Private Equity Comment




In the last edition of Private Equity Comment, just prior to the UK general election, there were many questions still surrounding Brexit, and it was even technically possible at the time of publication that Brexit might not actually happen given the Labour Party’s proposed approach. However, the decisive Conservative victory laid one question to rest, Brexit is happening. In fact it has already happened, as the UK left the European Union on 31 January 2020, and the questions are now all centred around what Britain’s future relationship with the UK will look like.

As expected, financial services will not be at the top of the list of priorities for negotiation, and in fact the EU has said that there will be no negotiation at all. Their view is that the granting of “equivalence” will be decided by the EU alone, and the UK will also have to live with the fact that it could be unilaterally withdrawn at any point. While this may be a major point for UK based investment banks and others providing trading services, it is of little consequence to private fund managers. The only part of the AIFMD that looks even broadly similar to this idea of equivalence is the third country passport. This allows fund managers in certain non-EU jurisdictions that have been approved by the EU, and who comply with AIFMD, to market their funds to EU investors. The issue is that although legislated for in the Directive itself, this third country passport is yet to be introduced, and seems unlikely to be in the near future.

What options does the UK have? One would be to push in the negotiations for something resembling equivalence. After all, UK law is currently completely aligned with EU law on management of Alternative Investment Funds, and as long as that remains the case can UK managers not continue to market their funds in the EU? This would be an optimal result for UK based managers but for the EU, this would essentially mean granting the UK the same rights they had when they were members, and for the UK it would mean continuing to align with EU laws in order to maintain access. Both sides have repeatedly ruled this out. The UK could align itself with the likes of Jersey, Guernsey and the US, jurisdictions that have already been “pre-approved” by the EU for the third country passport, and try to inject fresh impetus into making the third country passport a reality. While perhaps a long term plan, it is unlikely that the UK would start this kind of lobbying until after the formal negotiations with the EU have been concluded. Even then, given the lack of progress so far, there is no guarantee that the passport would even be introduced. The last choice for UK funds would be to market into Europe under the national private placement regimes, which for some EU jurisdictions is entirely possible.

Looking outside of the EU – is there a chance for the UK to make a case that it is now the jurisdiction of choice for those managers who do not wish to be within AIFMD? Parallel structures are increasingly common among global funds wanting one fund vehicle within the AIFMD for EU investors and the other outside of it for global investors, so it could be that we start to see parallel UK and Luxembourg limited partnerships in fund structures going forward.


The UK government has also started an interesting consultation on the UK as a location for intermediate entities through which funds hold their assets. This is a really positive move from the Treasury and will be of huge interest to the funds industry. The European tax system has always struggled with enabling tax exempt investors to invest through these types of funds into Europe on a tax neutral basis. In the last 12 months developments coming out of the implementation of the OECD’s BEPS initiative across Europe and the recent Danish cases on beneficial ownership for the purposes of EU Directives have threatened to create yet more obstacles to doing so. As such this consultation is likely to be welcomed by European fund managers and industry groups, as the emergence of the UK as a viable holding company location of fund investments is a goal well worth fighting for. Of course the key points being addressed in the consultation are, as expected, questions such as the application of the Substantial Shareholding Exemption and UK withholding tax on interest, but there is also reference made to the UK’s anti-hybrid rules. The importance of these rules, particularly as they apply facing a tax exempt investor base, should not be underestimated.


The onset of the COVID-19 pandemic has had a significant effect on the private equity industry. On the fundraising side, funds that are near to closing are still closing, with many managers and investors keen to get them over the line as soon as possible. New fundraising has slowed to an extent, as marketing to investors has become difficult due to the inability to travel and have face to face meetings, and many investors pause to assess the situation. As assets become difficult to value, this has had an impact on transactions, both primary acquisitions/disposals and secondary transactions, and these transactions have slowed considerably with many being put on hold. The outlook is uncertain but parallels can be drawn to the 2008 financial crisis and the direction the industry took during that period. Fund managers had to look closely at their fund documents as some investors, particularly high net worth individuals, hinted at possible defaults, and restructurings were common at fund level as new money was brought in to give much needed liquidity to investors. Managers may also look at other opportunities such as widening recycling abilities to increase capital available, and possibly even changes of strategy, perhaps into distressed assets or debt as businesses look for greater access to funding.


In the recent Budget on 11 March, the newly appointed Chancellor cut Entrepreneurs Relief by reducing the lifetime gain allowance from £10m to £1m. It was anticipated that a change was going to occur, with some commentators even predicting it could be scrapped altogether. Prior to the Budget, business owners selling companies would (provided they met the qualifying conditions, discussed further below) pay capital gains tax at 10% on the first £10m of gains, and the full 20% CGT on all gains made above that amount (the £10m limit applying on a rolling basis to all qualifying gains realised in their lifetime). The tax break has effectively been reduced by 90% as that limit is now only £1m, meaning for some business owners will still benefit in full from the 10% rate, but those making larger gains will now pay the full 20% on a larger proportion of their gains. The qualifying requirements for Entrepreneurs Relief have not changed, which broadly require the shareholder (who would need to be an officer or employee) to hold at least 5% of each of the share capital and the voting rights and be entitled to at least 5% of either any profits available for distribution and assets on a winding up or any sale proceeds if the company were to be sold at market value. The conditions need to be met for the two year period prior to the disposal, save in limited cases involving asset sales followed by liquidations. As such, PE executives with stakes in the house commitment to their funds, often totalling 2-3% of the total fund size across the team, would have been unlikely to qualify. Holders of equity directly in PE portfolio companies often can meet these tests though, and are therefore likely to be affected by these recent changes. It should also be noted that the Budget changes included measures to counteract certain planning arrangements implemented prior to the Budget with the aim of “locking in” the higher £10m lifetime limit (e.g. entering into unconditional contracts for sale, with completion to follow at a date after 10 March). Any individuals who utilised any such planning should seek advice as to the potential operation of these counteraction measures.


On 18 February 2020, the EU’s list of non-cooperative jurisdictions was updated to include the Cayman Islands, on the grounds that it does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles.

Key impacts for fund managers could be: investors who are sensitive to investing in vehicles based in jurisdictions included on this list, side letter provisions agreeing not to invest in vehicles based in such jurisdictions, whether arrangements involving Cayman structures will be reportable under the new EU directive “DAC 6”, and whether EU based investments will be subject to withholding taxes.

The Cayman Islands is seeking to get itself taken off the list (on the basis that legislation relating to private funds, which had been designed to address the EU’s concerns, has now been passed and is now in force). The hope therefore is that this will be a short term situation. The list is updated twice a year with the next update being scheduled for October 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin | Attorney Advertising

Written by:


Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.