On November 2, 2017, the House of Representatives released the first draft of the Tax Cuts and Jobs Act (the Bill), which could result in the most significant overhaul of the U.S. federal tax system since 1986. Subsequently, two substantive amendments were introduced by the Chairman of the House Ways and Means Committee. While the Bill is expected to change substantially and the Senate version remains to be unveiled, the Bill provides certain indications as to how tax reform may affect investment funds and asset managers. Significant aspects can be summarized as follows:
Akin Gump’s international trade lawyers wrote an alert on CFIUS’s 2015 annual report and published 2016 data. Please click here to read the full alert.
As stated in our May 25, 2017 Executive Compensation, Employee Benefits and ERISA Alert, the Department of Labor’s (DOL’s) new fiduciary rule (“Fiduciary Rule”) became partially applicable on June 9, 2017. Set forth below are a few questions that a typical private fund manager might have in response to the Fiduciary Rule, and our responses thereto.
This afternoon, President Trump announced his decision to withdraw the United States from the Paris Agreement, describing it as “disadvantaging the United States” and indicating that the United States will “cease implementation” thereof, unless the United States can renegotiate its terms.
This week we highlight a report by Ernst & Young based on three years of research on the linkages between nonfinancial performance and investor decision-making. The data concludes that with regards to environmental, social and governance (ESG) reporting, there is a global trend toward increased interest in nonfinancial information on the part of investment professionals.
On February 3, 2017, President Donald J. Trump issued a memorandum directing the U.S. Department of Labor (DOL) to re-examine the DOL’s final rule on who is a “fiduciary” of an employee benefit plan under the Internal Revenue Code and the Employee Retirement Income Security Act as a result of giving investment advice to a plan or its participants or beneficiaries. The order directed the DOL to prepare an updated economic and legal analysis concerning the likely impact of the rule, and rescind or revise the rule based on the results of this analysis.
On October 13, 2016, the Internal Revenue Service (IRS) and the Treasury Department issued final and temporary regulations (T.D. 9790) (the “New Regulations”) under Section 385 of the Internal Revenue Code (“Code”). Section 385 of the Code, titled “Treatment of Certain Interests in Corporations as Stock or Indebtedness,” authorizes the issuance of regulations to determine whether an interest in a corporation is to be treated as stock or indebtedness. Regulations were initially issued under the statute in the early 1980s, but were subsequently withdrawn without ever taking effect. Until regulations were once again proposed under the statute in April of this year, no substantive guidance was provided under the statute for determining whether an interest in form as debt was to be treated as equity. Although the regulations as proposed earlier this year were initiated as a result of the public furor over corporate inversions, the regulations that were proposed went far beyond corporate inversions and generated a great deal of uncertainty.
The Securities and Exchange Commission (SEC) issued a final order on June 14 to adjust for inflation the net-worth threshold for a registered investment adviser to charge performance-based compensation1 to its advisory clients or investors in 3(c)(1) private funds2 from $2 million to $2.1 million (not including the client’s or investor’s primary residence and related debt).3 The order (available here) will be effective on August 15, 2016. Advisory contracts or investments in 3(c)(1) private funds entered into prior to the effective date will not be affected. Subscription documents and agreements for the sale of fund interests between investors should reflect these new thresholds.