Macfarlanes
27 Experts
4 Contributions by Macfarlanes
PRACTICE NOTES
This Practice Note looks at EU environmental, social and governance (ESG) (also termed sustainability) integration steps, which revise the delegated acts underpinning the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD), the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive 2009/65/EC and the recast Markets in Financial Instruments Directive 2014/65/EU (MiFID II), and considers their industry impact and the new concepts introduced.
What were the ESG integration measures?
In August 2021, a package of measures (the Delegated Acts) appeared in the Official Journal of the EU (see Application of the ESG measures below). These changes applied to UCITS management companies, alternative investment fund managers (AIFMs) and MiFID investment firms (together, managers).
For practical guidance for managers, see Practice Notes: EU Undertakings for Collective Investment in Transferable Securities (UCITS)—essentials, EU AIFMD—essentials and EU MiFID II and
EU Law
PRACTICE NOTES
EU dimension
The opening task in any EU merger control review is to determine if the deal falls under the scope of the EU Merger Regulation (EUMR). The EUMR bites only on concentrations that possess an ‘EU dimension’. A concentration encompasses most arrangements that involve the acquisition of control, and its reach is broader than traditional merger scenarios, notably taking in many, and often intricate, joint ventures, as well as other structures where control is obtained (see A ‘concentration’ with an EU dimension). Whether a deal has an ‘EU dimension’ turns solely on meeting specified turnover thresholds. These thresholds are purely jurisdictional and applied without regard to:
substantive competition concerns
the parties’ nationality
the country in which the deal occurs
the law governing the transaction
Accordingly, the EUMR may capture transactions with minimal, or even no, EU connection in practice. The transaction must exhibit an EU dimension to fall within
Competition
PRACTICE NOTES
Scope of this Practice Note
This Practice Note reviews the function of depositaries to undertakings for collective investment in transferable securities (UCITS) funds (ie open-ended collective investment schemes (CIS) that are UCITS) and the framework established by Directive 2009/65/EC (the UCITS Directive), as revised by Directive 2014/91/EU (UCITS V) and accompanying delegated regulations. It sets out a depositary’s obligations and standards, who is eligible to act as depositary, liability, and constraints on delegation.
EU legislative background
On 26 July 2012, the Commission consulted on UCITS VI, addressing a range of issues, including a depositary passport. There have been no further developments on UCITS VI, and it is unlikely that any legislative proposal will emerge. UCITS V was published in the Official Journal (OJ) on 28 August 2014 and came into force on 17 September 2014, with EU Member States required to transpose the rules into
EU Law
PRACTICE NOTES
This Practice Note reviews the function of depositaries of UCITS funds (ie open-ended collective investment schemes (CIS) that are undertakings for collective investment in transferable securities) and the framework in Directive 2009/65/EC (the UCITS Directive), as updated by Directive 2014/91/EU (UCITS V), along with the supplementing delegated regulations and UK implementing measures (such as the Financial Conduct Authority (FCA) Handbook), plus the retention measures introduced following the end of the Brexit transition period. It considers a depositary’s obligations and requirements, who may act as depositary, liability, and constraints on delegation...
EU legislation on UCITS depositaries
Undertakings for collective investment in transferable securities (UCITS) are open-ended collective investment schemes which comply with Directive 2009/65/EC on the co-ordination of laws, regulations and administrative provisions relating to UCITS (the UCITS Directive, also known as UCITS IV), as amended by Directive 2014/91/EU (UCITS V). The
Financial Services
12 Contributions by Macfarlanes Experts
PRACTICE NOTES
Intellectual property (IP) agreements
IP arrangements-covering, for example, technology licensing or the collaborative development of new technology-can include provisions that are restrictive of competition.
At the same time, they may generate significant pro-competitive benefits. These are recognised in block exemption regulations that create a ‘safe harbour’ from the prohibition on anti-competitive agreements in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), provided specified conditions are satisfied.
The Technology Transfer Block Exemption (TTBER) affords such a safe harbour to certain intellectual property rights (IPRs) licences-technology transfer agreements-by setting out when arrangements that might otherwise restrict competition are permitted (see further Practice Note: The technology transfer block exemption).
