In the past three years, international regulatory focus on remuneration has gripped the globe. The heart of the debate which arose in the context of remuneration structures in investment banking and their contribution to global financial crisis has extended past this into remuneration across a broad range of industries. This past year has seen a number of developments which have intensified in both the UK and Europe as we draw close to the year end. We look back at the year and consider where regulation and industry guidelines have emerged in the context of pay structures and recent developments in the area of transparency and taxation. We also provide a comprehensive review of the hugely anticipated new remuneration code[1] the final version of which was published by the Financial Services Authority last Friday.
EU Regulation
EU AIFM Directive – An Update
The curtain is slowly closing on the era of (relatively) light regulation of Alternative Investment Funds in Europe. Key developments flowing from a meeting of European Finance Ministers on 19 October to discuss the ‘AIFM Directive’ include agreement on a slightly less onerous regime for depositaries and confirmation that there will eventually be a ‘passport’ regime allowing marketing of non-EU Funds on a pan-European basis. Although progress has been made, we are nonetheless concerned that the overall effect of the Directive will be to render meaningless over time the distinction between alternative funds marketed to professional investors and the (higher cost) retail funds established under the UCITS regime.
French Banking and Financial Regulation Bill: Summary of Main Provisions
On October 11, 2010, the French Parliament adopted the French Banking and Financial Regulation Statute (loi de regulation bancaire et financière).
The 100 page long Statute contains provisions significantly amending existing laws and regulations regarding, inter alia, (i) the activities and liabilities of credit rating agencies, (ii) short selling and naked short sales, (iii) temporary holding of shares before shareholders’ meetings, and (iv) mandatory takeovers.
Amendments to the EU Prospectus Directive: Summary of Key Changes
This Alert summarizes certain key changes to the EU Prospectus Directive (2003/71/EC) which were approved by the EU Parliament on June 17, 2010 (the "Amending Directive"). These changes are the result of several months of discussions among the European Commission, the European Parliament and the European Council and various market participants. The Amending Directive will come into force 20 days from publication in the Official Journal, which is expected to occur in September or October of 2010. EU Member States are required to implement the Amending Directive into national law within 18 months following its entry into force (March or April 2012). Accordingly, issuers will have some time to consider the proposed changes for debt and equity offerings in the EU. However, issuers of wholesale debt securities with minimum denominations of EUR 50,000 (or equivalent) that are listed on an EU-regulated market should note that the Amending Directive increases the minimum denominations to EUR 100,000 both for purposes of the Prospectus Directive and the Transparency Directive (2004/109/EC). As a result, issuers wishing to continue to benefit from the exemption from periodic reporting for issuers of wholesale debt securities under the Transparency Directive will need to ensure that they issue in denominations of EUR 100,000 if issuing after the date of entry into force of the Amending Directive.
European Parliament and Council Back New Alternative Investment Fund Rules
The continuing saga of the Alternative Investment Fund Managers Directive (the Directive) of the European Union is causing heartburn throughout the world’s financial capitals.
Despite strong rhetoric from the Conservative Party whilst in opposition, the UK’s newly elected Conservative-Liberal coalition government quietly agreed to the next phase of the implementation of the Directive, perhaps aware that it could not assemble enough votes to block adoption of positions on the Directive using the Qualified Majority Vote system.