LEI. This will ultimately convert to a permanent legal entity identifier (“LEI”) code. Details are available at

ISE listing conditions for closed ended funds

On 29 November 2013 the Irish Stock Exchange updated its listing conditions for securities issued by closed ended funds contained in Chapter 14.

CBI cooperation agreement with FINMA on the distribution of Irish funds in Switzerland

The Central Bank of Ireland has concluded a cooperation agreement with the Swiss regulator (“FINMA”) on the distribution of Irish funds to non-qualified investors (i.e. retail investors) in Switzerland from March 2014. FINMA’s statement on the cooperation agreement is available at the following link:

Key dates reminder

Read more


New requirement regarding fund distribution according to the Collective Investment Schemes Act (“CISA”) as from 1 January 2014

New duty to keep records according to CISA and key points of the new SBA Guidelines

As of 1 January 2014, licensees and third parties engaged in the distribution of units in collective investment schemes are obliged to record, in a written protocol, the client’s needs as well as the reasons behind each recommendation for buying units of collective investment schemes. The protocol must be handed out to the client. Read more


IOSCO issued its final report on Regulation of Retail Structured Products

On 20 December 2013 IOSCO published its final report on ‘Regulation of Retail Structured Products’, which provides a toolkit outlining regulatory options that securities regulators may find useful to regulate retail structured products. The toolkit has five sections with 15 regulatory tools that are organised along the value chain of the retail structured product market, from issuance to distribution to investment. Read more

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Print Fund News

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Jon Mills
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Senior Manager
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Stefano Borsi
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Risk and Compliance
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Funds Regulatory
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Andrew Clark
Senior Manager
Tel: 020 7311 1480

KPMG in Luxembourg Contact details

Ravi Beegun
Tel. +35222 5151 6248

Georges Bock
Tel. +35222 5151 5522

Vincent Heymans
Tel. +35222 5151 7917

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