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CACEIS European Regulatory Watch Newsletter

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2014 JULY No.2

EUROPE Council released two further compromises on ELTIF Regulation ESMA published 8 th updated Q&A on EMIR implementation ISDA study on Central Clearing in the Equity Derivatives Market ESMA published first registered social entrepreneurship fund manager (EuSEF) Commission published technical standards for the notification of EuSEF Regulation The format of notification of EuVCA European Commission requested ESMA advice on MAR implementing acts MAD/MAR published in the EU Official Journal ESMA announced the creation of the Consultative Working Group for the Market Data Reporting Working Group European Commission requested technical advice on delegated acts concerning MiFID II and MiFIR ESMA's consultation on MiFID reforms MiFID II/MIFIR published in in the EU Official Journal LUXEMBOURG LuxFLAG launched the first European ESG Label Application of CRD IV remuneration rules to management companies

Opinions on Bill 6625 Modification of the statistical data collection for money market and non-money market investment funds SWITZERLAND Rejection of the Lex Koller’s strengthening by the National Council BELGIUM Royal Decree approving the regulations regarding the prohibition of marketing of certain financial products to retail customers Royal Decree setting certain obligations on information during the marketing of financial products to retail customers Royal Decree approving the regulation on technical requirements for a risk’s label Publication of the Law implementing AIFMD on June 17 th Publication of the Law completing AIFMD transposition on June 17 th ITALY Ministry of Economy and Finance launched a public consultation on investment funds TAX Publication of first FATCA FFI list

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? W hat’s in there

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W hat’s next

B ackground

EUROPE Council released two further compromises on ELTIF-Regulation Background European long-term investment funds (ELTIFs) are EU-AIFs managed by EU authorised AIFMs which do not offer regular redemption before the end of the vehicle’s life and invest in long-term assets. ELTIFs benefit from an EU passport and might be marketed to retail investors across the EU. On 26 June 2013, the Commission issued a Propos- al for a regulation of the European Parliament and of the Council on ELTIFs (“the Regulation” - AVAILABLE HERE ). The Regulation shall ensure that uniform re- quirements apply to the investment and operating conditions of ELTIFs. On 17 April 2014, the European Parliament in plena- ry adopted amendments to the Commission’s pro- posal ( AVAILABLE HERE – a note from the General Secretariat of the Council to the Permanent Repre- sentatives Committee on the outcome of the Parlia- ment’s first reading is AVAILABLE HERE ). On 24 April 2014, the Presidency of the Council issued a first compromise proposal ( AVAILABLE HERE ). On 8 May 2014, the Presidency of the Council issued a second compromise proposal ( AVAILABLE HERE ). What’s in there? On 27 May 2014 and 9 June 2014, the Council of the EU published two further presidency compro- mises (10215/14 and 10583/14). The main changes from the previous versions are as follows: 1. Eligible assets: Direct holdings of real assets, unless they are se- curitised, would also form a class of eligible as- sets, if it is possible to apply the discounted cash- flow valuation method.

2. Portfolio composition and diversification: ELTIFs would only be authorized to borrow cash for the purpose of acquiring a participation in eligible investment assets to the extent that: « The ELTIF paid-up capital is not sufficient to make such acquisition, and « The cash is not used for granting a loan to a qualifying portfolio. 3. Specific provisions concerning the depositary of ELTIFs marketed to retail investors: ELTIFs marketed to retail investors would need to appoint a depositary eligible to UCITS. No right of asset’s reuse (e.g transfer, pledge, sale or lending of assets) would be granted to ELTIF’s depositaries and their delegates unless: « The reuse is executed for the account of the ELTIF; « The depositary is carrying out the instructions of the manager of the ELTIF on behalf of the ELTIF; « The reuse is for the benefit of the ELTIF and the interest of the investors; « The transaction is covered by high quality and liquid collateral received by the ELTIF under a title transfer arrangement the value of which amounts at least the value of the reused assets plus a premium. 4. Additional requirements for marketing to retail investors Instead of committing retail investors to invest a minimum of EUR 20,000 and state in a separate document from the subscription agreement that they are aware of the risk they take, ELTIFs man- agers would only be able to market ELTIF to retail investors provided that among others: « The ELTIF would be admitted to trading on a reg- ulated market or on a multilateral trading facility or on an organised trading facility; « ELTIF managers would have to act as an inter- mediary in case no buyer for a unit or share can be identified despite the ELTIF’s units or shares being admitted to trading on a secondary market; « The ELTIF manager is provided with sufficient information on the value of the retail investors’ portfolio and for retail investors whose portfolio,

