Investment Funds 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

CHAMBERS GLOBAL PRACTICE GUIDES

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editor Sam Kay Dechert LLP

Global Practice Guides

Investment Funds

Contributing Editor Sam Kay Dechert LLP

2025

Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. GPG Director Katie Burrington Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewer Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by Sam Kay, Dechert LLP p.5

INDIA Law and Practice p.208

Contributed by IC Universal Legal Trends and Developments p.230 Contributed by IC Universal Legal

AUSTRALIA Law and Practice p.8 Contributed by MinterEllison Trends and Developments p.37 Contributed by MinterEllison

IRELAND Law and Practice p.236 Contributed by Walkers

BRAZIL Law and Practice p.47 Contributed by Machado Meyer Advogados CAYMAN ISLANDS Law and Practice p.71 Contributed by Maples Group CHILE Law and Practice p.87 Contributed by EDN Abogados Trends and Developments p.103 Contributed by EDN Abogados CHINA Law and Practice p.112 Contributed by King & Wood Mallesons Trends and Developments p.133 Contributed by Zhong Lun Law Firm

ITALY Law and Practice p.260 Contributed by ADVANT Nctm Trends and Developments p.283 Contributed by ADVANT Nctm

JAPAN Law and Practice p.287 Contributed by Anderson Mori & Tomotsune Trends and Developments p.307 Contributed by Mori Hamada & Matsumoto

JERSEY Law and Practice p.314 Contributed by Carey Olsen LUXEMBOURG Law and Practice p.340 Contributed by BSP

FRANCE Law and Practice p.140 Contributed by Racine Trends and Developments p.160 Contributed by Racine

Trends and Developments p.363 Contributed by Norton Rose Fulbright

MAURITIUS Law and Practice p.373 Contributed by BLC Robert & Associates NETHERLANDS Law and Practice p.397 Contributed by Loyens & Loeff N.V.

GERMANY Law and Practice p.167 Contributed by POELLATH GUERNSEY Law and Practice p.190 Contributed by Carey Olsen

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Contents

SWEDEN Law and Practice p.419

Contributed by Harvest Advokatbyrå Trends and Developments p.438 Contributed by Harvest Advokatbyrå AB SWITZERLAND Law and Practice p.445 Contributed by Aegis Trends and Developments p.464 Contributed by Aegis

UK Law and Practice p.470 Contributed by Dechert LLP

USA Law and Practice p.493 Contributed by Clifford Chance Trends and Developments p.513 Contributed by Clifford Chance

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INTRODUCTION

Contributed by: Sam Kay, Dechert LLP

Dechert LLP is a global law firm with 17 loca - tions across the US, Europe, the Middle East and Asia. It has one of the largest investment fund practices in the world, with a record of in - novation stretching back 40 years. It advises across the full range of mainstream and alter - native asset classes and strategies, represent - ing some of the world’s largest fund complexes. The asset management practice has dedicated lawyers across 15 offices and operates as a

single practice group across the globe, with no internal barriers to collaboration. Clients look to the team for support across the entire fund lifecycle, from development and formation to marketing, operations and transactions. It pro - vides advice related to fund management and governance, and assists with the full range of regulatory and compliance issues, as well as investigations and litigation involving regulatory entities around the world. sales, and has extensive experience in advising clients on matters of strategic significance, such as GP-stake sales, internal restructurings for succession planning, management spin- outs and complex carried interest arrangements. He also advises institutional investors, funds-of-funds and asset allocators on their participation in funds, as well as LP-led secondary activity from single assets to large portfolio sales.

Contributing Editor

Sam Kay is a partner in Dechert’s financial services group. He advises on a wide range of investment funds matters, with a particular focus on fund formation, representing private funds and asset managers throughout the private equity, private debt/credit, infrastructure and real estate industries. Sam advises GPs on complex transactions such as continuation funds, tender offers and strip

Dechert LLP 25 Cannon Street London EC4M 5UB UK

Tel: +44 207 184 7000 Fax: +44 207 184 7001 Email: sam.kay@dechert.com Web: www.dechert.com

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INTRODUCTION Contributed by: Sam Kay, Dechert LLP

Investment Funds 2025 – Global Overview This cross-border legal guide provides a glob - al comparison of fundamental legal, tax and regulatory considerations relating to the estab - lishment and operation of investment funds in a range of jurisdictions where the industry is active. Each chapter is written by leading legal advisers from the relevant jurisdiction. Certain chapters focus on particular jurisdictions, in a question-and-answer format, providing informa - tion on the structures typically used, the regula - tory framework for those funds, any significant operational requirements, how the funds may be marketed, a summary of the tax treatment for both the fund itself and investors, and custom - ary or common terms. The guide also contains a number of chapters highlighting trends and developments in the investment funds market. This guide seeks to provide guidance on the key questions arising when industry participants are seeking to establish, operate, market and/or invest in an investment fund. Investment funds often operate across multiple jurisdictions, so those who understand the global landscape will be at a distinct commercial advantage, and will be able to minimise their risk of falling foul of local laws. The key objectives when setting up an invest - ment fund that are discussed in this guide There are a multitude of different legal structures available, and each jurisdiction applies its own legal and regulatory framework. Certain jurisdic - tions are traditionally utilised for certain strat - egies. However, ongoing legal developments in those jurisdictions, coupled with attractive investment funds regimes being introduced and/or modernised in the less obvious choices include the following. Choice of domicile

