UK Law and Practice Contributed by: Sam Kay, Philippa List, Mark Stapleton and Nicolas Kokkinos, Dechert LLP
1. Market Overview 1.1 State of the Market
in each country, known as the UCITS market - ing passport. Following Brexit, UK UCITS can no longer make use of this passport. A NURS provides a similar level of investor protection to that of a UCITS and allows the manager more flexibility in terms of the investments the fund can make. In addition to the UCITS and NURS, there is also a more lightly regulated regime for institutional and certain other qualified investors: the quali - fied investor scheme (QIS). The UK provides for a large number of open- ended vehicles that fall within these two cat - egories, including authorised unit trusts (AUTs), open-ended investment companies (OEICs) and authorised contractual schemes (ACSs). Dif - ferent authorisations apply, depending on the investments to be made. For example, OEICs that invest in real estate may be structured as property authorised investment funds (PAIFs), provided the relevant conditions are met, and OEICs that invest in unauthorised funds need to be authorised as funds of alternative investment funds (FAIFs). 2. Alternative Investment Funds 2.1 Fund Formation 2.1.1 Fund Structures Private Funds The typical structure of a UK private equity or venture capital fund is most commonly an Eng - lish limited partnership, which is a form of part - nership governed by the Limited Partnerships Act 1907 (LP Act 1907). Under the LP Act 1907, English limited partnerships must have at least one general partner (GP), who is responsible for the management of the limited partnership, and one or more limited partners. Thus, investors in
The UK is regarded as one of the leading global asset management centres, with an investment funds industry covering both traditional and alternative asset classes. Due to having consid - erable experience and infrastructure, the UK is one of the most prominent jurisdictions for fund formations and has developed a sophisticated market, offering a range of both closed-ended and open-ended types of funds. The asset man - agement industry is of vital importance to the UK’s economy. Within the UK market, alternative investment funds (AIFs) – as defined in the EU Alternative Investment Fund Managers Directive (AIFMD) and replicated in the UK’s post-Brexit alternative investment fund manager (AIFM) legislation (UK AIFM Regime) – include private closed-ended funds, often structured as English or Scottish limited partnerships, which are commonly used for funds that focus on illiquid asset strategies (eg, private equity, venture capital, real estate, alternative credit and infrastructure funds). List - ed closed-ended funds available for sale to the general public are also common, and are used for both liquid and illiquid asset strategies. The vehicles most often used are investment trust companies (ITCs) and, in the case of funds that intend to invest in real estate, real estate invest- ment trusts (REITs). Retail funds tend to be open-ended vehicles, which can be – from a regulatory perspective – either an undertaking for collective investment in transferable securities (UCITS) fund or a non- UCITS retail scheme (NURS). One of the key advantages of a UCITS fund is that it can be marketed to investors throughout the EU with - out the need for additional, local authorisation
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