composed of cash deposits and financial instru- ments, does not exceed € 500 000, the ELTIF manager would have to ensure that the retail investor does not invest an aggregate amount exceeding 5% of his portfolio in ELTIFs. 5. Transparency ELTIFs’ KID would not need to include information on the illiquid nature of the vehicle and to reflect all costs outlined in the prospectus. An ELTIF would have to provide its competent au- thorities with prospectus, any amendments and its annual report within the time period specified by these competent authorities. 6. Administrative penalties The ELTIF Regulation would no longer include pro- visions on administrative penalties applicable to breaches. 7. Borrowing of cash An ELTIF could borrow cash provided that among others it would serve the purpose of acquiring a participation in eligible investment assets and that the holdings in cash or cash equivalents of the EL- TIF would not be sufficient to acquire the partici- pation in eligible investment assets. 8. Disposal of ELTIF assets An ELTIF could reduce its capital on a pro rata ba- sis in case of a disposal of an asset, provided that such an option has been disclosed not only in the prospectus but also in the fund rules. What’s next? The Regulation needs to be adopted by the Parlia- ment and the Council.

The Regulation would enter into force 6 months after its adoption.

THE THIRD PRESIDENCY COMPROMISE IS AVAILABLE HERE.

THE FOURTH PRESIDENCY COMPROMISE IS AVAILABLE HERE.

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ESMA published 8 th updated Q&A on EMIR implementation Background The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices under Article 29(2) of Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Secu- rities and Markets Authority - ESMA), amending Decision No 716/2009/EC and repealing Commis- sion Decision 2009/77/EC Regulation, 15.12.2010, L331/84. What’s in there? On 21 May 2014 ESMA published the 8th updated Q&As on Implementation of the Regulation (EU) No 648/2012 on OTC derivatives, central counterpar- ties and trade repositories (EMIR). It provides re- sponses to questions raised by the public, market participants and competent authorities. The Q&As are aimed at national competent authorities to en- sure convergent supervisory activities. Amendments and modifications were made in the following sections: General questions: « Status of counterparties covered by AIFMD; « Authorised or registered AIFMs. OTC questions: « Calculation of the clearing threshold; « Funds, counterparties;

ISDA study on Central Clearing in the Equity Derivatives Market Background Under EMIR, ESMA is required to determine whether a clearing obligation should apply once a CCP has been authorised by a national compe- tent authority to clear certain classes of OTC de- rivatives. The ISDA study provides some insights on central clearing in the equity derivatives mar- ket. The study also considers criteria that should be assessed when determining whether a clear- ing mandate should apply in the EU. What’s in there? On 10 June 2014, ISDA published a study on central clearing in the equity derivatives market. The study describes the three segments of the equity derivatives market and their main char- acteristics. The three segments - that the mar- ket can be divided into - are the market for ex- change-traded contracts, the market for cleared, flexible exchange-like contracts and the market for OTC instruments. The study comes to the conclusion that the vast majority of the equity derivatives market is al- ready cleared, including all listed futures and options contracts and the more flexible products offered by services such as Bclear. However, the broad availability of clearing for OTC equity de- rivatives products will not develop overnight and is likely to remain limited in the near future. Any clearing obligation should according to the study take into account the unique features of listed and OTC instruments, as well as the specificities of individual products. An overly broad clearing mandate based on un- derlying, product type or settlement currency would be disruptive, potentially capturing con- tracts for which no clearing service exists. The study advises a granular approach to eval- uating whether products should be cleared, including detailed product taxonomy, a compre- hensive review of liquidity and analysis of prod- uct standardisation. What’s next? N/A.

ESMA published first registered social entrepreneurship fund manager (EuSEF) Background The EU Regulation No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds (Eu- SEF Regulation), which entered into force 22 July 2013, requires ESMA to publish all EU-registered EuSEF managers, the funds it manages, and the EU Member States where these funds are market- ed. ESMA lists all EU-registered EuSEF funds on its website What’s in there? On 21 May 2014, ESMA published the first reg- istered EuSEF manager, the BonVenture Manage- ment GmbH, based in Munich, registered by Ger- many’s BaFin. The EuSEF Regulation, together with the European Venture Capital (EuVECA) regulation, is intended to provide a legal framework for cross-border capital raising for investment in small and medium-sized enterprises (SMEs) as well as social enterprises across EU Member States. What’s next? ESMA will continue to publish new registered EuSEF managers as required by the EuSEF Regulation. Commission published technical standards for the notification of EuSEF Regulation Background Article 17(1) of Regulation (EU) No 346/2013 of 17 April 2013, requires the competent authority of the home Member State of a European social entrepre- neurship fund (EuSEF) to notify host Member States and ESMA of events related to the passport of the managers of qualified social entrepreneurship THE ESMA LIST IS AVAILABLE HERE. THE EUSEF REGULATION IS AVAILABLE HERE.

