Europe – Page 5 – Global Investment Law Watch

Europe: Central Bank’s Dear CEO Letter Highlights Actions to be Addressed by FMCs and AIFMs Without Delay

Apr 28 2023

On 24 March, the Central Bank of Ireland issued a “Dear Chair” letter following its review in 2021 of the costs and fees charged to UCITS as part of the ESMA Common Supervisory Action (the CSA).

The letter, which is addressed to Irish UCITS fund management companies (FMCs), sets out the Central Bank’s main findings from the 2021 review and its expectations on actions to be taken by FMCs to address deficiencies identified. Despite the focus being on UCITS FMCs, the Central Bank specifically emphasises that it will expect its findings and actions to be considered also by Irish AIFMs with reference to AIFs under management.

Europe: Proposed German Legislation Will Support Investments in Renewable Energy Facilities

Apr 14 2023

By Hilger von Livonius

On 12 April 2023, the German Ministry of Justice (Bundesministerium der Justiz) published a legislative proposal which would broaden the eligible assets for German open-ended real estate funds to include certain renewable energy assets. The proposal mentions both facilities for the generation, transport and storage of electricity, gas or heat from renewable energy sources, and charging stations for electric vehicles and bikes. The proposed rules would, for the first time, allow investment in facilities which are on open land and not directly connected with a building held by the fund. The new rules may also have an impact on non-German real estate funds available to certain German investors. For example, German pension schemes may require that non-German real estate funds share certain features with similar German funds.

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.

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.

Europe: ELTIF 2.0 Has Been Published

Mar 21 2023

By Philipp Riedl

On 15 March 2023, amendments to the EU Regulation on the European Long-Term Investment Fund (ELTIF) were published in the Official Journal of the European Union. They will apply from 10 January 2024.

Europe: Gains From Crypto Trading Are Taxable, German Court Decides

Mar 06 2023

By Hilger von Livonius

In a recent decision of 14 February 2023, the Federal Fiscal Court (Bundesfinanzhof, BFH), the highest German tax court, has ruled that privately held cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Monero (XMR) are – notwithstanding the fact that there are no physical goods in which a traditional form of legal ownership can be established – taxable assets for German income tax purposes. As a consequence, any gains from their acquisition (against fiat currency or otherwise) and sale (or exchange) within a one-year period will be taxable (at the owner’s personal tax rate); if, however, the relevant cryptocurrency has been held for more than one year, any gains will be tax exempt. For these purposes, the holder of the “private key” will be considered as legal owner of the cryptocurrency. The tax treatment of a realization of an increase in value of cryptocurrencies is therefore, in Germany, substantially the same as for fiat currency.

Europe: Is ELTIF 2.0 a More Viable Structure for Long-Term Investment in the EU?

Mar 03 2023

By Philipp Riedl

Version 1 of the European Long-Term Investment Fund (ELTIF) has not been a huge success story with only a few relatively small funds launched to date. However the development of a well-supported fund structure for retail investors to invest in illiquid long-term assets remains a key priority for EU legislators.

Europe: Important Issues Still Open for Debate in EU’s AIFMD and UCITS Reviews

Feb 28 2023

By Giovanni Campi

On 24 January 2023, the ECON Committee of the EU Parliament adopted its report on proposed amendments to the EU’s main fund rules, AIFMD and the UCITS Directive, ahead of trilogue negotiations with the EU Council and Commission set to begin in March. When agreed, the revised Directives are expected to come into force in 2025 in light of the 24 months transposition period. Notable proposals include:

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