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28 October 2010

Financial Services Quarterly Report - Third Quarter 2010

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On 25 June of this year, Hong Kong received a new Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (the "Handbook") issued by the Hong Kong Securities and Futures Commission (the "SFC").
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Contents

  • Retail Fund Authorization in Hong Kong: The Moving Goal Posts
  • Far-Reaching U.S. Financial Reform Legislation Impacts Financial Service Companies Both Within and Outside of the United States
  • CESR's Advice on Complex Financial Instruments: The Implications and Outlook for UCITS
  • Revising the UK Remuneration Code: Considerations for Investment Managers
  • Fund Raising for Alternative Investment Funds in Germany
  • The Introduction of Funds Re-domiciliation Legislation in Ireland
  • Marketing of Closed-End Investment Funds in France
  • Russia Finally Adopts Law on Insider Trading

Retail Fund Authorization in Hong Kong: The Moving Goal Posts
By Angelyn Lim, Kher Sheng Lee and Jessica Shao

Introduction

On 25 June of this year, Hong Kong received a new Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (the "Handbook")1 issued by the Hong Kong Securities and Futures Commission (the "SFC"). The Handbook is a consolidation of revisions made to the existing Code on Unit Trusts and Mutual Funds (the "Revised UT Code") and Code on Investment-Linked Assurance Schemes, and a new Code on Unlisted Structured Investment Products.

The Revised UT Code now forms the basis on which offshore funds will receive the SFC's stamp of approval in order to be distributed to the investing public of Hong Kong.

The Handbook comes after a public consultation period on proposed measures by the SFC to enhance protection for the investing public2 and strengthen the existing regulatory framework.

The Revised UT Code now forms the basis on which offshore funds will receive the SFC's stamp of approval in order to be distributed to the investing public of Hong Kong.

In the post-global financial crisis era, regulators around the world have seen fit to focus even more on enhanced measures to protect the small investor. The SFC has been no different.

This article summarises the key revisions to the general authorization requirements for investment funds, and highlights points of note for asset managers considering applying for the authorization of one or more funds in Hong Kong, for retail distribution.

Key Revisions to the General Authorization Requirements

Information to be Disclosed in the Offering Documents

Product Key Facts Statement ("Product KFS")

The Product KFS is intended to be a short (3–4 page) summary of the key features (and, in particular, the key risks) of the relevant fund, set out in plain layman language so as to be easily understood by the retail investor. The SFC has provided, on its website,3 illustrative templates of the Product KFS for six different kinds of investment products (i.e., guaranteed funds, exchange-traded funds, index funds, investment-linked assurance funds, unlisted structured investment products and general funds).

The SFC is prepared to adopt a very handson focused review of the Product KFS .

The Product KFS will form part of the offering documents, although the SFC may, under exceptional circumstances, permit an exemption in relation to certain foreign funds (e.g., certain UCITS funds), on the basis of overriding legal requirements of the home jurisdiction of those foreign funds. However, immunity from, or disclaimers or limitation of, liability with respect to the Product KFS is not permitted— issuers will assume civil and/or criminal liability for any misrepresentations in the Product KFS, whether or not such Product KFS constitutes part of the offering document of the investment product.

The SFC has indicated that, in practice (possibly due to the current teething issues of introducing the Product KFS requirement), the SFC is prepared to adopt a very hands-on focused review of the Product KFS in a bid to ensure that it is, indeed, presented in language that will be easily understood by the lay investor. The Product KFS should not be regarded as simply a "cut and paste" job from the disclosures in the main Prospectus of the fund although its contents must, obviously, be consistent with those in the "main" offering document.

Although existing authorised funds, and funds whose applications for authorization had been submitted to the SFC prior to 25 June 2010, were initially given until 24 June 2011 to produce their Product KFS, the SFC changed this position on 14 September 2010 to require certain funds, currently undergoing authorization, to produce a Product KFS now as part of the application process. This requirement applies to those funds that:

  • have a more than 10% exposure of their net assets to investment in the domestic PRC market; or
  • actively use derivatives as part of their investment strategy; or
  • will be managed by an asset management group that has not previously been approved by the SFC to manage an SFC-authorized fund.

Collateral Policy and Criteria

The fund's selection criteria, nature and policy with respect to any collateral it holds (as well as a description of such collateral) must be disclosed in the fund's offering documents.