« Intragroup transaction;

Public Register;

«

« Classification of non-EU Central Banks. CCP questions:

« Segregation and portability; « Organisational requirements;

Risk Committee;

«

« Prudential Requirements

What’s next? This document will be continually edited and up- dated as and when new questions are received.

THE DOCUMENT IS AVAILABLE HERE.

THE ISDA STUDY IS AVAILABLE HERE.

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10 September 2013 and signed by the European Parliament and Council on 16 April 2014.

MAR aims to update and to strengthen the existing framework to ensure market integrity and inves- tor protection as provided for by the Market Abuse Directive. What’s in there? On 28 May 2014, the European Commission re- quested advice from ESMA on MAR implementing acts. In particular, ESMA is invited to provide technical advice on the specification of procedures to enable reporting of actual or potential infringements of MAR to competent authorities, including arrangements for reporting and for following up reports, and measures for the protection of persons working under a con- tract of employment and measures for the protection of personal data (Article 32-5 MAR). What’s next? Eight months after entry into force of the Regu- lation ESMA shall provide the requested technical advice on the implementing acts. The implementing acts will be adopted 17 months after entry into force of the Regulation. They will be published no later than 23 months after entry into force of the Regulation and will enter into force 20 days later. MAD II/MAR published in the EU Official Journal Background On 20 October 2011, the Commission adopts proposals for a Regulation on insider dealing and market manipulation (market abuse), and for a Directive on criminal sanctions for insider dealing and market manipulation. On 4 February 2014 the European Parliament en- dorses the Commission’s proposal for a Directive on criminal sanctions for market abuse. The Regulation was adopted by the Europe- an Parliament on 10 September 2013 and signed by the European Parliament and Council on 16 April 2014. THE MANDATE SENT TO ESMA IS AVAILABLE HERE.

funds. Article 22(3) of that Regulation also requires the competent authority of the home Member State inform the competent authorities of the host Mem- ber States of the removal of a manager of a EuSEF from the register. The Regulation applies from 22 July 2013. What’s in there? The Implementing Regulation No 594/2014 of 03 June 2014 determines the format for notification among competent authorities and to ESMA of the supervisory information relating to the events provided for Articles 17(1) and 22(3) of EuSEF Regulation. « Notification shall be given to ESMA and the competent authorities of the Member States by sending an email with a filled form set out as an Annex to the Implementing Regulation. « Each competent authority shall communicate to ESMA the relevant e-mail address for notifica- tion of supervisory information. « ESMA shall make known to all competent au- thorities the list of relevant e-mail addresses, including the relevant e-mail address of ESMA. What’s next? The Implementing Regulation entered into force on 7 June 2014. The format of notification of EuVCA Background The European venture capital funds (EuVCA) Regula- tion No . 345/2013 of 17 April 2013 fully applies since 22 July 2013. THE REGULATION IS AVAILABLE HERE.

Commission Implementing Regulation (EU) No 593/2014 of 3 June 2014 laying down implement- ing technical standards with regard to the format of the notification according to Article 16(1) of Reg- ulation (EU) No 345/2013. The format of notification upon which the Commis- sion has decided, after Advice from ESMA and the ESMA Securities and Markets Stakeholder Group, is e-mail. Such email shall follow the form set out in the annex of the regulation. Each Member State will have to send relevant e-mail addresses to ESMA and ESMA will then draw up a list of e-mail addresses that will be dis- tributed to the Member States. What’s next? The competent authorities will send lists of relevant e-mail addresses to ESMA. ESMA will issue a con- solidated list of relevant e-mail addresses. European Commission requested ESMA advice on MAR implementing acts Background On 20 October 2011, the European Commission published its proposal for a Regulation on insider dealing and market manipulation (MAR). On 24 June 2013, the Commission, Parliament and Council reached a compromise in trilogue. MAR was adopted by the European Parliament on THE TEXT OF THE IMPLEMENTING REGULATION IS AVAILABLE HERE.

