Asset Management

Asset Management update - May 2016

ESMA opinion on key principles for a European framework on loan origination funds

In anticipation of a pending consultation by the European Commission on loan origination funds, which is due to be issued in the second quarter of 2016, the European Securities and Markets Authority (ESMA) has published an opinion setting out its view on the necessary elements for a common European framework for loan origination by investment funds. The consultation forms part of the Commission’s Action Plan on Capital Markets Union.

ESMA indicates that loan origination by funds is partly or fully allowed in the majority of Member States and ESMA has included an annex showing the different regimes across the EU. ESMA encourages the Commission to look at existing national approaches and regimes in devising a common EU framework, which may be provided for under a legislative proposal or by way of an ESMA instrument supplementing the AIFMD.

The key areas which ESMA draws attention to in its opinion are:

  • authorisation requirements, both for loan originating funds and their managers;
  • types of loan-originating AIFs;
  • types of investors;
  • organisational requirements for AIFMs managing loan-originating AIFs;
  • general requirements for loan-originating AIFs: leverage, liquidity, stress testing, reporting;
  • diversification, eligible investments and eligible debtors; and
  • systemic risk.

Find out more.

 

ESMA Discussion Paper on UCITS share classes

On 6 April 2016, ESMA published a new discussion paper on the use of share classes within UCITS as a follow-up to its earlier discussion paper issued at the end of 2014. The purpose of the discussion paper is to seek stakeholders’ views on developing a framework for UCITS share classes throughout the EU.

The discussion paper centres on a set of high-level principles regarding share classes, which are further detailed, where necessary, by a set of operational principles. The consultation seeks detailed feedback on whether and how share classes can actually work under the principles outlined in the discussion paper. The deadline for response is 6 June 2016. Find out more

 

Get ready for IFRS 9: The impairment requirements

While IFRS 9’s mandatory effective date of 1 January 2018 may seem a long way off, companies really need to start evaluating the impact of the new Standard now. As well as compiling the information necessary to implement the Standard, companies will need to review loan covenants and other agreements that could be affected by the impact on reported results.

Our document ‘Get ready for IFRS 9: The impairment requirements’ is the second in a series of publications designed to get you ready for IFRS 9. In this issue, we bring you up to speed with the Standard’s new impairment requirements by looking at:

  • the scope of the new impairment requirements;
  • the general (or three-stage) impairment approach;
  • simplified model for trade receivables, contract assets and lease receivables;
  • purchased or originated credit-impaired financial assets;
  • presenting credit losses; and
  • disclosures.

Find out more

 

IRS releases updated Form W-8BEN-E and instructions

Separately, the Internal Revenue Service (IRS) on 16 April 2016, released updated final versions of Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) and Instructions for Form W-8BEN-E. Non-US entities use Form W-8BEN-E to make several certifications relevant to US withholding tax and information reporting, such as whether they are foreign persons, whether they are beneficial owners of income received, whether they are entitled to a reduced rate of withholding under an income tax treaty and their Foreign Account Tax Compliance Act (FATCA) status.

Withholding agents may continue to accept the prior version of Form W-8BEN-E (dated February 2014) for six months after the April 2016 revision date on the updated version, but may not accept the prior version once use of the updated version becomes mandatory at the end of October 2016. Find out more