Wow #3 by 360Crossmedia 360Crossmedia

Wow

World of

No 3

> 06 INVESTMENT FUNDS The European Long Term Investment Fund (“ELTIF”) > 10 LONG STORY Letting Luxembourg’s quality shine > 22 CSR Luxembourg Solidarity and Generosity for Wildgen 4 Children

14 I FOCUS

Wildgen 4 Innovation:

A Legal Hub for Start–up Businesses

YOUR PARTNER FOR GLOBAL CORPORATE OUTSOURCING A market leader in the provision of bespoke outsourced services to an international client portfolio. • • • • •

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www.centralisgroup.com

CONTENTS 5 I FROM THE TOP By Pierre Metzler

6 I INVESTMENT FUNDS • The European Long Term Investment Fund (“ELTIF”) • Royalton Partners’ Move to Luxembourg: First Hand Testimonial

10 I LONG STORY

Letting Luxembourg’s quality shine

14 I FOCUS

• Wildgen 4 Innovation: A Legal Hub for Start–up Businesses • Silicon (Pétrusse) Valley: An Inviting Home for Technology Innovators • The Simplified Private Limited Liability Company: a New Tool for Fostering the Entrepreneurial Culture in Luxembourg?

22 I CSR

Luxembourg Solidarity and Generosity for Wildgen 4 Children

Wow N

World of Wildgen I Editorial: Pierre Metzler, Stephanie Leclercq, Emmanuelle Ragot, Samia Rabia, Robert Glaesener, Nigel Wiliams, François Brouxel, David Maria I Conception & coordination: 360Crossmedia I Artistic Director: Franck Widling I Cover photo: Shutterstock I Print run: 1.000 copies

ÂŠWildgen

FROM THE TOP Dear Wildgen Friends, Clients and Partners, It is with great pleasure that we bring you the third edition of WOW magazine. 2014 has been a momentous year for Wildgen. We have developed a clear strategy of becoming the alternative law firm in Luxembourg. We have strengthened our international network and service differentiation. We have extended our partnership. We have launched our CSR brand “W4” and its first project “Wildgen 4 Children”. We’ve ended the year with a clear strategy for long-term growth and sustainable activities. 2015 starts with new ideas and projects, our magazine is only a small reflection of this. Inside, we put the spotlights on our Investment Funds practice group, promote Luxembourg and announce the launch of Wildgen 4 Innovation, a legal hub implemented to give a hand to entrepreneurs to protect and start their business. We are delighted to invite you to join World of Wildgen and to adopt the values that make us proud of our firm: Quality, Respect, Unrivalled Client Care, Entrepreneurship and Diversity. We trust you will enjoy your reading and we wish you the best in all your projects.

INVESTMENT FUNDS

THE EUROPEAN LONG TERM INVESTMENT FUND (“ELTIF”) One of the main consequences of the ongoing financial crisis is that financing is often scarce and where it exists it is usually too focused on short-term goals. On 26th June 2013, the European Commission transmitted to the Council its proposal for a Regulation of the European Parliament and of the Council on European Long Term Investment Funds (“ELTIFs”), a new investment fund aiming at securing long-term financing for Europe’s real economy and creating a new EU investment brand to gain the confidence of investors and companies.

he ELTIFs will allow professional investors and individuals to invest in longterm European non-listed companies and in long-term assets such as real estate, infrastructure, transport and sustainable energy projects in return for a steady income. Pension funds and insurance companies are expected to be particularly interested in ELTIFs along with private investors who can afford to see some of their savings committed for a long period of time. However, ELTIF managers can offer investors the option to withdraw their money earlier provided that they comply with certain stringent requirements. On 10th March 2015 the European Parliament reached an agreement on ELTIFs and the new regulation will come into

effect 6 months after its publication in the EU Official Journal. A NEW INSTRUMENT AS PART OF WIDER PROJECTS The measures concerning ELTIF were announced by the Commission in the Single Market Act II communication in October 2012 and in the Green paper on Long-Term Financing of the European Economy in March 2013. On 26th November 2014 the Commission reached a political agreement with the EU Council and Parliament for an investment plan for Europe including inter alias the launch of the ELTIFs. Finally, on 28th January 2015, the Commission launched its project to establish a Capital Markets Union to boost jobs and growth in the EU (“CMU”) by holding the first orientation debate. The CMU will seek to create a single market for capital across all 28 Member States by removing barriers to cross-border investment and lowering the cost