If IP-related agreements fall outside TTBER, that does not, in itself, mean those agreements breach Article 101 TFEU; other block exemption regulations may still be applicable in appropriate
Competition
PRACTICE NOTES
At first blush, intellectual property (IP) rules and competition law seem to chase opposing objectives entirely. The former permits owners of intellectual property rights (IPRs) to govern access to their creations, thereby curbing rivalry they encounter and, in certain situations, bestowing upon them a position amounting effectively to monopoly. Competition law, by contrast, seeks to foster open markets and to oversee how market power is obtained and deployed in practice. Yet despite this surface-level friction, there is broad acceptance that both systems aim ultimately to advance consumer welfare in practice. The European Commission (the Commission) notably recognises that IPRs stimulate dynamic rivalry by rewarding undertakings that innovate and invest in better products and processes alike. Concurrently, the use of IPRs remains subject to competition law scrutiny, and the Commission’s enforcement in R&D-intensive fields, including pharmaceuticals and technology, has prompted debate about applying
Competition
PRACTICE NOTES
This Practice Note reviews the EU environmental, social and governance (ESG) — also termed sustainability — integration measures, which revised delegated acts under the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD), the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive 2009/65/EC and the recast Markets in Financial Instruments Directive 2014/65/EU (MiFID II), and considers their industry impact. It also briefly highlights the UK’s departure in respect of these measures.
What were the ESG integration measures?
In August 2021, a package of measures (the Delegated Acts) appeared in the Official Journal of the EU; see Application of the ESG measures below, and they affected UCITS management companies, alternative investment fund managers (AIFMs) and MiFID investment firms (together, managers). For practical guidance on managers, refer to Practice Notes: Undertakings for Collective Investment in Transferable Securities
Financial Services
PRACTICE NOTES
Intellectual property laws grant exclusive entitlements to holders of patents, copyright, design rights, trade marks and other protected rights. Owners of intellectual property rights (IPRs) may stop unauthorised use of their IP and may exploit it, for instance by granting licences to third parties. However, the ability to commercialise does not shield IPRs from scrutiny under competition law. Like any other arrangement, deals involving IPRs (e.g., licences enabling a licensee to use the licensor’s IPRs) must comply with Article 101(1), TFEU. For many would-be licensees and licensors, the initial task in checking whether their arrangements accord with EU competition rules is to consider if a block exemption regulation can apply. The block exemption most commonly relevant to an IP licence is the Technology Transfer Block Exemption Regulation (TTBE, Regulation 316/2014), the latest iteration of which took effect on 1 May 2014 and expires on 30
Competition
PRACTICE NOTES
IP disputes arise where one side—typically the claimant in this note—asserts that its patent has been infringed, while the defendant contests the patent’s validity. These matters are commonly resolved through settlement, yet such arrangements can themselves fall foul of Article 101(1) TFEU. The European Commission (the Commission) has provided guidance addressing this point.
NOTE—
Although the Brexit transition period ended on 31 December 2020, this Practice Note continues to cite EU and UK competition law side by side. That is because, even though UK regulators and courts may now depart from EU jurisprudence, any divergence between the two systems is expected to be incremental and progressive, as such, over time, since: (i) the UK competition framework is strongly grounded in concepts honed and refined over many years in EU case law (concepts which the UK courts were required to apply in harmony with UK
Competition
PRACTICE NOTES
Intellectual Property Rights (IPRs) allow owners to bar others from exploiting the protected subject matter. Such exclusion, or the threat of it, usually raises no competition law issues. Yet if the IPR holder enjoys a ‘dominant position’ (ie economic strength enabling it, to a significant degree, to act independently of effective competitive constraints), the use of those exclusionary powers can attract scrutiny under Article 102 TFEU. IPRs come in various forms (eg trade marks, copyright, patents), and competition questions may surface in diverse settings, though they most often concern patents and software copyright.
Abuse of dominance under Article 102 TFEU
EU case law holds that dominance carries a special responsibility on the undertaking in question. That responsibility obliges the firm to avoid modes of rivalry that are not ‘on the merits’. Because the contours of that notion are nebulous, the universe of potential abuses remains
Competition
PRACTICE NOTES
The use of malus and clawback
The concept that performance-based cash or share awards for executives and senior employees can be reduced (malus) or recovered (clawback) when a material adverse event occurs or later comes to light is now widely accepted and embedded in market practice. Although rooted in the financial services industry, malus and clawback are now standard elements of incentive plans operated by companies listed in the equity shares (commercial companies) category in the UK. This development flows directly from the Financial Reporting Council’s (FRC) 2014 revisions to the UK Corporate Governance Code in response to the global financial crisis, together with the subsequent expectations of the UK’s major institutional shareholders. The Department for Business, Energy & Industrial Strategy’s (BEIS) March 2021 consultation on modernising the UK’s audit and corporate governance regime further reinforces that deploying malus and clawback within
Share Incentives
PRACTICE NOTES
Macfarlanes and Burness Paull advised Dobbies Garden Centres, the UK’s largest operator of garden centres, on its restructuring plan (RP) under Part 26A of the Companies Act 2006 (CA 2006), which was approved by Lord Braid in the Court of Session in Scotland on 9 December 2024.