of jurisdictions seeking to compete with more established jurisdictions, mean that the domicile used by a manager for its last fund may not be the best option for its next fund. This guide will provide up-to-date information on the typical forms of investment fund vehicles available in each jurisdiction, to assist in making decisions relating to domicile. Asset class There is also a wide variety of asset classes that are captured within the market, from traditional long-only equity funds through to leveraged buy - out funds and hedge funds. Funds for different asset classes will have their own bespoke fea - tures and requirements. The industry develops in response to demand and now offers many ways for investors to customise their exposure to certain asset classes. Current trends – such as secondaries transactions, general partner-led fund restructurings, hybrid or “evergreen” funds and the drive towards the “democratisation” of the private funds market – demonstrate that the investment funds industry is flexible and accom - modating to investors. Regulatory and tax considerations The global investment funds industry continues to grow and innovate at pace against the back - drop of an increasingly complex regulatory, tax and legal landscape, and this is expected to car - ry on during 2025 and beyond. Without doubt, the number of legal, tax and regulatory issues that have to be considered when establishing an investment fund has increased significantly, and regulators and tax authorities across the world are introducing more complex reforms. A fund manager's failure to comply with these requirements can lead to significant fines or, in extreme cases, custodial sentences. There - fore, it is important to understand the applicable

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INTRODUCTION Contributed by: Sam Kay, Dechert LLP

About this guide To provide a framework for each jurisdiction- specific chapter, the guide focuses on two cat - egorisations of investment funds: “alternative investment funds” and “retail funds”. There will obviously be overlaps between these two cate - gories, and some strategies or structures will not be adequately catered for (an obvious example being listed funds aimed at institutional inves - tors). However, the suggested split is intended to be as follows. • Alternative investment funds cover the non-traditional private fund strategies such as private equity, venture capital, infrastruc - ture, alternative credit, hedge funds and real estate. • Retail funds cover the traditional mutual, authorised, regulated or registered funds that are commonly available to the public and, therefore, are not usually offered on a private placement basis. For this reason, retail funds have historically been more heavily regulated than other types of funds. This guide not only sets out the information needed, but also provides a network of lead - ing experts from law firms around the world who can be called upon to provide advice. The chap - ters in this guide have been written by some of the leading legal investment funds practitioners around the world: we thank each of them for contributing their invaluable and highly relevant industry comments.

requirements in jurisdictions where the fund or manager is doing business. Investor base Another key objective when structuring an investment fund is ensuring that the fund is suitable for its proposed investors, whether that will be institutional investors or retail investors, or a combination of both. The investment funds industry is a global market, so funds will often be marketed to investors in multiple jurisdictions. Therefore, a fund needs to be flexible enough to be adapted to different groups of investors; it needs to be capable of being marketed in differ - ent jurisdictions; and it needs to be sufficiently familiar to investors. The manager and sponsor will, therefore, need to consider and take advice on the securities and marketing laws and regula - tions in the fund's target jurisdictions. In many jurisdictions, the marketing or distribu - tion of an investment fund is restricted to cer - tain categories of investor – eg, “professional” or “sophisticated” investors (ie, not to the public at large). Funds that are targeted at retail inves - tors are, on the whole, subject to a higher level of regulatory scrutiny and operating restrictions. In recent years, lawmakers and regulators have continued to focus on investor protection whilst increasingly looking to ensure that the industry complies with wider ESG-related responsibili - ties, leading to many new (and often onerous) legal, tax and regulatory requirements. A further challenge is the need to navigate between the approaches taken in different regions or jurisdic - tions – eg, operating in line with EU ESG regula - tion – whilst also taking account of the differ - ing views and approaches to ESG in the United States.

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AUSTRALIA

Australia

Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach MinterEllison

Sydney

Tasmania

Contents 1. Market Overview p.11 1.1 State of the Market p.11 2. Alternative Investment Funds p.11

2.1 Fund Formation p.11 2.2 Fund Investment p.12

2.3 Regulatory Environment p.15 2.4 Operational Requirements p.19

2.5 Fund Finance p.19 2.6 Tax Regime p.20 3. Retail Funds p.21 3.1 Fund Formation p.21 3.2 Fund Investment p.23

3.3 Regulatory Environment p.24 3.4 Operational Requirements p.28

3.5 Fund Finance p.29 3.6 Tax Regime p.29 4. Legal, Regulatory or Tax Changes p.30 4.1 Recent Developments and Proposals for Reform p.30