Aim of ELTIF is to gain the confidence of investors. © Wildgen

Samia Rabia, Investment Funds Partner

of funding in the EU. The CMU links with the goals of the investment plan for Europe and ELTIFs therefore represent an important part of it. ELTIF SPECIFIC FEATURES Broadly speaking, in order to qualify as an ELTIF, a fund has to invest 70% of its assets in unlisted SMEs needing long-term capital and active in the infrastructure, real estate and intellectual property fields together with listed SMEs with a market capitalisation of less than EUR 500 million. Trading in assets other than long-term investments is only allowed up to a maximum of 30 % of their capital. Finally, the use of derivatives is restricted to only managing currency risk. Funds which will want to use the ELTIF label will have to meet a number of requirements under the new EU law, in particular regarding the eligible assets, how they have to spread their money to reduce risks and the information they have to provide investors with. Any ELTIF manager will also

have to comply with the stringent requirements of the Alternative Investment Fund Managers (AIFM) law to provide adequate protection for its investors. Under the proposal, ELTIFs would have to meet a set of common rules so that they always have a depositary to keep assets safe, they comply with rules on spreading assets to prevent too much money going into one asset and they only use derivatives to manage currency risks in relation to the assets they hold, and not for speculation. According to their nature, ELTIFs would predominantly attract institutional investors, even if they can be marketed to “semi-professional investors” and to other retail investors with investible portfolios of at least EUR 100,000 provided that they invest no more than 10% of their portfolio into ELTIFs. Contact Samia Rabia, Investment Funds Partner samia.rabia@wildgen.lu

INVESTMENT FUNDS

ROYALTON PARTNERS’ MOVE TO LUXEMBOURG:

FIRST HAND TESTIMONIAL THE REASON ROYALTON PARTNERS MOVED TO LUXEMBOURG WAS THE INTRODUCTION OF THE AIFMD REGULATORY FRAMEWORK. Royalton Partners migrated to Luxembourg from Cayman in May of 2014 and became an authorized AIFM. This authorization encompasses the performance of both the portfolio and risk management functions for private equity AIFs. Moreover, Royalton Partners currently has an application to extend the authorization to manage real estate AIFs pending with the CSSF, the Luxembourg regulator.

Nigel Wiliams Chairman of Royalton Partners

WHY BECOME AN AIFM? Simply put – to gain the EU wide marketing passport! Although there are transitional arrangements in place, post 2018 without access to an AIFM authorization, the marketing of an alternative investment fund in the EU will be virtually impossible. Our expectation at Royalton Partners in 2010 was that we would next go fund raising in 2014/15, having had a final close of our latest, third fund in the fourth quarter of 2009. Many of the transitional exceptions were scheduled to be over by this time. We therefore believed that, we were faced with a stark choice – apply to become an AIFM, or plan to run off the firm. Off course, the advent of the third party AIFM platforms, such as the one offered by Royalton Partners, meant that there was a third option. But at that time, we had not yet seen this opportunity. Back in 2010, a few days after the European Parliament passed the AIFMD, the EVCA organized a conference at short notice in Brussels at which Commissioner Barnier spoke. He stressed that the aim of the new legislation was to bring the European alternative investment fund industry on shore, so that EU investors invested in

