Data & Intelligence

Legal & Regulatory Bulletin – Issue No. 14, Spring 2015

I hope you enjoy the lively opinions featured in this season’s Bulletin and are benefiting from EMPEA’s efforts to enhance communications across its various channels. I would particularly like to thank members who are referencing the EMPEA Guidelines in their discussions with policymakers and regulators in emerging markets. Your efforts benefit the broader private equity asset class and are appreciated.

EMPEA’s regulatory advocacy work continues to focus on opportunities to support members as they seek to encourage legal and regulatory frameworks that address risks and encourage alignment of interests, but do not restrict capital flows or limit investors’ participation in opportunities that could attract significant private capital investment. If you think EMPEA’s support would be useful in a particular emerging market, please contact us directly and we’ll do our best to assist.

The Guidelines have now been translated into Arabic and Burmese. Mandarin, Portuguese and Spanish translations are underway. All will eventually be available on the EMPEA website. If you think translation into another language would be useful, please let us know. Your experiences, thoughts, recommendations and observations on the Guidelines more generally are also welcomed.

Similarly, if there is a legal or regulatory issue, which you’d like us to address in a future Bulletin, please contact us. We have a team of experienced emerging market practitioners on our Council –members have advised, advocated, arbitrated, counselled, litigated, problem solved, settled and/or transacted across many emerging markets. In good times and in bad times. They have much to share with you and are willing! Do share your thoughts with Ann Marie Plubell at plubella@EMPEA.net in the first instance.

In this Bulletin we focus on:

  • Investment Treaties: What every emerging market investor needs to know and why the emergence of investment treaties is one of the most significant changes in the cross-border legal landscape over the past few decades. A patchwork of over 3000 treaties gives investors basic legal protections against state interference with their investments and offers investors a neutral forum to resolve disputes with governments. Arbitrators are able to award financial compensation following binding decisions, which are directly enforceable against governments.
  • Emerging Market Fund Terms: How and why they differ – or don’t – from developed market fund terms. After a review of key private fund terms that are relatively similar across asset classes and markets, we consider differences between emerging and developed market fund terms including some surprising areas where you might expect differences but there are none and reflections on what future terms might look like.
  • India, the 2015 Budget, the Finance Minister’s Speech and the Tax Implications for Private Equity: What the first full fiscal year budget of Narendra Modi’s Government holds in store for, and signals to, private equity investors in India. Also, how the Finance Minister seeks to provide comfort by avoiding enforcement of tax provisions that would adversely impact the stability and predictability of the recently proposed taxation regime. We highlight matters where clarification might be sought and welcomed and consider investment structuring implications generally. Reading the signals suggests a future that may allow enhanced structuring flexibility for foreign investments.
  • Warranty and Indemnity Insurance: How warranty and indemnity insurance operates and the reasons for its increased prevalence in emerging markets, realistic expectations and some timing tips and terminology, which may be helpful when drafting and negotiating share purchase agreements in emerging market transactions.

In summary, much (and hopefully welcome) food for thought.

Best wishes for the spring and summer seasons to you all, Mark Kenderdine-Davies General Counsel, CDC Group plc Chair, EMPEA, Legal & Regulatory Council


IN THIS ISSUE

Investment Treaties: What Every Emerging Market Investor Needs to Know

Emerging Markets Fund Terms – How and Why do They Differ from Developed Markets Funds?

The Indian Budget, 2015 Implications for Private Equity

Mind the Gap – Stand Clear of the Risk: Warranty and Indemnity Insurance

EMPEA represents the leading global investors in EM. I look forward to working alongside to drive much-needed capital for financing entrepreneurs and businesses worldwide.

Renuka Ramnath | Founder, Managing Director & Chief Executive Officer, Multiples Alternate Asset Management Private Limited

EMPEA plays an important and energetic role across the markets it represents, driving outreach and research initiatives, and promoting the role of private capital.

Brian Lim | Partner and Head of Asia and Emerging Markets, Pantheon Ventures

The developed markets have no equivalent to the role EMPEA is playing as a convener and source of trusted information in the emerging markets.

David Rubenstein | Co-Founder and Co-Executive Chairman, The Carlyle Group

I’m honored to join fellow industry pioneers in the leadership of an unparalleled network, filled with first movers, shaping the future of industries and communities.

Dr. Andrew Kuper | Founder and CEO, LeapFrog Investments

EMPEA's market and industry intelligence opens doors to new sources of capital.  I look forward to the future success of EMPEA and its members.

Torbjorn Caesar | Senior Partner, Actis

While there are certainly challenges for the industry, the opportunities abound in our target markets and globally, making a global association like EMPEA more relevant than ever.

Drew Guff | Managing Director & Founding Partner, Siguler Guff & Company