Financial regulation

The legal entities generally used to undertake financial or investment activity are investment funds.

Generally

The type of legal entity used to undertake financial or investment activity in Australia will to a degree depend on the nature of that investment or activity.

Companies

A company is a separate legal entity capable of holding assets and being sued in its own name. The most common types of companies are proprietary companies limited by shares (denoted by 'Proprietary Limited' or 'Pty Ltd' appearing at the end of the company’s name) and public companies limited by shares (denoted by 'Limited' or 'Ltd').

A key advantage of undertaking financial or investment activity through a company limited by shares is that the liability of the  shareholders for the company's liabilities is limited to the company's assets and unpaid share capital.

A public company may also be listed on the Australian Securities Exchange, subject to compliance with additional regulatory requirements that apply to listed entities.

Partnerships

Partnerships involve two or more individuals or companies carrying on a business, generally pursuant to a partnership agreement. Most partnerships are limited to no more than 20 partners, unless the partnership applies to a particular profession (e.g. an accountancy practice). A partnership is not a separate legal entity. Its partners are jointly and severally liable for the partnership’s liabilities. In certain states limited liability partnerships can be registered with State regulatory authorities. An incorporated limited partnership is a special kind of limited partnership. Limited partnerships are far less common than ordinary partnerships.

Joint ventures

A joint venture is usually a contractual arrangement entered into by two or more parties to carry out a specific commercial endeavour. A joint venture may be incorporated or unincorporated. An incorporated joint venture operates through a company, which is a separate legal entity. An unincorporated joint venture is a purely contractual arrangement between the joint venturers, and they will directly engage in the activities of the joint venture.

Trusts

A trust is an arrangement where one person, the trustee, holds property for the benefit of another person, the beneficiary. The trustee holds legal title to the property and must deal with the property for the benefit of the beneficiary. The trustee may be an individual or a company. The trustee is liable for any obligations it incurs as trustee, but it generally has a right to be indemnified out of the trust property.

Common types of trusts are discretionary trusts, unit trusts and bare trusts. The trustee of a discretionary trust may determine which of the beneficiaries are to receive distributions from the trust. The beneficiaries of a unit trust hold units in the trust and their respective entitlements to distributions from the trust isare determined by the number and class of units held. The trustee of a bare trust simply holds the property without having any active duties in relation to it, except to convey the property on demand to the beneficiaries or to deal with the property as they direct. 

Funds

An Australian hedge or debt fund is usually structured as a unit trust and would ordinarily fall within the definition of a 'managed investment scheme' in the Corporations Act 2001 (Cth). That Act imposes a wide range of obligations and requirements on the operators of managed investment schemes. Managed investment schemes are regulated by the ASIC. Managed investment schemes may also qualify for tax concessions if they qualify as a “managed investment trust” under Australian tax laws.

Generally

The most common types of legal entities are limited companies, which are body corporates with separate legal personality and limit the liability of their members.

Limited companies can either be private (private limited liability company, société à responsabilité limitée/besloten vennootschap) or public (public limited company, société anonyme/naamloze vennootschap), depending on whether their shares are offered to the public.

Usually, regulated entities are incorporated as public limited companies which is the legal entity favored by large enterprises.

Funds

Investment funds mostly take the form of public limited companies, partnerships limited by shares or contractual schemes.

Fund managers should be public limited companies.

Generally

In very broad terms there are two main types of legal entities in Brazil: the limited liability partnership (limitada) and the corporation (sociedade anônima), both of which are body corporates with separate legal personality and which limit the liability of their members. Corporations can be privately held or publicly held depending on whether their shares are offered to the public.

Usually, the type of legal entity used to incorporate a financial institution is regulated by the Central Bank of Brazil (eg commercial banks may only be incorporated as a corporation)

Funds

Under Brazilian law, funds are considered as an ownership right shared by more than one person or legal entity (referred to under Brazilian law as condominiums). There is a variety of different funds that are regulated by the Brazilian Securities Commission (CVM). The main difference between them is the type of investments they are allowed to make: for example, there are real estate funds, general investment funds, private equity funds and securitization funds among others.