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

MinterEllison is a law firm operating across mainland Australia, New Zealand, Hong Kong, China, and the UK through a network of integrat - ed and affiliated offices. MinterEllison’s global reach is bolstered by a network of international offices and deep, longstanding relationships with leading independent law firms around the world. The firm is recognised as having one of the largest and most specialised financial ser - vices practices in Australia. The funds team comprises over 40 qualified practitioners with a strong understanding of the financial services

regulatory environment and active participation in industry working groups. Their expertise in - cludes fund formation, fundraising, regulatory compliance, third-party engagement, invest - ment advice, investor negotiations, and project management. MinterEllison has advised clients such as Next Capital, Quadrant Private Equity, and Metrics Credit Partners on innovative fun - draising methods. The team also collaborates with major firms like BlackRock, Vanguard, and Macquarie on investment management, par - ticularly in exchange-traded funds and A-REITs. Nicole Brown is a partner in MinterEllison’s financial services and funds group. Nicole specialises in funds management and financial services. She has experience in advising fund managers, investment managers, responsible entities, trustees and other financial services entities in relation to a variety of financial services and funds management issues, including establishing, structuring, promoting and marketing funds. Nicole’s experience covers a range of products, including retail funds, wholesale funds, exchange-traded funds and hedge funds. Her experience also includes several years with Baker McKenzie in London in its financial services team.

Authors

Michael Lawson is a partner and leads MinterEllison’s financial services and funds group. He has advised

Australian and global fund managers on all aspects of funds management and financial services for over 20 years. He has broad industry experience across domestic and international financial products, including retail and institutional funds, A-REITs, ETFs, structured products, private equity funds, hedge funds and infrastructure funds. Michael’s expertise spans the development, formation and promotion of listed and unlisted investment funds, restructures of existing products, counterparty arrangements and regulatory issues. Before joining MinterEllison, Michael was part of the magic circle of Clifford Chance’s market-leading funds management team in London.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

Lizzie White is a lawyer in MinterEllison’s financial services and funds group. Having transitioned from a graduate role at the firm, she has experience in a broad range of practice

Tamaryn Leach is a lawyer in MinterEllison’s financial services and funds group. She has a broad range of experience in the financial services industry, including in financial services

areas, including financial services licensing, consumer protections, payment systems, consumer credit, product disclosure, prudential standards and privacy. She has assisted in providing advice to various entities, including financial institutions, insurers, fund managers and payment service providers.

and credit licensing, consumer protections such as unfair contract terms, payment systems and regulations, consumer credit, anti-money laundering and counter-terrorism financing, sanctions, product disclosure, prudential standards, design and distribution obligations, scams, cybersecurity and privacy. She has been involved in due diligence projects from a regulatory perspective and in providing advice to various financial services entities, including banks, insurers, fund managers and payment service providers.

MinterEllison Level 40, Governor Macquarie Tower

1 Farrer Place Sydney 2000 Australia

Tel: +61 299 218 888 Fax: +61 299 218 123 Web: www.minterellison.com

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

1. Market Overview 1.1 State of the Market

vehicles (CCIVs), which can be used as invest - ment vehicles for a variety of asset classes. 2.1.2 Common Process for Setting Up Investment Funds A regulated Australian unit trust will require reg - istration with the Australian Securities & Invest - ments Commission (ASIC). Such unit trusts are known as registered managed investment schemes. Once ASIC receives an application, it must make a decision on registration within 14 days, and the key approval criteria are: • the trustee of the fund holds an Australian Financial Services Licence (AFSL) authorising it to be a “responsible entity” of a registered managed investment scheme; • the responsible entity is an Australian public company; and • the constitution of the fund meets the require - ments of the Corporations Act 2001 (Cth) (the “Corporations Act”) and relevant ASIC guidance. The key required documentation is a constitu - tion/trust deed. An investment management agreement is also typically required, by which the trustee outsources investment management to a manager entity. The setting-up process is not lengthy, and costs are reasonable. Establishment of a registered managed investment scheme and registration with ASIC can take place within three to four weeks. An unregistered unit trust can be established within one to two weeks. The above timings assume a simple structure and that relevant licensing arrangements are previously in place.

