HM Treasury gave a boost to UK private equity and hedge funds by proposing that UK managers will not have to comply with the new rules until 22 July, 2014. This means existing firms will have full use of a one-year transitional period provided by the Directive, which actually takes effect on 22 July this year.
In a sign that the UK Treasury is giving the fund management industry a more relaxed deadline than the European Commission intended, Gareth Murphy, a senior Irish regulator and current chair of the Investment Management Committee of the European Securities and Markets Authority (ESMA), refused to confirm whether Ireland would allow its fund management industry the same year’s delay.
Bovill [the financial services regulatory consultancy] points out that the Treasury has confirmed that it will not be forcing small private equity funds below a threshold size (having managed assets of €100 million or €500 million if the fund is unleveraged and has no redemption rights for the first five years) to comply with onerous new rules set out for private equity fund managers in the Directive. Bovill explains that private equity funds above the threshold size will have to comply with strict rules when they acquire larger non-listed companies or issuers. These include strict limits on the ability of private equity fund managers to undertake what the Directive emotively describes as “asset stripping” of acquired companies.
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