Global Investment Law Watch – Page 20 – Exploring the legal and regulatory issues affecting the worldwide investment community.

People’s Republic of China: Overseas Listing via VIE Structure Becoming Subject to CSRC Filings

Apr 12 2023

As one of a series of new regulations reforming the securities offering regime by China Securities Regulatory Commission (CSRC) released in February 2023, Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the Measures) came into effect on 31 March 2023. The Measures require companies incorporated within Mainland China seeking offerings and listings of securities in overseas markets (Overseas Offering and Listing) to make filings with CSRC. The Measures are applicable to both direct listings and indirect listings (e.g., red chips, via Variable Interest Entity (VIE) structure, or via Special Purpose Acquisition Company). Hence, VIE is no longer a grey-area scheme for Chinese companies to be listed in overseas markets.

Europe: UK Government Proposes To Regulate ESG Ratings Providers

Apr 11 2023

By Philip Morgan and Zainab Kuku

Responding to encouragement from both the FCA and IOSCO, HM Treasury has proposed regulating ESG ratings providers in a consultation paper dated 30 March 2023. It primarily aims to improve the transparency of the methodologies and governance objectives adopted by ESG ratings providers, as well as to mitigate risks arising from conflicts of interest where the rating provider also provides other services to the rated entity.

Europe: Significant Changes Proposed to Market Abuse Regulation in the UK

Apr 11 2023

By Michael Ruck and Aurelija Grubytė

HM Treasury and the FCA have completed their joint review of the criminal market abuse regime, and published a joint statement on 24 March 2023. Their observations are relevant to both the criminal and civil market abuse regimes in the UK. Most notably:

Europe: Here’s Your Chance to Improve the UK’s Senior Managers and Certification Regime

Apr 04 2023

By Samuel Gordon

The FCA, PRA and UK Government are looking for feedback by 1 June 2023 to guide potential changes to the Senior Managers and Certification Regime (SMCR), the UK’s regime designed to improve individual accountability and conduct standards of (mostly) senior personnel in financial services firms. To this end, the FCA and PRA jointly published a discussion paper on 30 March and HM Treasury published a call for evidence.

People’s Republic of China: CSRC Intends to Expand Business Scope for Futures Companies

Apr 04 2023

By Chloe Duan and Grace Ye

On 24 March 2023, China Securities Regulatory Commission (CSRC) released the draft amended Regulatory Measures for Futures Companies (Amended Regulatory Measures) for consultation, aiming to, amongst others, expand the scope of business activities that future companies are allowed to conduct directly.

Europe: UK’s FCA Issues Stern Warning to ESG Benchmark Administrators for Lack of Rigour

Mar 31 2023

By Zainab Kuku

The FCA did not hold back in its most recent comments to ESG benchmark administrators, in an indication of its increasingly adversarial approach to ‘greenwashing’. It described the quality of disclosures of ESG factors considered in benchmark methodologies as ‘poor’, and aimed clear warning shots at administrators who fail to comply with the FCA’s feedback.

United States: Staff Provides Legend Alternative for Non-Transparent ETFs Short on Ad Space

Mar 30 2023

By Keri E. Riemer

Non-transparent exchange-traded funds (ETFs) that are struggling to fit in digital advertisements the specific risk legend set forth in their exemptive orders (Exemptive Order Risk Legends) may be in luck. On 29 March 2023, the staff (Staff) of the Division of Investment Management of the U.S. Securities and Exchange Commission (SEC) issued a statement (Statement) requesting that non-transparent ETFs use in such ads either (i) the text and formatting of their Exemptive Order Risk Legends; or (ii) the following text and formatting (with bold as shown and without bullets) (the Staff Risk Legend):

United States: Goodbye M&A Brokers No Action Letter, Hello Federal Exemption

Mar 30 2023

By Eden L. Rohrer and Jessica D. Cohn

On 29 March 2023, the federal exemption from securities broker registration for qualifying mergers and acquisitions brokers (M&A brokers) became effective. That exemption was signed into law on 29 December 2022 as a policy rider to the Consolidated Appropriations Act of 2023 (H.R. 2617) (the M&A Brokers Exemption) and was described in our previous blog post and client alert.

The M&A Brokers Exemption can now be found in subsection (13) “Registration Exemption for Merger and Acquisition Brokers” of Section 15(b) of the Securities Exchange Act of 1934.

APAC: Managed Accounts and Conflicts—Part 2: Managed Accounts vs. Commingled Funds

Mar 29 2023

By Scott Peterman

In our last post, we suggested that managed accounts of whatever structure have become more and more popular among institutional investors. Our list included advantages of managed accounts often seen in print or discussed among panel participants in seminars. We did not, however, itemize all of the incentives motivating many institutional investors to prefer managed accounts over commingled funds. We’ll do so now to introduce and illuminate the reasons why and how conflicts of interest are created when fund managers manage separate client accounts alongside commingled funds. And, hopefully, give you some takeaways when managing your own investment management business.

Australia: Registered scheme and CCIV compliance: Obligation to give notice of members’ rights

Mar 28 2023

By Matthew Watts and Rebecca Mangos

As the end of the 2023 financial year fast approaches, responsible entities and CCIV corporate directors should be reminded of their obligation to notify members by 30 June 2023 of their rights to elect and request to receive certain documents in physical or electronic form.