What’s in there? On 4 June 2014, the Commission adopted the

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15 April 2014 and by the Council on 13 May 2014. Both the final texts of MiFID II and MiFIR were re- cently published on 12 June 2014. Certain elements of the Directive and Regulation need to be further specified in delegated acts to be adopted by the Commission. What’s in there? On 16 May 2014 the European Commission sent a request for technical advice to EBA. The advice requested from EBA concerns technical advice on product intervention by competent authorities as envisaged in MiFIR. In accordance with Articles 40(8), 41(8) and 42(7) of MiFIR, the Commission is empowered to adopt delegated acts specifying criteria and factors to be taken into account by ESMA, EBA and competent authorities in deter- mining when there is a significant investor protec- tion concern and threat to the orderly functioning and integrity of financial markets or commodity markets and to the stability of the whole or part of the financial system of the Union. As the product intervention powers framework of ESMA and EBA are identical and ESMA has already begun work on technical advice for the European Commission. EBA is encouraged by the European Commission to cooperate with ESMA. What’s next? The technical advice has to be submitted to the European Commission 6 months after the en- try into force of the Directive and the Regulation (which have been published in the Official Journal on 12 June 2014). The delegated acts must be published in the Of- ficial Journal before the entry into application of the Regulation and the Directive. This will be 30 months after the entry into force of MiFID II and MiFIR.

ESMA announced the creation of the Consultative Working Group for the Market

Data Reporting Working Group Background

The creation of the Consultative Working Group follows the call for expressions of interest in De- cember 2013. The group is set up in the context of reporting requirements resulting from MiFID II / MiFIR, EMIR and future MAR. What’s in there? On 16 May 2014, ESMA published the announce- ment on the creation of the Consultative Working Group for the Market Data Reporting Working Group (MDRWG). The MDRWG contributes to ESMA’s work on issues relating to reporting of transactions, positions, re- cord-keeping of orders and instrument reference data. The objectives of this group are to enhance the quality of the market data reported to EU Na- tional Authorities and Trade Repositories and to foster supervisory convergence among the nation- al authorities in its area of competence. What’s next? N/A

What’s in there? On 12 June 2014, the Regulation No 596/2014 on market abuse (Market Abuse Regulation) and Directive 2014/57/EU on criminal sanctions for market abuse (Market Abuse Directive) have been published in the EU Official Journal.

The major changes to the current regime are the following:

« Definition of EU minimum sanctions for market abuse; « Its scope to be extended to align fully with the revised MiFID regime, e.g. to cover: - Instruments which are traded on a MTF or OTF in at least one Member State, and not only a regulated market; - Market manipulation by the use of OTC instru- ments that can influence the prices of a finan- cial instrument traded on a regulated market, MTF or OTF; « Finally, the regulation envisages considering not only an act of abuse, but the intent to commit such an act, as abusive practice. What’s next? The Market Abuse Regulation shall enter into force on 2 July 2014 and will apply from 3 July 2016. Member States have until 3 July 2016 to trans- pose the Directive on criminal sanctions for mar- ket abuse into their national law. On 28 May 2014, the European Commission re- quested advice from ESMA on Regulation imple- menting acts. Eight months after entry into force of the Regulation ESMA shall provide the requested technical advice on the implementing acts.

THE ANNOUNCEMENT IS AVAILABLE HERE.

THE LETTER OF THE EUROPEAN COMMISSION IS AVAILABLE HERE.

European Commission

requested technical advice on delegated acts concerning MiFID II and MiFIR Background On 14 January 2014, the European Parliament and Council reached political agreement on a compro- mise text of MiFID II and MiFIR. This compromise text was adopted by the European Parliament on

YOU CAN FIND THE DIRECTIVE HERE.

YOU CAN FIND THE REGULATION HERE.

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Directive and the Regulation. On 22 May 2014 ESMA has launched a consul- tation process for the implementation of MiFID II and MiFIR. The closing date for responses to both papers is Friday 1 August 2014.

YOU CAN FIND THE DIRECTIVE HERE.

YOU CAN FIND THE REGULATION HERE.

LUXEMBOURG LuxFLAG launched the first European ESG Label Background LuxFLAG supports the financing of sustainable development by providing clarity for investors through awarding Labels to investment funds. In addition to the newly launched Environment, So- cial and Governance (ESG) label, LuxFLAG already offers two thematic labels for microfinance and environment. What’s in there? On 21 May 2014, LuxFLAG launched the first European ESG label. This label will be granted to investment funds that meet criteria concerning Environment, Social and Governance objectives. The label is available to UCITS and AIFMD funds domiciled throughout Europe or in equivalent ju- risdictions. The qualification criteria include that: « The application must explain clearly how ESG criteria are integrated in the investment process; « The fund must have an exclusion policy; « 100% of the fund assets must be scrutinised against the ESG criteria; « The fund must publish its entire portfolio at least once per year; and that « The fund mandates an outside auditor to demon- strate compliance with the LuxFLAG criteria. The ESG Label is granted for a period of one year and is renewable. Investment funds will have to apply for the label and will need to provide information reviewed by an auditor. In addition, the awarding of the label is subject to a recom- mendation by LuxFLAG’s Eligibility Committee of Specialists. « The fund must be regulated;