Risk Management Policy

The offering document must disclose the risk management policy (where appropriate) that has been put in place to deal with abnormal risks involved in the investment of a specialised fund.

Complaints

The offering document must disclose information regarding the issuer's approach to enquiries and complaints made by investors.

Limits on Investment in Other Funds

The previous strict 10% limit on investment in other collective investment funds has been expanded so that, while it still applies to investment in non-recognized jurisdiction funds that are not SFC-authorized, investment of up to 30% (of the fund's NAV) is now permitted in underlying funds which are "recognized jurisdiction schemes"4 but not authorized by the SFC, and in excess of 30% for those underlying funds that are SFC-authorized.

An offering document is required to be produced in both the English and Chinese languages. Although the preparation of a Chinese-language annual report is optional for all SFC-authorized investment funds, issuers must disclose clearly in the offering documents whether annual reports and interim reports will be published in bilingual versions.

Multi-Manager Fund

The key qualification requirements applicable to all management companies of funds applying for authorization by the SFC are set out in Chapter 5 of the Revised UT Code.

With respect to multi-manager funds, generally, it is expected that at least three sub-managers will be delegated the investment management function in respect of a fund's assets. When considering the key personnel qualifications of such sub-managers, the SFC may take into account (on a case-by-case basis), when assessing the investment experience of the key personnel of the sub-managers, experience in areas other than in managing public funds. This should be welcomed by fund management groups generally as the SFC's previously strict adherence to the public fund management experience requirement had not always been easy to satisfy and, arguably, need not be insisted upon at the sub-manager level.

Also to be disclosed in the fund's offering document are the due diligence processes adopted by the management company in selecting and monitoring the sub-managers on an on-going basis.

Special Funds

New requirements relating to the authorization requirements for special funds like Structured Funds are set out in Section 8.8 of the Handbook, and Section 8.9 sets out the requirements for Funds that Invest in Financial Derivative Instruments (which are not UCITS).

General Points to Note

In the post-global financial crisis era, regulators around the world have seen fit to focus even more on enhanced measures to protect the small investor. The SFC has been no different. Particularly with the lessons of the Lehman Minibond5 crisis, the SFC has substantially increased its attention on investment products aimed at the Hong Kong retail market (and their offering documents), as well as the conduct of distribution processes of market intermediaries when distributing such products.

Whereas, generally, this has resulted in a lengthened processing time at the application stage due to increased commentary from the SFC on the product offering documents (and now the Product KFS as well), this is particularly the case with funds whose investment strategies are focused on the Mainland China market. Given the current popularity of such products (including RMB-denominated products and those which invest primarily in Mainland China), the SFC has felt compelled to put such products under an even harsher supervisory light. Fund sponsors would be well advised to take these factors into account when planning the fund launch timetable.

Conclusion

The Revised UT Code was unveiled as one of a number of regulatory initiatives to enhance the protection of the Hong Kong investing public. Time will tell to what extent its goal will be achieved in practice.

Footnotes

1 Available at: http://www.sfc.hk/sfcPressRelease/EN/sfcOpenDocServlet?docno=10PR71.

2 For a discussion of other measures taken or contemplated by the SFC, please refer to http://www.dechert.com/ practiceareas/practiceareas.jsp?pg=lawyer_publications_ detail&pa_id=19&id=11962. For a discussion of a set of proposals issued by the SFC to enhance investor protection, please refer to http://www.dechert.com/library/FS_14_10_09_Hong_Kong_Proposes.pdf.

3 Please refer to the illustrative templates for Product Key Facts Statements in respect of General Funds issued by the SFC, available at: http://www.sfc.hk/sfc/doc/EN/ intermediaries/products/pkfStatements/KFS%20UT%20 General%20Funds%20Eng.pdf.

4 Please refer to the List of Recognized Jurisdiction Schemes issued by the SFC, available at: http://www.sfc. hk/sfc/doc/EN/intermediaries/products/schemesRegimes/ RJS%20Eng.pdf.

5 For further information regarding the Minibonds and enhanced risk disclosures, please refer to "Hong Kong's Securities and Futures Commission and the Minibond Fallout" available at http://www.dechert.com/ library/FS%20_1_01_09_Hong_Kong_Securities.pdf. and "The Minibond Saga Continues" available at http:// www.dechert.com/library/Financial%20Services%20Report% 20-%2003_09.pdf.