The Australian investment funds market is highly developed from both a regulatory and commer - cial perspective. Australia is a jurisdiction that is welcoming to retail and alternative fund strate - gies and managers. There has continued to be a significant flow of transactional and regulatory matters following initially restrained activity during the COVID-19 pandemic, and this is anticipated to continue in the year ahead. 2. Alternative Investment Funds 2.1 Fund Formation 2.1.1 Fund Structures The most commonly used structure is a unit trust due to its flexibility. For private equity and venture capital funds, a unit trust or a limited partnership, usually in the form of a venture capital limited partnership (VCLP) or early-stage venture capital limited partnership (ESVCLP) (in certain circumstances), can be used. A unit trust is simpler to establish and offers greater flexibility with respect to the asset class - es in which it can invest; however, certain limited partnerships can attract tax benefits for inves - tors and fund managers when certain require - ments are met. A unit trust is a suitable local structure for hedge and credit strategies. Following legislative changes in 2022, it is pos - sible to establish corporate collective investment

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

VCLPs and ESVCLPs are incorporated limited partnerships established under state-based leg - islation. They are bodies corporate and need to be registered with relevant state regulatory bod - ies. In addition, these entities require registration with Innovation and Science Australia under the Venture Capital Act 2002 (Cth) (the “VC Act”). Due to legislative requirements, the general part - ner of the VCLPs and ESVCLPs will generally be an incorporated limited partnership (VCMP). The general partner of that VCMP is generally a company. The benefit of registering VCLPs and ESVCLPs is primarily the manner in which investment pro - ceeds are taxed for both the general partner and the limited partners. Managers of each of these vehicles are required to: • hold an AFSL; • be an authorised representative of an AFSL holder; or • have the benefit of a relevant exemption. • Key documents for partnerships are: • a partnership deed; • a subscription agreement; • a management agreement; and • any side letters. A partnership deed for the VCMP is also required. Incorporation of a limited partnership can occur in approximately two business days with modest registration fees. A VCLP or ESVCLP registration can be conditional or unconditional, depending on whether all registration conditions have been met. Following receipt of a complete application, Innovation and Science Australia must typically make a decision regarding registration under the VC Act within 60 days, though there is a power to extend this timeframe.

A significant workstream to be undertaken on fund inception is the relevant “carry” vehicles and rules applicable for the carry participants. As discussed later (see 2.2.2 Legal Structures Used by Fund Managers ), if a CCIV is the pre - ferred vehicle, these are formed on registration with ASIC. 2.1.3 Limited Liability The trust deed for most unit trusts includes what is, in effect, a contractual limitation of liability of investors. The effectiveness of such limitations has broad commercial acceptance. Despite such acceptance, the question of the legal effec - tiveness of such limitations has not been settled across Australia’s states and territories. In relation to limited partnership structures, as a general rule, an investor’s liability is limited to the capital that they committed to the investment vehicle. Typically, if there is a tax impost relating to an investor’s commitment, the investor must fund that impost. 2.1.4 Disclosure Requirements A fundamental disclosure requirement is that communications to investors cannot be mislead - ing or deceptive, including by omission. Where retail investors are issued with interests in a fund, the product disclosure statement (PDS) must comply with statutory disclosure rules, including detailed cost disclosure. The issuer of the product has continuous disclosure obliga - tions. 2.2 Fund Investment 2.2.1 Types of Investors in Alternative Funds Institutional investors from Australia and off - shore frequently invest in alternative funds. Most major Australian institutional investors have an

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

Overview of VCLPs and ESVCLPs An incorporated limited partnership must meet specific requirements before it can be registered as a VCLP or an ESVCLP with Industry Innova - tion and Science Australia, an Australian gov - ernment department. There are specific require - ments for a VCLP and an ESVCLP set out in the VC Act, with many consistencies between the two, including the following: • the term of the partnership must be more than five years and less than 15 years; • the minimum committed capital must be at least AUD10 million; • the partnership must only carry on activities that are related to making eligible venture capital investments (EVCIs), as defined by relevant Australian tax legislation; • regarding ESVCLPs, the investments must be in the “early stage”. An EVCI is an equity investment in an unlisted company or unlisted trust that: • is located in Australia; • does not exceed more than 30% of the part - nership’s committed capital; and • has a predominant activity that is not an ineli - gible activity. An ineligible activity includes: • property development or land ownership; • banking; • providing capital to others; • leasing; • factoring; • securitisation; • insurance; • construction or acquisition of infrastructure facilities and/or related facilities; and

allocation for private equity and private debt funds. Venture capital investment in Australia is primarily high net worth and/or family office-led, though some institutions have a venture capital allocation. 2.2.2 Legal Structures Used by Fund In Australia, unit trusts can be structured as open- or closed-end vehicles. Performance fees can be based on a traditional performance fee tied to net asset value increases or follow a pri - vate equity-style “carry waterfall”. Managers Unit Trusts There are very few legal requirements that apply to Australian unit trusts, which are simple to establish and, provided they are only offered to wholesale investors, often have no regulatory or other registration or approval requirements (note that there would typically be regulatory require - ments for the manager or trustee; see 2.3 Regu- latory Environment ). A unit trust is managed by its trustee, who may, in practice, appoint an investment manager to provide investment management services in respect of the trust. The use of corporate trus - tees is common by fund managers who do not wish to manage the day-to-day administration of their own trust or who may lack the necessary regulatory licence to act as a trustee. Partnerships The common partnership structures used by a private equity or venture capital fund to invest primarily in Australian businesses are known as VCLPs for private equity and venture capital funds or ESVCLPs for early-stage venture capital funds.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

