Luxembourg Investment Vehicles

Performance fees 爲 Local restrictions on performance fees were recently implemented in several EU countries, setting the scene for new fund industry requirements. The goal of the regulators is to improve fee transparency and to achieve a standardized cost-reporting framework. In July 2019, ESMA launched a public consultation paper on performance fees draft guidelines under the UCITS Directive aiming to harmonize requirements across Europe, ensure a coherent level of retail investor protection and avoid regulatory arbitrage. The consultation also questions whether the scope of the guidelines' principles should be extended to AIFs distributed to retail investors. ESMA aims to issue the final guidelines in Q4 2019. AIFMD review AIFMD report As a "first-step" in the Directive review process, the European Commission (DG FISMA: Directorate-General for Financial Stability, Financial Services, and CMU) mandated KPMG in 2017 to provide a comprehensive study on how the Alternative Investment Fund Managers Directive (AIFMD) has worked in practice and to what extent its objectives have been met. The assessment includes a general overview regarding the functioning of specific AIFMD requirements, including marketing through the passport and national regimes, the impact of the depositary rules and the effect on: transparency and reporting requirements • private equity funds ⚫ venture capital funds ⚫the protection of non-listed companies. The final report, issued in January 2019, includes a number of key findings that give asset managers a taste of what might be in store for the second incarnation of this key legislation. Cross-border distribution Directive and Regulation in the OJEU On 12 July 2019, the EU Regulation and Directive on cross-border distribution of funds were published in the OJEU following the European Commission's legislative proposal issued in March 2018. These texts will amend and harmonize the distribution frameworks that apply to UCITS and AIFs. They cover the main barriers that were identified in CMU consultations since 2015, such as domestic marketing rules, regulatory fees and administrative and notification requirements. The Regulation enters into force on 1 August 2019, except for the new requirements for marketing communications which will apply from 2 August 2021. The Directive will have to be transposed into national law by July 2021 and shall apply from the same date. Luxembourg Investment Vehicles KPMG 11

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