EU funds, managed by EU managers, under the oversight of EU regulators. He compared the EU to the US where to be an alternative fund advisor, a registration with the SEC is required and most domestic funds are domiciled locally, in such places as Delaware. He made it clear, that if the legislation did not have the desired effect, further measures would be taken to make sure the alternative fund industry came on shore to the EU. After Commissioner Barnier had left the conference, a number of major EU institutional investors deliberated and many declared that once the new AIFMD regulatory arrangements were in place, they would only commit to funds managed by regulated AIFMs. Hence, my partners and I looked at each other and thought we had little choice but to seek to become an AIFM. We realised that the days of a Cayman management company, with a main investment office in Warsaw, managing a Guernsey fund being marketed into the EU where numbered. Later, we realised that once we had an AIFM license, we could effectively rent this license to non-EU alternative managers and smaller EU managers who would need access to the AIFM passport to raise funds in the EU but who had decided not to seek a license themselves. WHY LUXEMBOURG? Once we had done our homework, Luxembourg was the clear choice. In the course of our investment history, the funds we have managed have owned a bank, specialising in real estate mortgages and we currently own an insurance company. So, we have experience with financial regulators in the CEE region. Prior to moving to Prague, in 1990, I had been a cofounder and the CEO of Williams Cook Lott and Kissack one of the UK government bond brokers regulated by the Bank of England. In short, as firm we have a certain level of regulatory experience. Royalton Partners was and is a PE firm focusing on the Central and Eastern European (CEE) region. The firm was founded in Prague where Roman Babka, now our Chief Risk Officer, Ivan Vohlmuth and I stated working together in October 1990. As the firm developed, we grew our Warsaw office as Poland is the largest country in our investment region. Naturally, we might have sought a license

in Poland or the Czech Republic. But Poland has not yet transposed the AIFMD into local law and the Czech financial regulator, similarly to most CEE countries, through no fault of its own, just has not had the long experience of regulating alternative fund managers. In addition, since we invest throughout the region we did not want to be perceived as regulated by any individual country and be subject to its changing priorities. We could have set up in London, but there is some uncertainty about the UK’s membership in the EU - to migrate the firm, only to migrate it again did not make sense. So if not in our investment region and not in Europe’s financial capital, then where? Luxembourg was the obvious choice. Firstly, one thing was clear – the CSSF has the experience in overseeing the second largest fund domicile in the world, after the US. The country has long decided to make financial services one of the cornerstones of its economy and developed a robust regulatory framework, which strikes the right balance between effective supervision of market participants and practicalities of day-to-day operations. Luxembourg transposed AIFMD as one of the first countries in Europe. Secondly, the new SCSp partnership structure is available, which resembles the Anglo-Saxon limited partnership. Thirdly, there is no VAT charged on management services in Luxembourg, which would otherwise be charged to investors. Fourthly, our expectation was that our next fund would be a Lux AIF. HOW DID THIS CHANGE OUR FIRM? Royalton Partners moved from an unregulated to a fully regulated environment and this will obviously raise the level of protection for LPs. We have separated the investment decision process and risk management, set aside regulatory capital and implemented transparent internal policies and procedures. Notably, we are also able to offer AIFM solutions under our Third Party AIFM Platform to non-EU alternative asset managers, and smaller EU managers. THE RIGHT CHOICE In conclusion, we believe that Royalton Partners made the right choice by becoming an authorized AIFM; we are preparing to raise our next CEE fund and building our third party manco business.

LONG STORY LETTING LUXEMBOURG’S

QUALITY SHINE Wildgen managing director Pierre Metzler argues that the end of banking secrecy and tax controversy is allowing Luxembourg’s fundamental qualities to come to the fore – the mix of skills, experience and international outlook that has already lured China’s leading banks.

ÂŠ Olivier Dessy

LONG STORY Luxembourg does not need secrecy to develop and expand its role in the global financial industry. Pierre Metzler

INTO A NEW ERA OF TRANSPARENCY Luxembourg has arguably managed the end of the banking secrecy era extremely successfully, making clear its readiness to commit to the transparency and international standards that have become the new global norm. Far from causing the country’s business to melt away, the country’s stance continues to bring it new clients and new areas of activity. The country’s banks all passed the European Central Bank stress tests with flying colours, while the fund industry, the world’s second largest continues to demonstrate vigorous growth.

