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Matthew Crisp, ‎Partner – Financial & Regulatory Reporting at Cordium

With spring on the way, it’s not long until the skies and fields will be filled with new life. Lambs bleating, chicks chirping – with any luck we’ll also see a new clutch of funds begin to make their way in the world. What better time to consider the typical lifecycle of a firm?


Setting up a new fund management business may seem a straightforward affair, but there’s lots to consider. Appropriate forethought and planning at the start will make for a far smoother ride later on. Firms will need to register with the FCA, and managers – if they seek to market into Europe – will need to obtain AIFM authorisation. Beyond the obvious, such as finding an office, there is also the issue of structural tax planning to ensure the firm delivers maximum value down the line.


Once the basics are in place, a firm needs to build up its human capital – a fund isn’t going to go very far without good people running it. This should involve giving considerable thought to HR structures and collateral, from staff manuals to contracts to incentive schemes. There are tax elements here too: ensuring that remuneration is structured in an attractive way.

Once the human element is in place, it’s a matter of creating a customer base and sales infrastructure. When money starts to flow in, it is important that firms ensure proper compliance procedures are in place. This pertains to direct tax and VAT, and possibly Withholding Tax if loan finance is being used. For the funds themselves there is the issue Non-Resident Landlord Tax compliance for property funds, or Reporting Fund status where there are UK investors.


Once a firm is up and running, it’s all about building – and measuring – the firm’s value. During this period, it’s important to stay on top of the numbers through robust accounting and capital monitoring and financial planning structures.

Ensuring continued compliance in an era of high regulatory churn will also be critical at this stage. Firms will want to consider regular regulatory health checks and keep a keen eye on the forward regulatory agenda, so as to prepare in advance and not be caught on the back foot.

Risk management across the entire business – from managing portfolio exposure to staying on top of tax liabilities – is crucial at this stage of the lifecycle.

Reaching full potential

Ideally, the latter stages of a firm’s lifecycle will flow seamlessly from the planning and value-building of the prior stages. This is the point at which value is extracted from the fund. Everything beforehand – from tax planning to hiring the right people to managing risk – should have been designed to maximise that value. This will mean delivering healthy returns to fund investors as promised, as well as planning tax efficient extraction of value for the owners of the fund manager.

Global Banking & Finance Review


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