• making investments that are directed at deriving income in the nature of interest, rent, dividends, royalties or lease payments. For an investment to qualify as an EVCI, the investment must not exceed the value restriction imposed at the time of the investment (ie, AUD50 million for an investment by an ESVCLP and AUD250 million for an investment by a VCLP). In addition to the requirements for registration, the VC Act applies various restrictions to these structures: • no single investor in an ESVCLP, other than in certain circumstances, can contribute more than 30% of the total committed capital; • the maximum committed capital for an ESV - CLP is AUD200 million; • VCLPs and ESVCLPs cannot invest in a single investment whose total assets exceed AUD200 million at the time of investment; and • in general, they cannot make debt invest - ments other than permitted loans as defined in the VC Act. Given the strict requirements and restrictions imposed on VCLPs and ESVCLPs, many fund managers establish these vehicles with paral - lel funds (usually soft stapled-unit trusts). This structure allows fund managers to obtain the tax benefits afforded to VCLPs and ESVCLPs with respect to investments that are EVCIs while providing the fund manager with the flexibility to invest in non-EVCIs via parallel funds – a common strategy for leading Australian private equity and venture capital funds. CCIVs Amendments to the Corporations Act in 2022 have facilitated the emergence of a new fund vehicle – the CCIV. This vehicle is a company

limited by shares, which must consist of one or more “sub-funds”. While the CCIV itself is a legal entity, sub-funds are not separate legal entities. Each share in a CCIV must be referable to a sin - gle sub-fund, and the assets of the CCIV must be allocated to a particular sub-fund in an allo - cation register. The Corporations Act provides that the assets of one sub-fund are not available to satisfy the liabilities of another sub-fund. CCIVs can be structured as open-ended or closed-ended and are suitable for retail or wholesale clients. A retail CCIV is subject to specific rules broadly similar to registered man - aged investment schemes. A CCIV must be designated as retail or wholesale, though under certain circumstances, a CCIV will be required to register as a retail CCIV. A CCIV is managed by a “corporate director”, which must be a public company with an AFSL authorisation to “operate the business and con - duct the affairs of a CCIV” for retail or whole - sale CCIVs (as applicable) holding the relevant type of assets. A CCIV and each sub-fund are established upon registration with ASIC and are governed by that CCIV’s constitution. 2.2.3 Restrictions on Investors Australia has a highly developed and continually evolving regulatory regime in relation to invest - ments from offshore into Australia. In summary, the Treasurer of Australia, acting through the Foreign Investments Review Board (FIRB), can block foreign direct investment that is “contrary to Australia’s national interest” if clearance is required. The foreign investment review framework is set by the Foreign Acquisitions and Takeovers Act 1975 (the “FATA Act”) and the Foreign Acquisi -

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

tions and Takeovers Fees Impositions Act 2015, along with their associated regulations. The legislation generally regulates foreign invest - ment proposals by a “foreign person”. Foreign persons involved in applicable transactions are required to notify FIRB. “Foreign persons” essentially means individuals, offshore compa - nies, or onshore companies in which offshore foreigners hold a substantial interest. It includes private foreign investors and foreign government investors. Changes to the rules applied by FIRB from 1 January 2021 also give the Treasurer “call-in powers” and “last-resort powers”, by which the Treasurer may “call in” investments not notified to FIRB for review and in exceptional circum - stances may exercise “last-resort powers” to impose conditions, vary existing conditions or require divestment of approved investments where national security risks emerge. In addition, a new set of rules applies for screening national security businesses, which include: • communications (including telecommunica - tions, broadcasting and domain name sys - tems); • higher education and research; • data storage and processing; • the defence industry; • energy (including electricity, gas, energy mar - ket operators and liquid fuels); • food and grocery; • financial services and markets (including banking, superannuation, insurance and financial market infrastructure); • healthcare and medical (including hospitals); • space technology; • transport (including ports, freight infrastruc - ture, freight services, public transport and aviation); and

• water and sewerage. The critical infrastructure rules and FIRB’s guid - ance also outline some specific entities (eg, Aus - tralia’s big supermarkets, banks, insurers and superannuation funds) as critical infrastructure assets. 2.3 Regulatory Environment 2.3.1 Regulatory Regime Entities managing alternative funds should: • hold an AFSL with appropriate authorisations; • be appointed as the authorised representative of the holder of an AFSL; or • fall within a relevant licensing exemption under the Corporations Act. Where the fund is a unit trust, the trustee and the manager should have the appropriate authori - sations regarding managing and issuing inter - ests in a managed investment scheme. Where a foreign manager wishes to offer interests in an Australian fund, it is common to appoint a corporate trustee as the trustee of the fund, who would appoint the manager as the investment manager of the fund (see 2.3.3 Local Regulatory Requirements for Non-local Managers regard - ing the regulation of the manager). From a regulatory perspective, alternative funds open to only wholesale clients operate relatively freely. There are very few limitations that apply to alternative funds. Significantly, for private equi - ty funds, there are adverse tax implications if a trust were to control a business such that it would be designated a “trading trust”. In such a case, the trust would potentially not be eligible to qualify as a managed investment trust and could be treated like a company (where the trust