LUXEMBOURG AS A GLOBAL HUB All this sends out the signal that Luxembourg does not need secrecy to develop and expand its role in the global financial industry. Clients and law firms abroad remain convinced of the country’s importance as a jurisdiction, and there’s no let-up in the business they send to the Grand Duchy. Indeed, it continues to attract professional and financial firms and service providers, like the US firm that has moved its European headquarters from Switzerland to Luxembourg. As we all know, over the past few months Luxembourg has suffered its share of negative headlines in the international press,

and it’s easy to overreact. However, the reality on the ground is highly positive – like the decision of China’s leading financial institutions to establish European headquarters here, and the country’s emergence as a renminbi hub. This new vocation fits perfectly with Luxembourg’s longstanding tradition of international engagement and expertise. A HIGHER INTERNATIONAL PROFILE Wildgen, which last year celebrated its 90th anniversary, is raising its profile abroad through involvement in conferences and roadshows. This is something that ties in with broader

efforts to enhance the country’s image on the international stage. For instance, last May the International Bar Association’s 31st International Financial Law Conference brought more than 250 leading lawyers from all over the world to the Grand Duchy for three days – and were entranced by the Kirchberg and the European district, the old city and the capital’s cultural delights. Meeting up with some of them again at the IBA annual meeting in Tokyo, I was told that some of the firms represented at the law conference were now planning events of their own in Luxembourg. Luxembourg has a story to tell, and it’s one the rest of the world wants to hear.

FOCUS WILDGEN 4 INNOVATION:

A LEGAL HUB FOR STARTâ&#x20AC;&#x201C;UP BUSINESSES Innovation can turn interesting ideas into viable and then successful companies and this is often seen as the catalyst that initiates the incorporation of new companies. However, companies may also fail if they stop innovating.

FOCUS

SPECIFIC ASSISTANCE TO PROTECT INNOVATION Luxembourg is rapidly emerging as a technological European Start-up hub. Attracting and nurturing start-up businesses from around the world, entrepreneurs may have many questions about Luxembourg local laws, business regulations and compliance. As a full-service law firm, assisting local and international clients for more than 90 years in Luxembourg, including more than 15 different nationalities and with an average age of 36 years, innovation is key and part of Wildgen’s longstanding success. Our services continuously evolve to meet our client’s expectations and shift social trends and preferences. For a company and for our clients, avoiding innovation faces an ongoing risk of becoming irrelevant Therefore we help them to protect and secure their innovation and ownership via specific advisory assistance and via efficient litigation in relation to the defence of their IP rights and commercial relationships. RISKY BUSINESS It became natural and logical to the firm to launch a new service conceived as a legal hub for start-up businesses in line with the sponsoring of the Luxembourg Venture Lounge “Biotech” event since 2012 and our involvement in the development of new technologies and film industry sectors in Luxembourg. Most of start-ups have an idea but they usually have no budget for legal analysis and consequently may make initial mistakes that impact the future of their ownerships or protection of their IP rights. Usual pressing questions are always very similar such as: Is my idea subject to protection? How could I limit my personal liability? Should I opt for this type of legal company form? How do I combine ownership of IPRs and growth and tax implications? What’s the trademark’s filing strategy in terms of territories, products and services to be covered and type of trademark (complex, figurative or word)?

A person with a new idea is a crank until the idea succeeds.

As an IP/TMT Partner, I often see concepts coming to life and entering the marketplace with little or no legal guidance, which is risky business.

(Mark Twain)

A NEW DEDICATED PROJECT Through the Wildgen 4 Innovation project, qualified start-ups are able to receive guidance through the complex and at times confusing areas of business law to protect their legal interests. Today, our dedicated team for emerging businesses helps and serves them based upon five guiding principles, which I believe can benefit many small companies interested in leveraging innovation as a growth platform: • Reliability: a prior phone call with a member of our dedicated team will determine the scope of needs on which we may help and the contact person within the team; • Efficiency: the team is well-experienced and covers all areas from the very early days of the project to the various steps of business development and continuity of the company; • Accuracy: the team gathers people embracing a real passion for innovation; • Flexibility: alternative arrangements to hourly fees are proposed i.e. delivery of pro-bono services, implementation of flexible and adaptive packages or monthly subscription; • Openness: the team includes various nationalities and speaks several languages. We aimed at encouraging innovation as many people conflate it with invention. Should this difference be well understood, innovation is then seen as a core value to be embraced. Legal services we dedicate to start-up businesses are provided to embed the paradigm of innovation into a corporate vision and culture. Great ideas deserve great support and this is exactly what Wildgen 4 Innovation aims at.