Generally

The most common types of legal entities are general partnerships, limited partnerships, limited corporations and unlimited liability corporations. Other legal structures available in Canada for businesses include contractual relationships, such as franchises, joint ventures and license agreements.

Limited liability and tax consequences tend to be the main considerations for most businesses when choosing the appropriate means for undertaking financial or investment activity.

Partnerships

A partnership generally exists when two or more persons carry on business together with a view to profit. The income and losses of the partnership generally flow through to the partners of the partnership.

In a general partnership, each partner is jointly liable for the debts and obligations of the partnership. In a limited partnership, the general partner is liable for the debts and obligations of the partnership and the limited partners are only liable to the extent of their capital contributions (provided they do not take part in the management or control of the business of the partnership).

Corporations

Corporations are considered to be separate legal entities. Shareholders of a limited corporation (denoted by Limited or Ltd., Incorporated or Inc., or Corporation or Corp.) have limited liability and shareholders of an unlimited liability corporation (denoted by Unlimited Liability Corporation or ULC) have unlimited liability. Incorporation can be effected at the federal, provincial or territorial level; however, only the provinces of British Columbia, Alberta and Nova Scotia allow for the creation of an unlimited liability corporation.

A corporation incorporated either provincially or federally must be extra-provincially registered in each province where such corporation carries on business. The ‘carrying on business’ test is specific to each jurisdiction, but typical indicia include whether an entity has any physical presence or assets, resident employees or agents, local phone numbers or traditional advertising activities in the jurisdiction. The registration process in each jurisdiction is relatively straightforward and generally involves some combination of submitting an application, paying a fee, appointing an agent for service, and providing proof of the entity’s existence (eg a certificate of status).

Funds

Investment funds tend to take the form of limited partnerships, limited companies and trusts. Persons who act as investment fund managers are generally required to register in the provinces or territories in which the investment fund managers do business. If an investment fund manager does not have a place of business in Canada, it may be exempt from this registration requirement in certain circumstances.

Generally

For the purposes of banking activities and managing funds the legal entity shall be incorporated as a corporation.

Regarding private investment, in the vast majority of cases, the form of organization can be freely chosen, with the exception of specifically regulated business areas such as insurance companies or some utilities providers, who are required to follow a specified legal structure.

For example, in Chile it is common to use the following vehicles.

Corporations

Corporations in Chile can vary in nature, and because of this, are regulated accordingly. The main difference exists between corporations being publicly or closely held.

Partnership Limited by Shares (SpA)

SpAs are a special type of corporation with a basic structure resembling a closely held corporation. The SpA structure is more flexible and has fewer formalities as well as less economic and administrative costs.

Limited Liability Companies

Limited Liability Companies follow generally the structure of a partnership, with the main difference that the liability of the owners of a Limited Liability Company is restricted to the capital amounts subscribed by its partners.

Pursuant to applicable Colombian regulation, financial and investment activities must be undertaken exclusively by legal entities under the form of Corporations (Sociedad Anónima) or Cooperative Associations (Asociaciones Cooperativas).

Corporations are body corporates with separate legal personality and limit the liability of their members.

Generally

The most common types of legal entities are joint-stock companies (akciová společnost abbreviated as 'a.s.' in Czech) and limited liability companies (společnost s ručením omezeným abbreviated as 's.r.o.' in Czech), which are corporations with a separate legal personality and limits on the liability of their members. Banks can be established only as joint-stock companies, as some activities require a certain type of legal entity to be used.

The liability of a company's shareholders can be limited by:

• shares, in which case they are liable to pay for their shares but not the company's debts; or
• guarantee, where they are also liable to pay a certain amount if the company is wound up.

The list of shareholders is kept by the Central Securities Depository. Joint-stock companies can be public or private. A public joint-stock company is one where all or some shares have been accepted for trading on a regulated market situated or operated in any of the State Parties to the Agreement on the European Economic Area. Private joint-stock companies can have a sole shareholder. The company must execute a memorandum of association (or founding deed, where there is a sole shareholder), which includes the company’s articles of association.