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

is widely held). The concept of “control” is widely interpreted for Australian income tax purposes. In certain circumstances, including where a for - eign entity holds 20% of the interests in an Aus - tralian fund or 40% of the interests in aggregate in an Australian fund are held by foreign entities and their associates, approval may be required by FIRB in respect of such fund investments. 2.3.2 Requirements for Non-Local Service Providers Please see 2.3.3 Local Regulatory Require- ments for Non-local Managers . 2.3.3 Local Regulatory Requirements for Non- Local Managers Non-local providers of financial services, including investment managers, have two main options for providing financial services to Aus - tralian wholesale clients in addition to the option of holding an AFSL: • they may apply for individual relief from ASIC to be relieved of the obligation to hold an AFSL (as part of ASIC’s current transitional arrangements for foreign financial services providers (FFSPs); or • they may rely on another relevant exemption from the requirement to hold an AFSL. The FFSP regime of exemptions is currently under review and in a period of transition. A new regime was initially proposed to take full effect on 1 April 2022 but has been delayed until 1 April 2025. The Australian federal government (the “federal government”) consulted on a new direction for the regime in 2021 and introduced a bill in February 2022 – albeit, when the federal government called an election in May 2022, a bill containing proposed new exemptions lapsed. A subsequent bill containing the proposed amend -

ments to the FFSP regime was introduced to Parliament in November 2023 with a proposed commencement date of 1 April 2025. However, as Parliament is not scheduled to reconvene until early in 2025, there remains uncertainty as to the timing of the passage of this bill. As a result, the current licensing and exemption arrangements for FFSPs remain in a transitional period. For further information, see The Foreign Financial Service Providers (FFSP) Regime in 4.1 Recent Developments and Proposals for Reform . 2.3.4 Regulatory Approval Process A regulated fund (typically an Australian unit trust) is known as a registered managed invest - ment scheme, meaning it is registered with ASIC. The registration process is relatively straightfor - ward and only requires that: • the trustee of the fund holds an AFSL author - ising it to be a “responsible entity” of a regis - tered managed investment scheme; • the responsible entity is an Australian public company; and • the constitution of the fund meets the require - ments of the Corporations Act. • Once ASIC receives an application for reg - istration, a decision on registration must be made within 14 days. As previously noted, a limited partnership can be incorporated within approximately two business days. Registration of VCLPs and ESVCLPs can take as little as one month, assuming all required documents have been prepared. Registration fees are modest.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

2.3.5 Rules Concerning Pre-Marketing of Alternative Funds In Australia, pre-marketing of alternative funds, like marketing of alternative funds, may involve providing financial services for which an AFSL will be required, subject to applicable exemp - tions. Please refer to 2.3.3 Local Regulatory Require- ments for Non-local Managers , 2.3.6 Rules Concerning Marketing of Alternative Funds and 2.3.7 Marketing of Alternative Funds . 2.3.6 Rules Concerning Marketing of Alternative Funds Marketing an alternative fund may involve pro - viding financial services in Australia, for which an AFSL will be required, subject to applicable exemptions. Non-local providers of financial services should refer to 2.3.3 Local Regulatory Requirements for Non-local Managers . 2.3.7 Marketing of Alternative Funds Alternative funds can be marketed in Australia as long as the person marketing the fund is author - ised under an AFSL (or an exemption – see 2.3.3 Local Regulatory Requirements for Non-local Managers ) to provide financial product advice or to deal in the relevant fund interests to the rel- evant client group. Typically, these funds would be marketed to wholesale clients only. If the person is not authorised to provide these services to retail clients, marketing activities must be limited to wholesale clients. In addition, where the fund is marketed to retail clients, it would usually need to be registered with ASIC as a “registered managed investment scheme” (see 2.3.4 Regulatory Approval Process ) and comply with regulated disclosure requirements

(see 3.3.1 Regulatory Regime ) and associated rules applying to regulated products. 2.3.8 Marketing Authorisation/Notification Process In Australia, marketing alternative funds may involve providing financial services, for which an AFSL will be required, subject to applicable exemptions. In these circumstances, depend - ing on whether an AFSL will be required or an exemption is available, some form of prior authorisation or notification may be required to be made to ASIC. For example, if it is determined that an AFSL is required, an application for an AFSL will need to be made to ASIC prior to any marketing activities taking place. Alternatively, if it is determined that an exemp - tion is available, then prior notification to ASIC may be required depending on the exemption. Please refer to 2.3.3 Local Regulatory Require- ments for Non-local Managers . 2.3.9 Post-Marketing Ongoing Requirements Once an alternative fund has been marketed to investors in Australia, certain ongoing require - ments may need to be considered. Certain activities in relation to the alternative fund (for example, issuing interests in the alter - native fund to investors in Australia and provid - ing reporting and information to such investors) may involve the provision of a financial service in Australia. In these circumstances, the fund operator may require an AFSL or be able to rely on an exemption.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

