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Funds
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level of regulation and compliance. Following the transposition date, the reality was that many managers continued to domicile their funds in the Channel Islands and the Caribbean and neither was the momentum broken by investors only seeking to invest in AIFMD compliant funds. Investments into non-AIFMD compliant funds continued and, in many ways, the status quo was maintained. AIFMD applies to:
l EU fund managers that manage a fund (EU or non-EU);
l Non-EU fund managers that manage an EU fund; or l Non-EU fund managers that market their fund (EU or non-EU) in the EU.
As we all now know, notwithstanding the results of the referendum in Gibraltar (95.9% remain), Brexit = Gibexit.
Post Brexit it is likely that a Gibraltar fund will never fall within the scope of AIFMD unless it purposely structures itself to access the EU market (e.g. by appointing an EU fund manager or marketing itself in the EU). This puts Gibraltar’s fund products back on a level playing field with the likes of the Channel Islands and the Caribbean but with the added
benefit of a well-regulated EIF regime, a very competitive private fund product, a professional services sector that understands the industry and an appealing tax regime which stems from domestic law and will remain unchanged by Brexit. The Gibraltar fund proposition suddenly becomes very strong and far more convenient from a practical and travel perspective for those based on the European continent.
As they currently do now, post Brexit, EIFs and private funds may wish to promote
in the EU using the national private placement regimes available for funds that are out of scope of AIFMD. Brexit does not change this.
Post Brexit, access to the UK from most jurisdictions is likely to be more cumbersome. On the other hand, from Gibraltar, the self- styled single market to be created between Gibraltar and the UK, puts the Gibraltar product at a huge advantage when compared
to any other jurisdiction if access to the UK is a must. Gibraltar could become the gateway to the UK market for funds offerings.
Although at the point of writing this article it seems unlikely, if we do retain some form of EU market access, the ground work to Gibraltar’s legislative framework has already been undertaken to ensure that EIFs and private funds can avail themselves of EU market access benefits if they so wish. The Gibraltar
Funds and Investments Association in conjunction with HM Government of Gibraltar has worked very hard to ensure that our legislation is fit for purpose. This would result in EIFs and private funds complying with AIFMD only if they so wish to take advantage of the benefits and this is what we commonly refer to as the “dual regime”.
Finally, in the retail funds space, the directives on undertakings for collective investments in transferrable securities (UCITS) has had a very different industry adoption and has become the benchmark for retail funds on a global scale. A small number of EU jurisdictions have become the “go-to” for the domiciliation of UCITS. There is a very large number of UCITS domiciled in those jurisdictions which are in-turn UK facing and thereby raise investment in the UK. If we assume a hard-Brexit, it will no longer be possible for those UCITS to market themselves in the UK. On the other hand, a Gibraltar UCITS post-Brexit will have UK access under the Gib-UK self-styled single market and this, if promoted effectively, represents a huge opportunity for Gibraltar.
Gibraltar could become a unique proposition for both the alternatives and retail fund markets.
‘As we all now know, notwithstanding the results of the referendum in Gibraltar (95.9% remain), Brexit = Gibexit
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