Contact Emmanuelle Ragot, IP/TMT Partner Wildgen 4 Innovation Head emmanuelle.ragot@wildgen.lu

FOCUS

I couldnâ&#x20AC;&#x2122;t think of a better place to start a business.

ÂŠ DR

Robert Glaesener, CEO Talkwalker

SILICON (PÉTRUSSE) VALLEY:

AN INVITING HOME FOR TECHNOLOGY INNOVATORS Luxembourg’s unique position as a small, international city in the centre of Western Europe and the country’s open attitude to innovation and business has played an important role in Talkwalker’s rise from a 3 person start-up to a fast growing, increasingly global tech company of more than 50 people. UNIQUE ADVANTAGES: A SMALL, INTERNATIONAL CITY IN THE HEART OF EUROPE When most people think of Luxembourg they automatically think of finance and accountancy but in reality things have been changing for some time. Although those industries remain strong there is much backing for start-ups and innovation, particularly in the technology sector which has helped us immensely. And it’s not just Talkwalker, success stories like Skype, Lumension and DigiCash all started in Luxembourg. In addition Luxembourg’s unique stature as a small but very international city gives it some unique advantages. First there is the location. Located between France, Germany and Belgium, Luxembourgers grow up learning four languages, French, German, English and Luxembourgish. Due to the large number of overseas workers many people speak other languages as well. This is great for companies like ours as we work with clients around the world and having a multilingual workforce on your doorstep makes a big difference. Luxembourg’s strong education system and highly developed ICT infrastructure also

means that the workforce is highly educated and in the technology space in particular, they have a great platform on which to develop those skills. CLOSE CONNECTIONS AND STRONG SUPPORT From a business standpoint, as a young company Luxembourg has offered us many opportunities. Talkwalker was part of one of the many start-up incubators located in the country. Organisations such as LuxInnovation and more recently Silicon Luxembourg provide strong support and in some cases financial assistance for innovative companies in the early stages of development. As a small nation of only 500,000 people, it’s also very easy for businesses to engage in conversations with important stakeholders like the government, the many multinational companies that have a presence in Luxembourg and even members of the European Parliament which is located in Luxembourg’s business district. Such close proximity between important organs of state and business can make a big difference when trying to grow a business in a competitive industry. LOOKING FORWARD In 2009, when Talkwalker first began it was a 3 person start-up moving into the relatively new field of big data web crawling and social media monitoring. 6 years later, we are 50 strong and have recently opened a new office in New York City. Talkwalker has managed to make big strides in a short amount of time and I think much of our success has been due to our location. I couldn’t think of a better place to start a business.

FOCUS

THE SIMPLIFIED PRIVATE LIMITED LIABILITY COMPANY:

A NEW TOOL FOR FOSTERING

THE ENTREPRENEURIAL CULTURE IN LUXEMBOURG? Entrepreneurs are often discouraged by a vicious circle: on the one hand, fear of failure encourages them to incorporate a company in order to benefit from limited responsibility and consequently to limit their financial risk but, on the other hand, the high cost to incorporate a company demotivates them. A NEW CORPORATE FORM On the 21st January 2015, the cabinet of the Luxembourg government suggested a solution to break the vicious circle and adopted a bill of law on the establishment of a new type of legal form, namely the simplified private limited liability company (“société à responsabilité limitée simplifiée” or “S.à r.l.-S”) (the “Bill”), also known in Luxembourg as the “EUR 1 Company” or the “111 Company”. The S.à r.l.-S, although mainly based on the legal dispositions of a classic private limited liability company, is designed to allow a natural person who wishes to test and develop a business innovative idea to create a company within a limited time period and with one single euro as starting capital.