If an AFSL is obtained, the licensed entity will be subject to ongoing statutory duties and obliga - tions, including, for example, to: • provide their services efficiently, honestly and fairly; • manage conflicts of interest; and • report “reportable situations” to ASIC. Alternatively, if a relevant exemption was being relied upon, the conditions of that exemption would need to be complied with on an ongoing basis. For example, sufficient equivalence relief includes certain reporting requirements for ASIC. Please refer to 2.3.3 Local Regulatory Require- Investor protection rules concerning financial services for wholesale clients primarily empha - sise adherence to the conditions set by the Australian Financial Services Licence (AFSL) under which the financial services are provided (including compliance with relevant provisions of the Corporations Act, which encompasses restrictions against misleading and deceptive conduct). Investor protection rules for financial services offered to retail clients include compliance with the abovementioned matters, as well as addi- tional regulations aimed at safeguarding retail clients. These include requirements for member - ship in an alternative dispute resolution system and more detailed product disclosure rules. Since October 2021, persons issuing and dis - tributing financial products to retail clients have been subject to provisions of the Corporations Act known as the financial product “design and ments for Non-local Managers . 2.3.10 Investor Protection Rules

distribution obligations” (DDO). This has been a significant focus of the industry in recent times. Under the new obligations, to ensure that their products are designed and distributed appropri - ately, issuers must make a target market deter - mination (TMD) for each product that identifies, among other things, the intended class of con - sumers. They are then required to take “reason - able steps” that will (or are reasonably likely to) result in the financial product being distributed in a manner consistent with the TMD. Issuers are obliged to conduct reviews of the TMD peri - odically and keep certain records. Where there are significant dealings in the financial product that are inconsistent with the TMD, issuers are required to notify ASIC. Distributors are also subject to certain obliga - tions under the DDO – specifically to: • not engage in retail product distribution unless they reasonably believe a TMD has been made or is not required to be made; • take “reasonable steps” that will (or are rea - sonably likely to) result in distribution being consistent with the TMD; • notify the issuer of significant dealings that are inconsistent with the TMD; and • keep certain records. 2.3.11 Approach of the Regulator ASIC plays an active role as the non-prudential regulator of the Australian financial services (AFS) industry. It conducts surveillance and enforcement of the industry and facilitates regu - latory development and implementation. ASIC’s position on a range of regulatory mat - ters is publicised via the ASIC website and other communication channels. Documents issued

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

by ASIC include regulatory guides, information sheets and media releases. Meetings between industry participants and ASIC occur from time to time in various contexts. 2.4 Operational Requirements The key restriction applicable in relation to the operation of an alternative investment fund is licensing. Each entity involved in the fund’s operation must hold or be authorised under a relevant AFSL or subject to or validly rely on an applicable exemption. As previously noted, there are very few limita - tions applying to alternative funds. Significantly, for private equity funds, there are adverse tax implications if a trust were to control a business such that it would be designated a “trading trust”. In such a case, the trust would potentially not be eligible to qualify as a managed invest - ment trust and could be treated like a company (where the trust is widely held). The concept of “control” is currently widely interpreted for Aus - tralian income tax purposes. Provided the fund’s trustee is appropriately authorised under its AFSL, there is no legal requirement for a depository or a custodian to be appointed to hold its fund assets. Specific operational requirements for AFSL hold - ers include the following statutory obligations: • providing financial services efficiently, hon - estly and fairly; • having in place adequate arrangements for the management of conflicts of interest; • complying with the conditions of the entity’s AFSL; • complying with the financial services laws of Australia;

• taking reasonable steps to ensure that their representatives comply with the financial services laws of Australia; • having available adequate resources (includ - ing financial, technological and human resources) to provide the financial services covered by an entity’s AFSL; • maintaining competence to provide financial services; and • ensuring that their representatives are ade - quately trained. ASIC has issued guidance in relation to compli - ance with these obligations, and there are vari - ous practical ways in which AFSL holders may satisfy the obligations. 2.5 Fund Finance The fund finance market in Australia is highly developed. Restrictions on borrowings may arise due to the agreements that the fund equity holders have in place between themselves or as a function of the constituent documents of the fund. In addition, financier-imposed borrowing restrictions and covenants will be relevant. It is common for financiers to take security for finance provided, including mortgages, in rela - tion to property and infrastructure funds. Alternative fund managers often utilise capital call facilities, which are secured by the unpaid capital commitments of the investors to the investment vehicle itself rather than the vehi - cle’s assets. Certain large, institutional-grade investors do not support the use of capital call facilities. There are limited examples of funds raising debt via bond markets, which typically take place offshore.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

