Abstract
This paper analyses the recent reforms of a limited partnership used for structuring alternative investment funds in the UK (2017), Luxembourg (2013) and France (2015). The introduction of the Alternative Investment Fund Managers Directive (2011) has prompted the EU Member States to modernise their legal structures to get ahead of an increasing competition as a leading fund and fund manager domicile. This paper argues that the UK Private Fund Limited Partnership is the most competitive legal structure in terms of management rights accorded to investors and tax-transparency. Luxembourg provides an equally competitive limited partnership model, which will be used extensively by fund managers and investors post-Brexit. A regulatory competition in partnership law will incite other EU Member States to review their legislation applicable to this legal form.
Highlights
The introduction of Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers [2011] OJ L174/1 has marked the first pan-European attempt to harmonise the alternative investment fund industry
This paper argues that since the EU Member States do not have much discretion on the level of the fund manager regulation, they adjust their fund regulation approaches to position themselves as a fund domicile of choice
This article has critically assessed the use of the limited partnership model for structuring alternative investment funds in the EU
Summary
The introduction of Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers [2011] OJ L174/1 (hereinafter ‘AIFMD’) has marked the first pan-European attempt to harmonise the alternative investment fund industry. The discretion of a national legislator in the transposition of the Directive is rather limited This is explained by the overriding objective of the AIFMD to create a level-playing field for the European alternative investment fund industry. Luxembourg modernised its limited partnership regime, at the same time as transposing the AIFMD into its national law. These initiatives gave rise to what we call ‘regulatory competition in European partnership law’. By amending their partnership law, EU Member States compete with each other to position themselves as investor-friendly fund domiciles. Part VII concludes by envisioning further developments in the EU partnership law
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