UK Law and Practice Contributed by: Dylan Doran Kennett, Michael Jacobs, Stephen Newby and Mark Ife, Herbert Smith Freehills LLP
to the UK Alternative Investment Fund Manag - ers Regulations 2013 (AIFMR) and associated Financial Conduct Authority (FCA) rules. The AIFMR are derived from and, since Brexit, so far remain broadly aligned with the rules under the EU AIFM Directive. However, the UK government and FCA are undertaking a process of repeal and replacement of the UK asset management regulation, so there may be deviations from the European position in coming years. The AIFMR govern various aspects of the man - ager’s conduct in respect of the fund, including in relation to: • marketing, reporting and disclosures to inves - tors; • the appointment of a depositary; and • ongoing operating requirements and restric - tions, including on valuation, leverage and delegation. The requirements under the AIFMR apply in a more limited way for non-UK managers than for UK managers. VC funds themselves are neither authorised nor regulated in the UK. However, UK managers of VC funds must have appropriate FCA permis - sions. Non-UK managers may market UK or non-UK VC funds to professional investors in the UK if they meet certain conditions, including having appropriate co-operation arrangements in place between the FCA and the supervisory authority in the manager’s jurisdiction. VC funds structured as limited partnerships are also subject to the Limited Partnerships Act 1907, which imposes some basic duties on the partners, including the registration and notifica - tion of changes in the partnership to Compa - nies House. Funds that are established as PFLPs
are subject to fewer of these duties and, most notably, need not publicly disclose the capital commitments of limited partners. The Econom - ic Crime and Corporate Transparency Act 2023 introduced requirements intended to increase transparency in relation to limited partnerships, with key changes including more detailed infor - mation and notification requirements to Com - panies House. 2.4 Particularities London as a financial centre is a significant mar - ket for all classes of asset, including VC, and the UK more broadly is seeking to continue to posi - tion itself as a centre for tech, fintech, cleantech and innovation more generally, backed by home - grown and overseas VC investors. A significant portion of VC funding in the UK is channelled into biotech and other innovative enterprises spinning out from the UK’s world-class universi - ties, such as Oxford and Cambridge. Many Lon - don-based corporates are also now moving into the VC space through their own venture funds, adding a new set of players to the market – these may be dedicated funds in the traditional sense, or may be investing from their balance sheet. In addition, since Brexit, the UK government has been focusing on promoting investment by UK pension funds (including local government pen - sion schemes, in particular) in UK infrastructure and “levelling up” projects. To some extent, this is driving additional capital into UK VC funds, which are investing in such projects. In sup - port of these aims, Chancellor Rachel Reeves announced a new National Wealth Fund (NWF) in July 2024, which was intended to align the UK Infrastructure Bank and British Business Bank under the NWF to invest in key industries, with the NWF seeing an injection of GBP5.8 billion in additional funding. In October 2024, the UK Infrastructure Bank was then rebranded to NWF.
590 CHAMBERS.COM
Powered by FlippingBook