2.6 Tax Regime Taxation of a Trust

For a VCLP, the key Australian tax implications include: • “flow-through” treatment – taxable income derived by the VCLP “flows through” the partnership to the investors and will be taxed in the hands of the investors; and • CGT exemption – a full CGT exemption is available for eligible venture capital partners (ie, tax-exempt foreign residents or foreign venture capital funds) on gains derived from the disposal of EVCIs made by the VCLP (subject to satisfying certain requirements). For an ESVCLP, the key Australian tax implica - tions include: • “flow-through” treatment – taxable income derived by the VCLP “flows through” the partnership to the investors and will be taxed in the hands of the investors; • tax offset – a non-refundable carried-forward tax offset is available to investors for the lesser of 10% of their eligible contributions or share of investments in the ESVCLP (subject to satisfying certain requirements); • revenue gain or profit exemption – any rev - enue gain or profit arising from the disposal of an EVCI by an ESVCLP will be excluded from the taxable income of an investor of the ESVCLP, which only applies if the revenue gain that arises would have been subject to the CGT exemption if the asset disposed of was a CGT asset (note that the exemp - tion is capped where the relevant investment exceeds AUD250 million); and • income exemption – an investor’s share of income (eg, dividend) derived from EVCIs made by an ESVCLP will be excluded from the partner’s taxable income calculation if the partner is a limited partner of an Australian- resident general partner.

Typically, the income and gains of a trust are subject to flow-through tax treatment (ie, tax - able income of a trust is taxed at the hands of the investors) and, therefore, investors are taxed directly on their pro rata share of the income of the trust and gains arising from the disposal of any investment of the trust. In order to qualify as a “managed investment trust”, broadly, the trust: • must be managed by an AFSL holder; • must be widely held; • must not be closely held; and • cannot control a trading business. Where the trust qualifies and elects to be a “managed investment trust”: • fund payment distributions made by the man - aged investment trust to foreign investors may be subject to the concessional managed investment withholding tax of 15%; and • investors’ share of the gains arising from disposals of investments by the funds should be taxed under the capital gains tax provi - sions rather than be treated as a revenue gain (where the trust has made certain election) – as a result, a capital gains tax (CGT) dis - count may be available for eligible Australian resident investors. Further detail is provided in 3.6 Tax Regime . Taxation of a VCLP or an ESVCLP A VCLP or an ESVCLP provides fund manag - ers and investors with support to help stimulate venture capital investments through tax benefits.

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AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison

Generally, a resident trust should be able to qual - ify for the benefits of a double tax treaty between Australia and a foreign jurisdiction. However, this should be considered on a jurisdiction-by-juris - diction basis. CCIVs The new CCIV structure has been designed to provide tax treatment that aligns with the existing tax treatment of Attribution Managed Investment Trusts (AMITs). Investors in a CCIV sub-fund will receive the same tax treatment as those in an AMIT, including “flow-through” tax treatment.

offshore entity or a locally established (usually an Australian proprietary company limited by shares) subsidiary of an offshore manager. The investment manager, whether locally established or offshore, would generally need to obtain an AFSL or be able to rely on a relevant exemption. Please see 3.3.3 Local Regulatory Require- ments for Non-local Managers for further dis- cussion regarding the local regulatory require - ments for offshore managers. Key Advantages and Disadvantages of Unit Trusts Some of the key advantages of unit trusts are outlined below. • Tax “flow-through” – unit trusts that have passive investments (and do not have active businesses) are typically managed as a flow-through vehicle for tax purposes, which means that, unlike a company, a unit trust does not itself pay tax. Rather, the unit hold - ers of the unit trust will pay tax on their pro - portional share of the distributions to them. • Asset protection – unit trusts offer additional asset protection from internal and external parties as the assets of the unit trust are held by the trustee on trust for the unit holders. The trustee is also subject to fiduciary and (as a responsible entity) statutory duties, includ - ing acting in the best interests of unit holders. The perceived disadvantages of unit trusts include the following. • Unit trusts are not common offshore – unit trusts tend to be creatures of common law jurisdictions, and hence, they are often only used or well understood in some offshore jurisdictions. • No separate legal identity – unlike a company, a unit trust is not itself a separate legal entity

3. Retail Funds 3.1 Fund Formation 3.1.1 Fund Structures Unit Trust

The most commonly used structure for retail funds in Australia is a unit trust. Each unit enti - tles the unit holder (ie, the investor) to a benefi - cial interest in the trust property as a whole but not in any particular asset comprising the trust property. The trustee (which, in the context of retail funds, is referred to as a responsible entity) is responsi - ble for the operation and management of the unit trust. As retail funds are regulated in Australia, the Corporations Act requires that the responsi - ble entity be an Australian public company that holds an AFSL. For this reason, offshore manag - ers looking to establish an Australian retail fund will often choose to engage a local responsible entity to manage the fund instead of creating their own responsible entity in Australia. The responsible entity may then appoint an investment manager to oversee the fund’s assets. The investment manager can be an

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