Hybrid funds meaning

In this issue: Funding and investment Scheme governance Pension scams and liberation Daily and weekly news alerts Dates for your diary Trackers Funding and investment TPR publishes revised employer covenant guidance to align with new DB funding code of practice The Pensions Regulator (TPR) has at last issued revised guidance on the employer covenant for trustees overseeing defined benefit (DB) pension schemes, to align with its new DB funding code of practice, which took effect on 12 November 2024 under the Pensions Act 2004 (Code of Practice) (Defined Benefit Funding) Appointed Day Order 2024 (SI 2024/1143). Described by TPR as ‘the last piece of the jigsaw to help schemes carry out valuations under the new DB funding code’, the update introduces the first regulatory definition of employer covenant, intended to deliver greater market certainty and foster consistency between schemes. Notable changes cover cash flow analysis, tests of reasonable affordability, maximum affordable contributions, reliability periods, covenant longevity, and...

See Q&A: What CDD challenges could remote working present? If your practice falls within the scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended, you are required to meet the statutory obligations at all times, regardless of how or where you work. The coronavirus (COVID-19) outbreak drove a broad move to remote working that largely persists; nevertheless, confirming who your client is and checking their identity remains essential and central to client due diligence (CDD). Offenders did not stop during the pandemic and some attempted to exploit the circumstances. With remote and hybrid models enduring, many of the CDD issues first examined then are still pertinent, as criminals continue seeking opportunities to take advantage. You should factor the risks of representing clients without an in-person meeting into your firm-wide risk assessment (FWRA). That assessment must in turn flow through into the policies, controls and procedures you implement to mitigate the risks you have identified. For...

In this issue: UK, EU and international regulators and bodies Permissions, approvals and oversight Prudential rules Operational robustness Financial misconduct and sanctions Complaints, redress and claims handling Investigations, enforcement and disciplinary action Capital markets regulation Packaged Retail and Insurance-based Investment Products (PRIIPs) Derivatives regulation Sustainable finance and ESG Banks and mutuals Investment funds and asset management EU MiFID II Insurance regulation Payment services and systems Fintech and cryptoassets Financial Services Enforcement Database Daily and weekly news alerts Intraday news alerts New and refreshed content Key dates for your diary UK, EU and international regulators and bodies Amendments to EEA Agreement Annex IX (Financial Services) published in Official Journal Twelve decisions of the European Economic Area (EEA) Joint Committee revising Annex IX (Financial Services) to the Agreement on the European Economic Area (the EEA Agreement) have appeared in the EU’s Official Journal....

Except where an exemption or relief applies, payments of: annual interest (or amounts that tax rules treat as annual interest), and that have a UK source must be made under deduction, with the payer required to withhold and account to HMRC for UK income tax at the basic rate (20%) or, from 6 April 2027, at the savings basic rate (22%) (for more detail, see Practice Note: UK withholding tax on yearly interest). This Practice Note describes the duty to deduct (and account to HMRC for) UK income tax from UK‑source annual interest as a withholding tax, even though it is in substance a mechanism for collecting UK income tax from the UK‑based payer rather than from the recipient who: is the beneficial owner of the income, and is likely to be based outside the UK For more information on the requirement to deduct UK income tax from UK‑source annual interest, see Practice Note: Administration...

This Practice Note discusses the meaning of capital call facilities, 'NAV' or asset-backed facilities, and hybrid facilities the commercial applications of capital call facilities the due diligence that lenders will undertake the standard security package typically required by lenders the principal terms of capital call facilities 'Capital call facilities' and other types of fund finance A capital call facility, also known as a subscription line facility, is financing extended by a lender to a fund and is ordinarily collateralised by investors’ undrawn commitments. Accordingly, funds tend to obtain these lines early in their life cycle, when unfunded commitments are at their highest yet the fund holds few or no investments that can be charged in favour of lenders. Nevertheless, particularly where recallable capital commitments persist (see below), capital call facilities can remain beneficial well into the fund’s term. By contrast, funds that are at the halfway stage or approaching the end of their life cycle may find that...

Characterising overseas entities for UK tax purposes It is essential to characterise overseas entities for UK tax, as this determines how they, their members and potentially other connected persons are taxed... Transparent — treated in a similar manner to a partnership or certain trusts for UK tax; not a taxable person in its own right for direct taxes; profits are commonly assessed on UK‑resident members as they arise, whether or not distributed Opaque — broadly treated like a company and therefore a taxable person; its profits are typically not taxed in the UK until paid out to UK‑resident members, or where anti‑avoidance rules attribute undistributed profits to another person (eg under controlled foreign company rules) Opaque for capital gains but transparent for income — a hybrid approach applying in particular to some non‑UK unit trust schemes and non‑corporate offshore funds Distributions received from an opaque overseas entity also need to be characterised (as either...