An RP is a mechanism by which a financially distressed company may propose a compromise or arrangement with its creditors in order to remove, lessen, avert, or soften the impact of its financial difficulties. These compromises and arrangements can be structured in many ways, including, for example, amendments and extensions of debt obligations, debt-for-equity swaps, and alterations to lease terms together with compromises of rent payable under leases and other property-related liabilities. The RP was introduced during the coronavirus (COVID-19) pandemic to offer a new restructuring tool in the UK. Whilst there is
Restructuring & Insolvency
PRACTICE NOTES
Scope of this Practice Note
This Practice Note:
sets out what fund tokenisation and digitalisation mean and how they diverge from conventional funds;
surveys UK and overseas regulatory moves, highlighting current UK workstreams;
details practical steps to launch a tokenised fund;
evaluates the benefits of distributed ledger technology (DLT) for funds;
flags principal challenges and risks; and
suggests next steps for practitioners.
What is fund tokenisation and digitalisation?
Fund tokenisation involves capturing elements of a fund’s administration and investor rights as digital tokens recorded on a blockchain ledger. A token digitally mirrors a standard unit or share in a UK authorised fund. The investor’s legal interest remains that of a traditional unit/share; the novelty lies in the representation and maintenance of ownership and fund records. In a traditional UK authorised fund, the unit/share register, asset register and client data sit in conventional book‑entry systems across multiple service providers.
Financial Services
PRACTICE NOTES
FORTHCOMING CHANGE relating to abolition of the non-dom regime and introduction of a residence-based regime:
At Spring Budget 2024, the government disclosed plans to scrap the remittance basis and bring in a residence-based system from 6 April 2025. Those electing into the new rules will, subject to conditions, be outside UK tax on overseas income and gains for their first four years of UK tax residence. This applies, where the conditions are met, to foreign income and gains throughout the initial four years in full. See News Analysis: Spring Budget 2024—Private Client analysis—Abolition of ‘non-dom’ regime. This Practice Note explores tax considerations when arranging a private equity buyout with both UK and offshore components. There are numerous motives for interposing offshore vehicles in acquisition structures, even where the target is onshore in the UK. Frequently, the structure is tailored to suit
Tax
PRACTICE NOTES
This Practice Note examines the principal features of qualified investor schemes (QIS), a UK‑authorised fund framework, covering investment powers, eligibility requirements and possible tax consequences.
What is a QIS?
A QIS is a UK‑authorised fund first launched in 2004 to satisfy the fund management sector’s call for a Financial Conduct Authority (FCA) regulated investment vehicle operating under a comparatively light‑touch rulebook. It is aimed mainly at professional, institutional and sophisticated investors, including those within wealth management, and sits alongside the UK UCITS, non‑UCITS retail schemes (NURS) and long‑term asset fund (LTAF) regimes. For additional detail on UCITS, NURS and LTAFs, see Practice Notes: UK Undertakings for Collective Investment in Transferable Securities (UCITS)—essentials, Non‑UCITS retail schemes (NURS) and The UK Long‑Term Asset Fund (LTAF).
A QIS can be structured as an authorised unit trust (AUT), an open‑ended investment company (OEIC), or an authorised
Financial Services
PRACTICE NOTES
This Practice Note explores the principal regulatory considerations concerning unregulated collective investment schemes (UCIS) in the UK. It outlines what UCIS are, the risks they present, the regulatory framework applicable to UCIS, limits on their treatment, and how they align with the UK alternative investment fund managers (AIFM) regime...
What are unregulated collective investment schemes?
In the UK, an unregulated collective investment scheme (UCIS) is any collective investment scheme (CIS) that is not supervised by the Financial Conduct Authority (FCA) as either an authorised (regulated) fund or a recognised scheme. Businesses and individuals can consult the FCA register to verify whether a CIS is authorised or recognised. For more on authorised and recognised funds, including the meaning of a CIS, see Practice Note: Collective investment
Financial Services
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