LUXEMBOURG TO BE A LEADER ON THE START-UP MARKET With the introduction of this new type of company, the Luxembourg Government aims to promote and foster the entrepreneurial culture and the entrepreneurship spirit in Luxembourg, and consequently to drive economic growth. Besides, the government believes it will contribute to social inclusion, allowing many jobseekers to create their own company and as such avoid unemployment. As such, Luxembourg follows in the footsteps of its neighboring countries which already introduced a similar type of company, namely the SPRL-Starter in Belgium, the Entrepreneur

individuel à responsabilité limitée (EIRL) in France and the Mini-GmbH in Germany. Nevertheless, Luxembourg, known for its pragmatism, intends to become a challenger and subsequently a leader on the start-up market, instead of remaining in the position of follower. Therefore, an excellent legal framework is essential. LEGAL FRAMEWORK Here are the main characteristics of the S.à r.l.-S: •  Only natural persons are allowed to incorporate one single S.à r.l.-S each. Legal entities cannot incorporate a S.à r.l.-S. •  It is not allowed to have a corporate capital higher than the minimum capital of a “classic” •  S.à r.l. (EUR 12,394.68) and therefore a S.à r.l.-S might not be suitable for all types of activities. •  The corporate purpose must mandatorily aim to the pursuit of activities for which a business permit is required, as commercial, craft and industrial activities.

A new corporate form designed to reduce the costs of incorporation. •  A S.à r.l.-S may be incorporated under private seal, per notarial deed and per special act. The incorporation deed shall be published. •  A non-distributable legal reserve funded on a yearly basis by the allocation of 5% of the net profits shall be created. When the aggregate amount of the legal reserve and corporate capital will reach EUR 12.394,68, this allocation will cease to be compulsory. Some items, such as limiting the existence of the S.à r.l.-S in time and the necessity of transforming it into a “classic“ S.à r.l. after a few years, remain however important points of discussion. Nonetheless, the S.à r.l.-S shall in any case reduce the costs of incorporation of a new company by means of an incorporation process designed to be more efficient, simple and less time-consuming. Contacts • François Brouxel, Corporate Partner francois.brouxel@wildgen.lu • David Maria, Tax Partner david.maria@wildgen.lu

CSR LUXEMBOURG SOLIDARITY AND GENEROSITY FOR

WILDGEN 4 CHILDREN

Wildgen has always dedicated itself, through its CSR policy, to different valued causes: Environment, Diversity, Education, Children… And has organised at several occasions toy drives within its own premises. In 2014, concerned about growing precariousness in Luxembourg and economic austerity dictated by the crises, we decided to go further and mobilise solidarity and generosity throughout the whole country around the Wildgen 4 Children project. UNIVERSAL CHILDREN’S DAY Then, with several local partners, we launched Wildgen 4 Children, a Toy Drive and Fundraising for the profit of Luxembourg charity associations working for the well-being and development of disabled and underprivileged children. This project was articulated around the Universal Children’s Day, on the 20th November. The Universal

Protection and fundamental rights of children must remain a universal priority.

Didem Batum - Orangefield

“Congratulations on the excellent initiative with the launch of Wildgen for Children. I thought it was a fantastic idea.” Howard Liebman Jones Day Children’s Day, was initiated in 1954 in order to raise general awareness to children’s fundamental rights. This day, is to remind us that still today, within our countries, children live in precarious and difficult situations. Through this action, we wanted to remind that protection and rights of children must remain a universal priority. A FIRST SUCCESS Puzzles, books, outdoor games, building toys, cars,

dolls, ... thanks to the generosity of the whole country, hundreds of toys were delivered to the beneficiary associations and over EUR 2,000 were collected and used to meet some of their needs such as sport equipments, health care products, cultural activities... We were very pleased by the results of this first project which are far beyond our greatest hopes. A SUSTAINABLE PROJECT We intend to make this operation sustainable and to support year after year a maximum of associations, which goals are to assist and help children going through difficult moments. This action was the first “Wildgen for Children” project; many other actions in favour of children and youths are to follow. See you then in 2015 for the well-being and development of our children! List of associations, partners, and details of Wildgen for Children action are available on www.w4c.lu. Contact Stephanie Leclercq, Chief Marketing Officer / Head of CSR Committee Stephanie.leclercq@wildgen.lu