ESMA's consultation on MiFID reforms Background The revised Markets in Financial Instruments Di- rective (MiFID II) and Regulation (MiFIR) as adopt- ed by the European Parliament on 14 April 2014 introduce changes that will have a large impact on the EU’s financial markets, such as advanced transparency requirements, enhanced trade re- porting obligations, new supervisory tools and im- proved retail investor protection. On 23 April 2014 the European Commission has sent a mandate to ESMA for advice on possible delegated acts. What’s in there? On 22 May 2014 ESMA has launched the consulta- tion process for the implementation of MiFID II and MiFIR. This is the first step in the process of trans- lating the MiFID II/MiFIR requirements into practi- cally applicable rules and regulations to address the effects of the financial crisis and to improve financial market transparency and strengthen in- vestor protection. In order to ensure that MiFID II achieves its objec- tives in practice, ESMA has published: « Consulting Paper on MiFID/MiFIR Technical Ad- vice – ESMA needs to deliver this advice to the European Commission by December 2014 and is therefore subject to a condensed consultation process for this paper; « Discussion Paper on MiFID/MiFIR draft RTS/ITS – this will provide the basis for a further con- sultation paper on the draft RTS/ITS which is expected to be issued on late 2014/ early 2015. The closing date for responses to both papers is Friday 1 August 2014. What’s next? ESMA will hold three public hearings on MiFID II:

FURTHER DETAILS ON THE HEARINGS CAN BE FOUND HERE.

THE CONSULTATION PAPER ON MIFID/MIFIR TECHNICAL ADVICE IS AVAILABLE HERE.

THE DISCUSSION PAPER ON MIFID/MIFIR DRAFT RTS/ITS IS AVAILABLE HERE.

MiFIDII/ MiFIR published in the EU Official Journal Background On 20 October 2011, the Commission adopted the proposal for a Directive on markets in financial in- struments repealing Directive 2004/39/EC of the European Parliament and of the Council. On 14 January 2014, the European Parliament and Council reached political agreement on a compro- mise text of MiFID II and MiFIR. This compromise text was adopted by the European Parliament on 15 April 2014 and by the Council on 13 May 2014. What’s in there? On 12 June 2014, the Directive on Markets in Fi- nancial Instruments repealing Directive 2004/39/ EC (2014/65/EU, MiFID II) and the Regulation on Markets in Financial Instruments (No 600/ 2014 MiFIR) have been published in the Official Journal. Please refer to our previous news on MiFID/MIFIR to get a global overview of the change to the cur- rent regime. What’s next? Both texts will enter into force on 2 July 2014 and will apply from 3 January 2017. On 16 May 2014, the European Commission sent a request for technical advice to EBA. The technical advice has to be submitted to the European Com- mission 6 months after the entry into force of the

« 7 July 2014:– Market Issues

« 8 July 2014:– Investor Protection Issues « 8 July 2014: – Commodity Derivatives

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Opinions on Bill 6625 Background

What’s next?

3. Article 42 (2) of the Bill s hould be amended as to explicitly exclude global bearer certificates held by securities settlement systems. 4. Article 5(2b) of the law of 5 August 2005 on fi- nancial collateral arrangements should be amend- ed as to state that the transfer of possession of bearer shares may be done by entering the pledge over the financial instruments in such registers.

N/A

THE LUXFLAG’S PRESS RELEASE IS AVAILABLE HERE. Application of CRD IV remuneration rules to management companies Background CRD IV (Directive 2013/36/EU) establishes that the variable component shall not exceed 100% of the fixed component of the total remuneration for those categories of staff whose professional activ- ities have a material impact on the risk profile of the institution. What’s in there? We have contacted the CSSF on an anonymous basis and received the oral confirmation that management companies which are subsidiaries of credit institutions subject to CRD IV, must comply with the CRD IV remuneration requirements. In accordance with CRD IV remuneration rules, the variable remuneration (including “carried in- terest” or “performance fees”) of material risk takers within management companies (being sub- sidiaries of credit institutions) should be capped at 100% of the fixed remuneration (or 200-230% subject to the approval by a shareholders vote). What’s next? CRD IV shall still be transposed in Luxembourg Law.The draft legislation is under the Chambre des Députés’s review.

Bill 6625 was introduced on 4 October 2013 follow- ing FATF’s recommendations; it seeks to amend the law of 10 August 1915 by setting rules applying to the immobilisation of bearer shares. In particular, it will put an end to the free transfer of bearer shares by delivery of certificate and will require (i) the im- mobilisation of the bearer shares by a professional depositary and (ii) the identification of the bearer shares holder. Bill 6625 covers both shares to be issued after the entry into force of the law and existing bearer shares. Only bearer shares exchanged on a regulat- ed market are out of scope. Among other, bearer shares issued or to be issued by investment funds (SICAV or FCP) are in scope of Bill 6625.

