The United Kingdom served its Article 501 notice today, giving two years’ notice to leave the European Union. Managers of offshore funds, as well as everyone else here in the UK, now have more clarity on the Brexit timetable, with the UK scheduled to be out of the EU in March 2019. Much has been uncertain since the UK’s referendum in June last year, and that’s not likely to end until the final exit terms are agreed, but it’s clear that the effects of Brexit will be felt beyond the UK and Europe. Brexit negotiations are expected to be intense and politically complex (especially with French and German elections later in 2017 and Scotland’s demand for a further independence referendum before Brexit finally takes effect), with the UK’s stated aim, in its Article 50 notice, of agreeing a “deep and special partnership, taking in both economic and security co-operation” between the UK and EU post Brexit.
So what impact will Brexit have on offshore funds?
Adding to our success at The Lawyer and HFM Awards, Harneys was privileged to win twice at the inaugural Africa Global Funds Awards held recently in Cape Town. The Africa Global Funds Awards were created specifically to honour and generate both industry and public recognition for fund service providers focused on Africa and are the only international awards of their kind.
We were successful both in the Best Offshore Law Firm and Best Offshore Law Firm – Client Service categories, effectively giving us a clean sweep of the awards designated to offshore law firms against some well regarded and formidable competitors. Given that I head up our Africa Practice and for the last 5 years have had a strong focus on the funds industry in Africa, these wins saved me from some awkward internal conversations and allowed me to breathe a long sigh of relief.
It was a packed room at The Lawyer Awards last week – all 1250 of us anxiously hoping our firm would be crowned winner – and with few categories so fiercely contested as Offshore Law Firm of the Year, we were definitely on the edge of our seat.
The Lawyer kept us entertained while we waited, though. With hours of comedy from Dara Ó Briain, a rocking band and a beautiful River Thames fireworks display, it was a glittering celebration of a year of hard work and success across the legal industry – and judging from the crowd still packed on the dancefloor at 2am, a night that many didn’t want to end.
In this guest post, Brian Sapadin, Executive Director of GlobeTax, discusses the benefits of tax reclamation and the opportunities presented by the new Cayman LLC draft legislation.
With the highly anticipated Cayman LLC law finally being published in draft, once unobtainable foreign tax reclaim entitlements are expected shortly to be in play for eligible investors whose Cayman fund undertakes a conversion to the new structure (or, in the case of a new launch, initially structures as a Cayman LLC). Most U.S. tax-exempts invest through offshore feeders, traditionally a Cayman limited company (Cayman LTD), to avoid Unrelated Business Income Tax (UBIT) which can be assessed to U.S. resident tax-exempt investors for gains made on leverage, including traditional margin or shorting strategies. Unfortunately, investors in such vehicles do not have access to double taxation treaty benefits, since the Cayman vehicle serves as a corporate blocker and Cayman itself is not party to bilateral tax treaties.
In a Cayman LLC — a transparent “look-through” vehicle — U.S. tax-exempts (and the fund manager) should soon be able to reap the benefits of tax treaties, for eligible markets other than the U.S., while still being shielded from UBIT.
In this guest post Thalius Hecksher, Global Director at Trident Fund Services, discusses the drivers behind the trend for bigger funds and fewer start-ups, and why Cayman remains the largest and most popular offshore fund domicile.
When it comes to the Cayman Islands, blue skies, beautiful beaches, scuba diving, and snorkeling are the norm, and have been for decades. But when it comes to offshore fund administration there are some interesting changes afoot in Cayman. In a pronounced sea change Cayman start-up funds are getting bigger, while on the flip side, small start-ups, while not quite an endangered species, are certainly rarer. With regulatory costs creeping up in recent years, partly as a result of the implementation of new initiatives such as FATCA, it looks like this trend is here to stay.