From the Editors

Far-Reaching U.S. Financial Reform Legislation Impacts Financial Service Companies Both Within and Outside of the United States

"This law creates a new, more effective regulatory structure, fills a host of regulatory gaps, brings greater public transparency and market accountability to the financial system and gives investors important protections and greater input into corporate governance."

– Mary L. Schapiro, Chairman U.S. SEC

President Barack Obama signed into law on July 21, 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"), thereby effecting the most sweeping changes to the U.S. financial regulatory system since the 1930s.

While the Act's principal focus is on U.S. financial services institutions and U.S. financial markets, a number of its provisions will impact non-U.S. financial services companies operating in the United States or providing products and/or services to U.S. clients and consumers. At the same time, wholesale changes to regulation of financial services are also taking place in Europe where, among a number of other regulatory initiatives, the Alternative Investment Fund Managers Directive (or AIFMD) is proposed to introduce a European regime for management and marketing of alternative investment funds. One of the most important challenges the global financial services industry will face in the next few years will be navigating safely through both sets of these new regulatory initiatives.

While the Act's principal focus is on U.S. financial services institutions and U.S. financial markets, a number of its provisions will impact non-U.S. financial services companies operating in the United States or providing products and/or services to U.S. clients and consumers.

The Act is primarily focused on improving the regulation and supervision of the financial institutions that were viewed as triggering the 2008 financial crisis, namely banking institutions, as well as other firms that acted as major players in the derivatives marketplace or were involved in subprime lending and securitization of such loans. Nevertheless, the Act's extremely broad reach leaves very few financial services firms untouched.

The Act's provisions range from high-level structural changes, such as the creation of a Financial Stability Oversight Council and a Consumer Financial Protection Bureau, to detailed requirements for specified participants in the financial markets (including investment advisers, investment companies, broker-dealers and broadly defined "banking entities").

The effects of the Act will be felt by entities beyond those currently registered with the Securities and Exchange Commission ("SEC") as investment advisers, investment companies or broker-dealers. Many unregistered investment advisers that manage private funds will now be required to register with the SEC and, together with currently registered advisers, will be subject to greatly increased regulation and SEC scrutiny. And, the so-called "Volcker Rule" adds restrictions that, with certain exceptions for permitted activities, prohibit a banking entity from engaging in proprietary trading and from acquiring or retaining an ownership interest in or sponsoring a hedge fund or a private equity fund.

The future regulations and studies, the substance and findings of which cannot be predicted, are likely to impact in a variety of ways, and for years to come, all participants in the U.S. financial markets.

In addition to implementing various new and amended statutory provisions, the Act defers many of the "details" of this comprehensive regulatory initiative to future regulations and studies by a variety of U.S. federal regulatory agencies. In this regard, the SEC has announced a new process to enable the public to comment even before the Commission proposes its regulatory reform rules and amendments, as well as new best practices for SEC staff when conducting meetings with interested parties "in order to ensure full transparency to the public."

The future regulations and studies, the substance and findings of which cannot be predicted, are likely to impact in a variety of ways, and for years to come, all participants in the U.S. financial markets. And there is a clear tension in the Act between the apparent desire to demonstrate Congress' tough stance on Wall Street while at the same time avoiding adverse impact of the reforms on the financial industry and the recovery in the broader economy.

There is a clear tension in the Act between the apparent desire to demonstrate Congress' tough stance on Wall Street while at the same time avoiding adverse impact of the reforms on the financial industry and the recovery in the broader economy.

For an extensive suite of publications prepared by Dechert attorneys regarding the impact of the Act on various financial services entities and products, please refer to those listed below (and future client alerts on U.S. and international legal developments on our website). We will continue to monitor and report on the rule-making process and related developments as provisions of the Act are implemented.

CESR's Advice on Complex Financial Instruments: The Implications and Outlook for UCITS
By Declan O'Sullivan and Conor Durkin

On 29 July 2010, the Committee of European Securities Regulators ("CESR") delivered its technical advice to the European Commission (the "Commission") in relation to CESR's review of complex and non-complex financial instruments for the purposes of the MiFID1 "appropriateness" requirement. Despite calls (from various parties who made submissions to CESR during its consultation) to classify structured UCITS and UCITS that employ complex portfolio management techniques as "complex financial instruments", CESR did not recommend any change to the current categorisation of UCITS under MiFID as "non-complex financial instruments".

