A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

2.2

Overview of main legal frameworks and vehicles

Most private equity investments are channelled through an investment vehicle in the form of an independent, private, fixed-life, closed-end fund. These funds typically have a life of ten years that can be extended upon agreement with their investors. They can be set-up as a regulated or unregulated structure. It should be noted that regulated funds are subject to certain restrictions, including invest- ment and borrowing limits (although in the case of funds targeted at professional investors, institutions and high net-worth individuals, derogations might be available from many of the restrictions). Additionally, they are subject to certain requirements as to the suitability of the promoters and managers of those funds and in certain countries such as Luxembourg must appoint independent custodians and administrators. In Europe, virtually every country has created its own investment vehicle – as illustrated by the map below – with special tax treatment, but often only applicable to domestic investors or with substantial constraints with respect to the fund’s operating activities.

Figure 23: Main private equity fund structures across the European Union

2.2

References to the main legal texts regulating private equity in France, Ireland, Luxembourg and the United States are summed up in appendix.

Ky

AS, KS

Aktiebolag, Kommanditbolag

English LP Scottish LP

K/S

Limited Partnership

CV, BV

CEIF

GmbH & Co KG

PRICAF

SICAR,SIF

MiFiG

FCPR

LP for Coll.Inv.Schemes

FCR

SCR FCR

AKES

Fondo Chiuso

Copyright CACEIS, 2009

Moreover, some countries have attempted to offer structures incorporating flexibility to ac- commodate individual investors’ needs such as the United Kingdom LP or the Luxembourg SICAR, trying to replicate the possibilities Delaware structures offer for US-based investors. In this section, we have chosen to focus our analysis on four major jurisdictions where CACEIS is established: Luxembourg, France, Ireland and the United States. We will also have a few words about the promising Swiss market, as well as about the United Kingdom and the Channel Islands, as they are currently unavoidable locations for the private equity industry in Europe.

A thorough understanding of PE | page 41