On 27 May 2014, the Luxembourg Chamber of No- taries issued its opinion on Bill 6625.

The below outlines the 5 main issues identified:

1. The specificity of the Luxembourg market place should be taken into account by acknowl- edging that most active companies in the Grand Duchy of Luxembourg are small and mid-sized companies, with a limited number of employees which can hardly be used for money laundering purposes. 2. The name “bearer shares” should be amended to better reflect the fact that the ownership and the transfer of bearer shares will be carried out by registering them and no longer via physical trans- fer. The bearer shares regime will be amended to avoid money laundering risk yet their current name still carries the negative image associated to money laundering 3. Article 42 (3) of the Bill provides that an on-go- ing supervision over the register in which the bearer shares are registered can be carried out by credit institutions, asset managers, lawyers and notaries. While credit institutions have an on-going access to their client financial data, the notaries drafts punctual documents, which allow them lim- ited access to the client’s financial information.The on-going control provided in the Bill would thus be unpractical for notaries to perform. Article 3 (3) of the organic Law of 9 December 1976 should be amended to free the Notaries from their obligation to perform their duty when so requested. 4. The Chamber of Notaries points out the cost- liness of the register’s maintenance , especially for small and mid-sized companies which are not impacted by money laundering issues. The Notary Chamber thus suggests to reassess the possibility of simply suppressing bearer shares, which would send a clearer message or to introduce a flexible register system which would allow the manage- ment to choose between keeping the register in- house or externalizing it to actors identified in Article 42 (3) of the Bill. The Notary Chamber also suggests contemplating the idea of an ad-hoc register.

Bill 6625 has been amended by the Luxembourgish Government on April 1 2014.

The Luxembourgish Chamber of Commerce issued its opinion on 22 April 2014 (covered in our tracker).

The Luxembourgish Chamber of Notaries issued its opinion on 06 June 2014. What’s in there? On 27 May 2014, the Conseil de l’Ordre du Barreau de Luxembourg issued its opinion on Bill 6625.

The below outlines the 4 main issues identified:

1. Considering the legal nature of bearer shares, the wording of article 42 (5) of the Bill should be amended to avoid confusion with the wording of article 40 of the 1915 Law on the ownership and transfer regime of registered shares. Therefore article 42 (5) of the Bill should be amended as to state that the depositary is holding the bearer shares on behalf of the shareholder who owns them and that the depositary is not subject to any restitution duty. In addition, any transfer should be made effective against third parties by any transfer report entered on the same register by the depositary. The depositary might accept any documentation or notification evidencing such transfer. 2. A new article 2bis would be added to the Bill as to clearly state that bearers bonds are out scope. Therefore, the reference to article 42 within article 84 of the 1915 Law should be removed.

THE CAPITAL REQUIREMENT REGULATION (575/2013) IS AVAILABLE HERE.

THE CAPITAL REQUIREMENT DIRECTIVE (2013/36) IS AVAILABLE HERE.

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5. The Chamber of Notaries inquires as to wheth- er restricting the maintenance of the register to Luxembourg entities does not violate the freedom of establishment and freedom to provide services as granted by European law The same day, the Luxembourgish Ordre du bar- reau issued its opinion on Bill 6625. What’s next? Bill 6625 is to be voted by the Chambre des Députés (vote not scheduled so far).

THE OPINION OF THE ORDRE DU BARREAU IS AVAILABLE HERE.

SWITZERLAND Rejection of the Lex Koller’s strengthening by the National Council Background The Federal Act on the Acquisition of Real Estate by Persons Abroad (LFAIE), also known as the "Lex Koller", is a Swiss law which restricts access to home ownership for people who are not domiciled in Switzerland. Application of the Lex Koller shall vary depending on the type of residence permit in Switzerland, on the country of origin of the potential buyer or on the place of residence of this latter. Enforcement of the Lex Koller shall also change according to the building’s type of use: principal or secondary resi- dence, holiday accommodation, firm headquarters or investment property. Consequently, a foreign buyer cannot invest in a residential property with a performance purpose. However, it may very well invest capital in property for commercial, industrial or social use. The “Badran” motion to toughen up the Lex Koller has been filed to the National Council in Septem- ber 2013. It has eventually been rejected on 2 June 2014. What’s in there? TThe Badran motion filed in September 2013 was intended to modify the LFAIE in order to abolish the privilege granted to people abroad regarding the acquisition of shares in real estate funds and real estate companies listed on the stock exchange. According to the law in force, acquisition of shares in a real estate fund by a person abroad is not subject to the authorization scheme provided by