In practical terms, the distinction between complex and non-complex financial instruments matters, because the requirement to assess the appropriateness of a product or service must always be complied with where the investment product or service involves a complex financial instrument. An assessment of appropriateness does not need to be undertaken for "execution-only" (i.e., non-advised) services in respect of non-complex financial instruments.

This article examines how UCITS are categorised under MiFID, discusses the possible impact of any change to such categorisation and considers the future regulatory developments that may affect classification of UCITS under MiFID's appropriateness requirement.

Classification of UCITS Under MiFID

MiFID introduced a conduct of business regime whereby investment firms are required to assess the "suitability" or "appropriateness" of a service or product offered to clients. In broad terms, the purpose of the suitability and appropriateness assessments are to ensure that clients have the necessary experience and knowledge to understand the risks associated with an investment service or product— in particular, MiFID aims to prevent complex financial instruments from being sold on an execution-only basis to retail investors. Complexity of the service or product is the main criterion to be taken into account when assessing the suitability or appropriateness of such service or product for a client.

Suitability and Appropriateness Requirements Whenever an investment firm provides investment advice or discretionary portfolio management only, the investment firm must obtain all necessary information regarding the client, its knowledge, experience and financial situation, in order to enable the investment firm to recommend only investment services or products that are suitable for the client.

With the exception of the provision of investment advice or discretionary portfolio management, an investment firm is required to obtain information regarding its clients, their knowledge and experience, so as to enable the investment firm to provide only those services or products that are appropriate for the client.

An investment firm is permitted under MiFID to provide products or services without having to comply with the suitability or appropriateness obligations, if the product or service consists of execution-only services, or the receipt and transmission of client orders relating to non-complex financial instruments.2 This is known as the "execution-only exemption".

Article 19(6) of MiFID sets out a non-exhaustive list of financial instruments that are categorised as noncomplex. Such instruments include, among others, shares admitted to trading on regulated markets, money market instruments, bonds or other forms of securitised debt and UCITS. By definition, UCITS are classified under MiFID as non-complex instruments and therefore fall within the execution-only exemption.

Financial instruments that are not defined as noncomplex instruments under MiFID are subject to an in-depth risk-based analysis for the purpose of determining whether the instrument should nevertheless be categorised as non-complex for the purpose of the appropriateness requirement. Article 38 of the MiFID Level 2 Directive3 sets out criteria for determining whether or not an instrument should, on a risk-based assessment, be classified as complex.

CESR's Review of Complex and Non-complex Instruments Under MiFID's Appropriateness Requirement

On 14 May 2009, CESR issued a Consultation Paper that set out CESR's analysis of how various types of financial instruments, including UCITS, should fit within either the complex or non-complex categories of instruments for the purposes of the MiFID Directive's appropriateness requirement.

Since CESR commenced its consultation in May 2009, an increasing number of UCITS alternative products have been offered that pursue investment strategies usually associated with hedge funds. Many commentators have noted that some UCITS can be complex products and queried whether complex UCITS should be sold to retail investors. In these circumstances, the proper classification of UCITS under MiFID's appropriateness requirement has become a topical issue.4

In its consultation, CESR queried whether there should be any change to the treatment of UCITS under MiFID. Many correspondents argued that UCITS should not automatically be categorised as non-complex instruments given the underlying assets in which UCITS can invest in or to which they may have exposure. Fund associations, on the other hand, overwhelmingly supported no change to the current treatment, arguing that UCITS are conceived as retail products, strictly regulated and subject to stringent risk management rules, provide a high degree of investor protection and are well diversified liquid investments that do not involve liability exceeding the acquisition costs. Financial regulators in the European Union have indicated that they are generally open to a review of the treatment of UCITS under MiFID.

Response of European Regulators

The Autorité des Marchés Financiers ("AMF"), the French Financial Regulator, has commented that UCITS can be very complex products, and has called for the re-examination of the way UCITS are sold, in the context of CESR's review of MiFID's appropriateness requirement. The AMF would prefer UCITS to be placed in the category of financial instruments whose complexity is first assessed by an investment firm under Article 38, before determining whether the UCITS should be classified as complex or non-complex.

