The newspaper “Journal du Dimanche” previously published information about the intentions of the French President Francois Hollande to hold a meeting with the leaders of Germany, Spain and Italy on March 6 in Versailles, dedicated to the future of the European Union. This mini-summit, among other things, should have to demonstrate the unity of the leaders of the four major European powers of the euro zone in the face of the many threats and crises that the EU is currently facing. The agenda also included the study of the issues “related to ensuring the strengthening of the development of the European Union”.
On March 6, the government supported the changes to the Law on the Financial Instruments Market, the Law on Alternative Investment Funds and their Managers, as well as the Audit Services Act. What is the ultimate goal of these changes? They should make the EU financial market more transparent and stable, reduce systematic risks, protect depositors, and ensure the effectiveness of financial markets and reduce the costs of their participants. The changes in the laws have been designed to adopt the Directive of the European Parliament and the Council on the markets of financial instruments.
In the process of painstaking work over the directives on the part of institutions and EU Member States, the assessment of the existing supervisory practice of the financial market was made, insufficient transparency in the general financial markets was recognized, actually taking place and partially unregulated trade actions by the regulations were analyzed.
The outcome of the integrated assessment was the conclusion that the existing regulation is not sufficient to ensure the full stability of the financial markets and transparency of their activities. Thus, in order to solve and eliminate the identified shortcomings, the draft directives have been developed.
By adopting the Directive, the financial institutions of the Member States have provided the comprehensive regulation to ensure the protection of depositors. An important part of this regime is the protection of customers’ funds and financial instruments. The duties of the investment brokerage companies is the implementation of appropriate measures to protect the rights in respect of securities and cash assets entrusted to the investment brokerage company, as well as the property rights of the depositor.
Investment brokerage companies will have to implement the appropriate specific order to ensure the protection of financial instruments and customer funds. The main goal of all legislative changes under consideration remains clarification of the legal regulation of investor protection and increase of the transparency of related procedures.
We will hope that, in accordance with the overall strategy, a single integrated legal and economic approach to the legislative reform of the EU countries will effectively ensure fair treatment for all participants in the financial market. And, in order to find always the necessary benchmarks in constantly changing trends and organize effectively your business in the EU and not only - contact the specialists of the company Finance Business Service!

Luxembourg garden

Henderson Diversified investment trust said that it is considering the transfer of its Luxembourg subsidiary of the United Kingdom, referring to the growing fiscal risks in the Grand Duchy.

In a statement released to the London Stock Exchange on October 7, Henderson said that some recent developments in tax law and practice of Luxembourg increased the legal risks of operating within the jurisdiction, including the transfer pricing.

"The Board of Directors and its advisors continue to review these developments and the recently concluded that the existing structure of the company may include increased complexity and risk," said Henderson.

"Accordingly, the Council examining the possibility of simplifying the tax structure by election and joining the UK investment trust tax regime, including changing its place of registration in the United Kingdom," added the firm.

Such a move is likely to lead to the liquidation of its subsidiary in Luxembourg and the formation of a new company in the UK, which is expected to reduce its annual operating costs.

The company said its investment management arrangements will not be affected by this reorganization. However, he confirmed that it will last only if it is in the best interests of shareholders.

Henderson expects to update shareholders on the issue later this year.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

US Pension Fund

Senate Finance Committee unanimously approved a bipartisan bill layout - improved savings and retirement Act 2016 - to make some changes in the pension provisions of the tax legislation.

For example, in accordance with the present law, a person who has reached the age of 70.5, before the end of the year can not make contributions to a traditional individual retirement account (IRA). The law will revoke this ban.

Ron Wyden (D - OR), Ranking Member of the Committee, said that the renewal provisions of the retirement age "is essential, especially because so many Americans are living longer, if they can afford to save for retirement, they must get permission to do that" .

The second proposal is to change the calculation of the dollar limit amount on a non-refundable tax credit, currently provided for beginners small entrepreneur's cost adopted new qualified pension plan, a simple IRA plan (or SEP), provided that the cover of the plan, at least one is not of the strongest workers' compensation.

Calculation of the three-year loan, currently less than USD500 per year, or 50 percent of qualified start-up costs. Under the proposed changes, a fixed amount of dollars for the fiscal year will be more (1) USD500 or (2) the amount that is less than (a) USD250, multiplied by the number of workers who are not highly compensated employees, and who are eligible to participate in the employer's plan, or (b) USD5,000.

And finally, as an administrative improvement, the law should establish that, if the employer receives a promotional bonus, pension, profit sharing, or plan an annuity after the close of the taxable year, but prior to the expiration of statutory deadlines for filing the return to the employer during the tax year, the employer can choose to treat the plan as if it was adopted on the last day of the tax year.

Author: Sergey Panov

managing partner Finance Business Service

Бюджет Сингапура

On March 24, 2016 was released a budget that includes measures to expand and strengthen the financial sector, as well as tax incentives for international trade.

It will be extended by a double tax deduction for the Internationalization Scheme for four years from 1 April 2016 to 31 March 2020. This will cover the cost of qualifying activities such as participating in the development of foreign business and investment research.