the Lex Koller when these shares are subject to regular market. Similarly, acquisition of shares of a legal person whom real purpose is the acquisi- tion or trade of property subject to authorization (known as “residential property companies”) do not require authorization if units are listed on a stock exchange in Switzerland. According to the initiators of this motion, this reg- ulation does not comply with either the letter or the spirit of the Lex Koller. Therefore, those latter advocate the abolition of this privilege. What’s next? The Badran motion has been rejected on 2 June 2014 and its initiators do not plan to submit it to popular vote. BELGIUM Royal Decree approving the regulations regarding the prohibition of marketing of certain financial products to retail customers Background The Royal decree approving the regulations of the Financial Services and Markets Authority, regard- ing the prohibition of marketing of certain financial products to retail customers dated 24 April, 2014 has been published on 20th May, 2014. THE BADRAN MOTION IS AVAILABLE HERE

THE OPINION OF THE LUXEMBOURGISH CHAMBER OF COMMERCE IS AVAILABLE HERE.

Modification of the statistical data collection for money market and non-money market investment funds Background As to comply with various ECB regulations and guidelines, the BCL and the CSSF have set up a data collection system for money market funds and investment funds (circulars BCL 2007/211 and BCL 2009/227 as amended by Circular BCL 2013/231; circular CSSF 13/564). What’s in there? On 28 May 2014, the BCL and the CSSF issued the circular BCL 2014/237; CSSF 14/588 repealing circular BCL 2013/231; CSSF 13/564. version of the current reports as well as an ex- tension of the reporting population (in particular, SICARs are added to the reporting population). What’s next? Circular BCL 2014/237; CSSF 14/588 enters into force on 1 January 2015 In comparison with the current statistical data col- lection, the modifications consist in new

THE CIRCULAR IS AVAILABLE HERE.

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Royal Decree approving the regulation on technical requirements for a risk’s label Background

What’s in there? The aim of the regulation is to protect retail cus- tomers from products which are inherently specula- tive, complex and difficult to assess. This regulation of the FSMA is designed to ban the marketing of certain financial products to retail customers. This Regulation is not applicable to Uci. . What’s next? The interdiction is applicable from 1 st July, 2014. Royal Decree setting certain obligations on information during the marketing of financial products to retail customers Background The Royal Decree setting certain obligations on information during the marketing of financial products to retail customers dated 25 th April, 2014 has been published on the Belgian Official Gazette on 12 th June, 2014. This Royal Decree has been adopted to increase retail customer’s protection during the commercialization of finan- cial products. What’s in there? The Royal Decree requires delivery to retail cus- tomers of an information sheet and regulates the publicity, notice and other documents concerning financial products. For this new regulation the delivery of a KIID for Uci is considered equivalent to the delivery of an information sheet. What’s next? The Royal Decree will enter into force on 12 th June, 2015.

Council of 8 June 2011 on Alternative Invest- ment Fund Managers and amends Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010. This law has been published in the Belgian Official Gazette on 17 th June, 2014. What’s in there? The law dated 19 th April, 2014 regulates Alter- native Investment Fund Managers in its parts II which transpose the AIFMD 2011/61/UE. Part III of the law regulates Belgian and Foreign Funds which commercialized their shares in Belgium (public funds, institutional funds,…). Part IV con- tains additional rules for managers of Belgian and foreign alternative investment funds which commercialize their shares in Belgium. What’s next? This law will enter into force 10 days after its publication on the Belgian Official Gazette.

The Royal Decree approving the regulation on technical requirements for a risk’s label dated 25th April, 2014 has been published on the Bel- gian Gazette on 12th June, 2014. The regulation was adopted to enable the retail customers to get a first idea of the risk associated with a defined product.. What’s in there? Five risk classes are listed on the label. In some cases, it may be used of the rating issued by an eligible rating agency that measures the degree of risk of the debtor on a long term basis. This risk’s label is to be mentioned on the information sheet required by the Royal Decree dated 25 th April, 2014 setting certain obligations on information during the marketing of financial products to retail customers. What’s next? The Royal Decree will enter into force on 12 th June 2015. Publication of the Law implementing AIFMD on June 17 th Background This Belgian law implements the Directive 2011/61/EU of the European Parliament and the

Publication of the Law completing AIFMD

transposition on June 17 th Background

The law dated 10 th April 2014 completing, with regard to remedies, the law on alternative in- vestments funds and their managers has been published on the Belgian Official Gazette on 17 th June 2014. What’s in there? The law dated 10 th April ensures the partial transposition of Directive 2011/61/UE on Alter- native Investment Fund Managers and modifies Directives 2003/41/CE on the Activities and Supervision of Institutions for Occupational Re- tirement Provision and 2009/65/CE on the coor- dination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities as well as the regulation (EC) No 1060/2009 on credit rat- ing agencies and (EU) No 1095/2010 establish- ing a European Supervisory Authority. What’s next? The present law enters into force on the date the law dated 19th April 2014 on Alternative Invest- ment Fund Managers will enter into force.

