Thesis Unit Trust Management Limited and TUTMAN LLP (together (“TUTMAN”) do not expect a material impact on their business as a result of the UK leaving the EU.
TUTMAN acts as authorised corporate director of open-ended investment companies or as manager of authorised unit trusts, both undertakings for collective investment in transferable securities schemes (“UCITs”), which became “UK UCITS” after 31 December 2020, and alternative investment funds (“UK AIFs”) or authorised contractual schemes (“Funds”).
TUTMAN is a UK business with no operations in other EU countries. We have a predominantly UK client base. Two of the Funds we manage were marketed in EU 27 countries by distributors prior to 31 December 2020, but such marketing has ceased. It is not currently intended to market Funds in the EU 27. Existing investors in a TUTMAN fund resident in a European Economic Area (“EEA”) country may continue to be invested and make further investment in that fund. If existing investors wish to invest in a different sub fund or another TUTMAN fund, TUTMAN must be able to provide evidence that all communication with the investor was reactive and the investor found the information on their own accord. It will be a matter of local law and local regulation as to whether such investments may be made. Prospective EEA investors, who apply to become an investor in a TUTMAN fund for the first time after 31 December 2021, will only be able to invest if the “reverse solicitation” regime is available to them, where they initiate the provision of the service.
Any investment managers appointed by us to manage the portfolios of Funds, which are incorporated in an EU 27 country and provide services through their UK branches, can continue to do so under the Temporary Permissions Regime established by the Financial Conduct Authority (“TPR”). This enables inbound EEA firms to access the UK market while seeking full authorisation in the UK. The TPR is expected to last for a minimum of three years from 31 December 2020.
There has been no major impact on the way we operate Funds. Northern Trust Global Services SE UK Branch (“NTGS SE”), which acts as depositary or trustee for some of the Funds we operate, became a European public limited liability company in March 2019. NTGS SE re-domiciled from the UK to Luxembourg, but it is able to continue to act as depositary or trustee under the TPR after 31 December 2020 until it transfers Funds to its UK incorporated depositary firm, which is awaiting authorisation from the FCA. This transfer is currently expected to take place by the end of 2021.
To the extent that any personal data is transferred from the UK to the EEA for processing by any of our delegates, the Government has stated that the UK will continue to allow the free flow of personal data from the UK to the EEA. As regards the flow of personal data from the EEA to the UK, the UK became a “third country” from 1 January 2021. Under the EU GDPR, the transfer of personal data to third countries is permitted in certain circumstances, namely if the European Commission confirms an adequacy decision for the UK and if appropriate standard contractual clauses or binding corporate rules are in place. An adequacy decision in respect of the UK has not yet been made.
The European Union (Withdrawal) Act 2018 converted direct EU legislation into UK law on exit day, and preserved existing UK laws which had implemented EU obligations. The Government has made numerous statutory instruments which amend retained EU financial services legislation. The Government’s intention is that the same rules and laws will apply after 31 December 2020 as before, as far as possible, but with the necessary amendments to reflect the UK’s new position outside the EU, and to smooth the transition to this situation. Fund prospectuses will be updated in their next review.