The Irish Financial Regulator has also acknowledged that there has been a rapid rise of UCITS using hedge fund strategies, and has indicated that if the matter is raised by the Commission, it would be happy to reconsider the treatment of UCITS under MiFID.

Impact of Changes

Changes to the categorisation of UCITS as noncomplex instruments would be likely to cause UCITS significant difficulties in relation to sales and distribution activities. In particular, distributors, execution-only brokers, operators of fund supermarkets and other providers of execution-only services, would be required to obtain detailed information in relation to the strategies employed by UCITS for the purpose of assessing on a risk-basis whether a UCITS is a complex financial instrument. If the UCITS is assessed to be a complex instrument, a further assessment would need to be made regarding the appropriateness of the UCITS for the client.

Several practical issues would arise if UCITS are not automatically permitted to avail of the execution-only exemption. For example: (i) should the UCITS itself, or its distributor, be required to make the determination as to whether or not an instrument is complex; (ii) should national regulatory authorities have any role in approving the categorisation of UCITS; (iii) how should information regarding the classification of UCITS be communicated to clients and should such information be included in the Key Investor Information document (that will replace the simplified prospectus); and (iv) how should firms involved in selling and distributing UCITS review, and possibly adapt, their procedures to map and classify their clients, as well as the UCITS transactions of their clients and, on the basis of such information, assess the appropriateness of UCITS for their clients.

Further Regulatory Developments

On 29 July 2010, after completing its consultation, CESR delivered its technical advice to the Commission. Although CESR's function was to carry out a review of the classification of various financial instruments under MiFID, CESR noted that UCITS are subject to a separate regulatory regime and indicated that recommendations for reform regarding the classification of UCITS would be outside the scope of its review.

On the same day, CESR also replied to the Commission's request for information regarding technical criteria to distinguish among UCITS as complex and non-complex instruments. On this subject, interestingly, CESR stated it "believes that there is a case for considering treating structured UCITS and UCITS that employ complex portfolio management techniques as complex financial instruments for the purposes of the appropriateness test (this is a concept that would need to be elaborated possibly through binding technical standards)" and invited the Commission to determine whether additional work should be undertaken by CESR in considering this question.

The Commission will now review CESR's technical advice before recommending changes, if any, to MiFID. It is expected that Commission will make its recommendations in early 2011.

Packaged Retail Investment Products

On a related topic, the Commission is currently preparing legislative proposals in relation to Packaged Retail Investment Products ("PRIPs"), and its work in this field is related to CESR's review of financial instruments (including UCITS) under MiFID. PRIPs are defined by the Commission as investment products that are broadly comparable for investors and can take a variety of forms. For example, PRIPs would include investment funds (including UCITS), structured securities, unit-linked life insurance products or structured term deposits. At present, retail PRIPs, such as those listed above, are regulated under separate Directives and there are inconsistent rules in relation to disclosure, selling and investor protection. The Commission's goal is to create a common basis for the regulation of key investor disclosures and selling practices at a European level, irrespective of the form in which a retail investment product is packaged or sold.

Based on its work to date, the Commission has proposed to develop a framework in relation to pre-contractual disclosures and selling practices. For selling practices (including the sale of UCITS), the Commission intends to use MiFID provisions on conflicts of interest, inducements, appropriateness, suitability and client disclosures, as the basis for developing a common PRIPs sales regime.

Conclusion

The question of the future treatment of UCITS under MiFID and the associated issue of how UCITS are distributed will be revisited in the context of the PRIPs reform that is being developed by the Commission. Investment firms providing execution-only services in respect of UCITS, particularly distributors, executiononly brokers and operators of fund supermarkets, should be aware that a change to the classification of UCITS under MiFID may mean that UCITS will no longer automatically benefit from the execution-only exemption. If the PRIPs reform results in a change to the classification of UCITS, investment firms would be advised to review their operating procedures so that the firms can either make a determination as to whether or not specific UCITS are complex financial instruments, or alternatively, assess the appropriateness of particular UCITS for their clients.

Footnotes

1 Directive 2004/39/EC of 21 April 2004 on Markets in Financial Instruments Directive ("MiFID"), which is a European Union law that provides harmonised regulation for investment services across the European Union. MiFID applies to all business firms that provide investment services in respect of financial instruments.