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What’s next? The first updated FFI list will be published by the IRS on 1 July and will be subsequently updated on a monthly basis. The updated lists will contain those entities that have registered and obtained a GIIN 5 business days before the end of the month. The list as well as important links (e.g. to the relat- ed user guide and a list of frequently asked ques- tions) is AVAILABLE HERE .

ITALY

What’s next? 10 June 2014 was the deadline for submission of comments.

Ministry of Economy and Finance launched a public consultation on investment funds Background On March 4, 2014 was issued the Legislative De- cree n. 44 transposing the AIFM Directive in Italy. The Decree entered into force on April 9 th 2014, and amended the Italian Consolidated Financial Act (Testo unico della finanza “TUF”). What’s in there? On 20 May 2014, the Italian Ministry of Economy and Finance ("MEF") launched a public consulta- tion regarding the draft regulation on general cri- teria which the Italian UCIs (including Italian AIFs) must comply with. The new regulation will replace the Ministerial Decree 24/05/1999, No. 228. The general criteria and investment limits appli- cable to Italian UCIs will include: open-ended UCIs (UCITS, AIFs),close-ended AIFs (AIFs, real estate AIFs),UCIs reserved to professional investors (open ended/close-ended AIFs) and guaranteed UCIs (open-ended/close-ended AIFs). In accordance with AIFMD provisions UCIs reserved to professional investors may derogate from limits and prudential rules provided for by the Bank of Italy. It seems also that retail clients will be able to invest in such reserved UCIs provided a minimum subscription amount of at least € 500,000 and a statement about the acknowledgment of the rele- vant risks. The retail client will have also a 7-day period from the subscription to withdraw from the investment.

TAX

Publication of the first FATCA FFI list Background Under FATCA, Foreign Financial Institutions (FFIs) which are considered as non-participating FFIs will face a 30% withholding tax on US sourced in- come for payments made. What’s in there? On 2 June 2014, the IRS published its first FFI list. The list contains the names of financial institutions and other entities that have completed Foreign Account Tax Compliance Act (FATCA) registration with the IRS and obtained a global intermediary identification number (GIIN). As at 19 June 2014, in 78 countries have either signed an Intergovernmental Agreement (IGA) with the US or are treated as if an IGA were finalized. The link to the list with the IGAs published by the US Department of the Treasury is AVAILABLE HERE.

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Scanning This publication is produced by Legal and Compliance teams of CACEIS with the kind support of Communication teams and Group Business Development Support teams.

Editors Gaëlle Kerboeuf, Group General Counsel @ Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) @ Permanent Editorial Committee Gaëlle Kerboeuf, Group General Counsel Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) Chantal Slim, Head of Legal (CACEIS Bank France) Eliane Meziani-Landez (Head of Fund Structuring France) Emilie Zaracki (Legal Officer) Ana Vazquez, Head of Fund Structuring and Domicile (Luxembourg) Véronique Bastin, Head of Compliance (Luxembourg) Stefan Ullrich, Head of Legal (Germany) Costanza Bucci, Legal and Compliance Manager (Italy) Mireille Mol, Legal and Compliance Manager (Netherlands) Laura Guzzi, Legal Manager (Belgium) Helen Martin, Head of Legal (Ireland) Sarah Perrier, Head of Legal and Compliance (Switzerland) Philippe Naudé, Marketing and Communication Specialist (France) Arianna Arzeni, Head of Group Business Development Support

Design Sylvie Revest, CACEIS, Communications

Photos credit Yves Maisonneuve, Yves Colllinet, CACEIS, Fotolia

CACEIS 1-3, place Valhubert 75 206 Paris CEDEX 13 www.caceis.com

This publication is provided by CACEIS from sources believed to be reliable. The present publication is not intended as an offer to sell or a commercial solicitation and may be amended at any time by CACEIS. Information contained in the present newsletter are not a substitute to legal, taxation or investment consultation or advice from an appropriately qualified profes- sional. CACEIS does not warrant the accuracy and completeness of this newsletter, nor endorse or make any interpretation about its content. In no event will CACEIS be liable for any damages whatsoever arising out of the use of, or reliance on the content of this newsletter. Unauthorized used or distribution without the prior written permission of CACEIS is prohibited.

Scanning - July 2014 - page 11

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