The budget also proposes not to impose the company's profits from the sale of its equity investment until 31 May 2022, which will help to provide certainty for the advance of corporate restructuring.

The Minister also proposed to extend the Finance and Treasury scheme until 31 March 2021 where since March 25, 2016 includes the following enhancements took effect:

  • Concession rate has been reduced to eight percent.
  • In order to qualify for the preferential terms of the tax rate will be allowed to receive funds indirectly from authorized offices and associates.
  • The amount of exemptions granted in accordance with Article 13 (4). The volume will be expanded to cover the interest payments on deposits, provided that the funds are used for qualifying activities or services.

In an effort to help businesses, especially small and medium enterprises, the budget to raise the existing corporate income tax rebate from 30 percent to 50 percent.

The budget also expands the fund of small and medium-sized businesses, to provide more capital to support small and medium-sized enterprises in Singapore.

Author: Sergey Panov

managing partner Finance Business Service

MoneyBox

Entrepreneurs with successful experience of investing abroad their own funds are very often interested in investment operations with assets of the third parties. Pooling investors usually allows investing money at much more favorable terms. This is the main reason for the existence of investment funds.

Investment fund is a subject of law, which is different from all other entities, known in the common law that it is not legal personification of a person or group (as in the case of a corporation); it is rather a subject that has no owners (shareholders, members or partners) and traditionally has a specific target orientation – profit group of individuals.

Activities of the Fund are subject to regulation by the State where the fund is registered. That is why it is advantageous to register such fund in the offshore zones. In these countries, the regulation comes down to ensure that the fund must obtain permission from the authorities on their activities and submit timely reports on the statutory form. The investment activity of the fund itself is practically not regulated, which makes it possible to invest in a wide variety of instruments.

Investment funds are divided into two classes: "open» (Open-End Funds) and "closed» (Closed-End Funds). The main difference between them lies in how the funds are organized in terms of pricing of fund shares (investment certificates).

"Open" Funds are issuing and buying back their stocks, shares on demand, i.e. when an investor puts his money or repays the fund's securities. The number of depositors of the Fund is unlimited. "Closed" funds, like public companies, produce a certain number of stocks, shares issued in the course of the subscription, and then they can be traded on an exchange like any other stock. The value of shares of the "closed" fund is determined by investors’ demand for its securities.

Also, additionally the following classification is used:

Private Fund – which has no owner, but there are people who controls its operations. The number of investors in the fund is typically limited and shares are offered to a certain number of individuals.

Professional fund – is a fund whose shares are available only to professional investors. Professional investor herein means a person investing in similar assets professionally, or just wealthy individuals (capital of at least $ 1 million), who agreed to be equal to professionals.

Public fund – is a fund that can offer its shares to an unlimited number of investors. Accordingly, satisfy more stringent requirements are applied, than to other types of funds.

All the funds have to be founded in a legal form. It may be partnership, unit trusts, the company. Most of the funds are founded in the form of the company. And for the offshore jurisdictions this means that it is a company registered with the non-resident status, and is exempted from taxes, except for fixed annual fees.

The structure of the fund is quite specific. As in any company the fund has a board of directors that makes decisions of a strategic nature. But apart from this the fund has a specific organizational structure. It implies:

  • Chairman of the board (Manager) is a licensed individual or legal person which determines the Fund's investment strategy and investment decisions.
  • Administrator is a licensed individual or legal person who is the registered agent, maintains a registry of shares, maintains contacts with shareholders, responsible for accounting and calculates the net asset value.
  • Custodian or depositary is an individual or legal person who holds the assets of the fund (which usually are securities and cash), carries out transactions with them, collects dividends on these securities and provides relevant financial information to the administrator.
  • Auditor checks fund accounts (for private and professional funds it is not mandatory, but desirable.)
  • Investment Advisor is an individual or legal person who provides investment advices to the manager. This may be the founder of the fund, he can also be at the Board of Directors. This position is not mandatory.

In general, investment funds are used for the pooling of investors, which usually allows investing money at much more favorable terms.

But the funds are also established for specific tasks.

One of them is the use of the fund for the confidential control and ownership of the company. Instead of registering the shares of corporations in their own name or to issue bearer shares issued on the stock fund. Thus, the meaning of using the fund as a shareholder of the corporation is to get rid of personal possessions (or by bearer shares) and transfer the property.

The fund can be used when opening corporate bank accounts or investment accounts without disclosing the identity of the beneficial owners of the corporation. With the presence of the fund it may be stated that this fund is the owner of the corporation. It is done to get rid of personal possessions in favor of a foreign entity whose owners are anonymous.

The fund can be used when transferring funds to offshore or receiving funds from offshore. The advantage in this case is the exemption from financial obligations related to charitable contributions (because some states levy a tax on donations and are more demanding to reporting).

Funds may not be engaged in the usual commercial activities as a corporation. Nevertheless, they may be engaged in commercial activities from time to time, if the income from such activities is used to achieve the objectives of the fund. For example, a private fund may be engaged in banking or investment activities, such as investment in bank deposits, stocks, bonds, mutual funds, options, money markets, etc., if the profits derived from such investments are intended to be for the beneficiaries of the Fund.

Author: Yuri Krasilnikov

managing partner Finance Business Service