2 The service should be delivered at the initiative of the client, the client should be advised that the investment firm is not required to assess the suitability of the services and the investment firm should have in place an appropriate policy to manage conflicts of interests (ref. Article 19(6) of MiFID).

3 Directive 2006/73.EC of 10 August 2006 as regards defined terms, and organisational requirements and operating conditions for investment firms.

4 Although UCITS IV will result in significant changes to the UCITS regime, it does not touch upon the classification of UCITS under MiFID.

Revising the UK Remuneration Code: Considerations for Investment Managers
 By Jim Baird

The United Kingdom Financial Services Authority (the "FSA") issued a consultation paper on 29 July 2010 proposing revisions to its remuneration code (the "Code"). The Code currently applies to approximately 27 larger firms but under the proposals would be extended to apply to approximately 2,500 financial services firms from 1 January 2011 (subject to some important transitional provisions).

These proposed changes to the Code are in essence the means by which the FSA proposes to implement the broader European proposals under the draft EU Capital Requirements Directive ("CRD3"), required to be implemented by the same date.

The Code would apply the broad principles under the CRD3 to most UK hedge fund managers and all UK managers of UCITS funds. UK domiciled groups must apply the Code globally with respect to all regulated and unregulated entities. In addition, UK subsidiaries of foreign domiciled groups must apply the Code to all global entities within their group or sub-group. Accordingly, a non-UK/EEA subsidiary or sister company of a UK subsidiary will be caught by the Code.

In large part, these difficulties derive from the origins of the Code as a model designed for the banking sector, which adapt less well in their application to the asset management sector (where different business models and systemic risk profiles prevail).

The provisions of the Code would include a requirement to defer 40% of variable remuneration for at least three years (increasing to 60% if variable remuneration exceeds £500,000), a requirement that 50% of variable remuneration be paid in shares (or other equivalent ownership interests) and a ban on guaranteed bonuses (except in certain limited circumstances). In addition, firms would have to consider adjusting the unvested portion of an individual's variable remuneration in certain circumstances (such as misconduct, failures of risk management or downturn in firm performance).

The Code presents a number of potential difficulties for the firms that will now fall within its scope. In large part, these difficulties derive from the origins of the Code as a model designed for the banking sector, which adapt less well in their application to the asset management sector (where different business models and systemic risk profiles prevail).

The FSA has stated that it is committed to applying a "proportionate" approach and the draft Code provides that the provisions should be applied in a manner proportionate to firms' size, internal organisation and complexity. However, as yet, the exact nature of the proportionate approach remains undetermined and the concern is that there will be insufficient flexibility due to the confines imposed on the FSA by CRD3.

For the many UK hedge fund managers for whom a limited liability partnership ("LLP") is the structure of choice, the Code will present particular issues. Members of an LLP pay tax on their respective shares of LLP profits in any particular year, whether or not receipt of some of the profits is required to be deferred. Therefore, there will be difficulties in aligning the timing of the tax burden with the receipt of the related profits for these individuals. In extreme cases, if the higher 60% level is deferred, and the marginal tax rate is 51%, a member could end up with insufficient profit to meet his or her tax bill in the current year.

On a related point, there is currently no clear distinction between staff and owners of an LLP, so, unless clarified, the latter would be subject to the Code in respect of their full profit share even if, in reality, this represents an equity investment rather than remuneration in the true sense.

LLPs will also have difficulty complying with the requirement to pay part of the variable remuneration in shares (as such entities do not issue shares). If alternatives, such as issue of shares in a fund, are adopted, this may expose staff to unintended levels of risk.

More generally, the Code does present problems in achieving the deferral and conditional vesting on the one hand, while achieving tax efficiency on the other. While firms will be anxious to avoid unfunded tax liabilities for staff in respect of deferred remuneration, the tax authorities are unlikely to embrace deferral of tax on this element of remuneration. In addition, if tax is imposed on the basis of the full deferred amount, some form of tax adjustment would be required where the variable remuneration is subsequently adjusted.

The Code therefore presents a number of practical difficulties, particularly for smaller firms, that may require considerable planning. These impacts, together with potential planning measures, are discussed in more detail in our DechertOnPoint "The FSA's Proposed Revision of its Remuneration Code" available at http://www.dechert.com/library/FS_Employment- 08-10-FSA_Provised_Revision-SA.pdf.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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