Funds

Investment fund is a term which is used for all types of funds, regardless of their legal form. Investment funds can take various legal forms, eg a joint-stock company with variable registered capital (SICAV), trust fund, a limited partnership with investment certificates, common fund, cooperative or a private limited company.

Generally

The most common type of legal entity is a limited liability company regulated by the Limited Liability Companies Act. A limited liability company is a body corporate with separate legal personality and which limits the liability of its members. A limited liability company can be either private or public depending on whether or not the shares are offered to the public.

The liability of a company's shareholders is limited by shares (i.e. to the invested share capital), in which case they are liable to pay for their shares but not the company's debts. However, if the shareholders have given separate guarantees for the company’s obligations they are also liable for the amount guaranteed if the company does not fulfil the guaranteed obligation.

In addition, many Finnish Banks (usually credit institutions) are established as cooperatives (osuuskunta). Cooperatives are owned by their members and are thus similar to limited liability companies.

In addition, limited partnerships can undertake investment activities. Limited partnerships are formed by a private agreement, which is signed by all of the partners.

Funds

Investment funds can take the form of limited partnership when they are classified as alternative investment funds. Mutual funds and special mutual funds are defined as a pool of acquired assets and they are not legal persons. They are managed by fund management companies, who manage the funds in their own name but on behalf and for the benefit of the fund.

The most common types of legal entities are used to undertake financial or investment activity, such as public limited company (société anonyme) or simplified joint-stock company (société par actions simplifiées), both of which are body corporates with separate legal personality and limit the liability of their members.

Banks and financial services providers are usually established as German entities in the form of a private company limited by shares (Gesellschaft mit beschränkter Haftung – GmbH) or a public company limited by shares (Aktiengesellschaft – AG) and, in some cases, as a limited liability partnership (GmbH and Co KG).

To the extent Special Purpose Vehicles are set up for a certain transaction, they are usually established as a GmbH or a GmbH and Co KG.

The most common types are companies limited by shares which may be private or public. Private companies can have up to 50 shareholders or members while public companies have unlimited shareholders or members. Incorporated partnerships may also be used to provide some services. 

Generally

The most common types of legal entities are companies limited by shares and limited-liability companies, both of which are body corporates with separate legal personality that limit the liability of their members.

Companies limited by shares can either be private (denoted by the suffix ‘Zrt.‘) or public (denoted by the suffix ‘Nyrt.‘) depending on whether their shares are offered to the public. Some activities require a particular type of legal entity to be used, for example banks and specialized credit institutions may only operate in the form of companies limited by shares or as branches.

The liability of a company's shareholder is limited by shares, in which case they are only liable to pay for their shares and not the company's debts.

Limited-liability companies (or ‘Kft.‘) are similar to companies limited by shares in many ways. The main difference is that they require a lower minimum initial capital contribution.

Funds

Investment funds are recognized as legal entities, and shall be deemed established when registered by the National Bank of Hungary, and shall be deemed terminated when removed from the register. In its capacity as the investment fund’s lawful representative, an investment fund manager may act in the name of the investment fund.

Investment fund managers (with certain exceptions) typically operate in the form of companies limited by shares.

The most common types of legal entities/structures used to undertake financial or investment activity in Ireland are companies, limited partnerships and regulated funds.

Companies

The most common types of company used to undertake financial or investment activity in Ireland are private limited companies (either private companies limited by shares (LTD) or designated activity companies limited by shares (DACs)), companies limited by guarantee, unlimited companies and public companies. These each have separate legal personality and apart from unlimited companies, limit the liability of their members.

Limited Partnerships

Limited partnerships (established in Ireland under the Limited Partnerships Act 1907) are also frequently used; these are unregulated, tax transparent and unlike companies, do not have separate legal personality.

Funds

Ireland is regarded as a key location by the world’s investment funds industry and Ireland as a domicile provides for a number of different regulated fund vehicles. These include Irish collective asset management vehicles (ICAVs), investment limited partnerships, unit trusts, investment companies and common contractual funds. The ICAV is a relatively new corporate vehicle, governed by the Irish Collective Asset-Management Vehicles Act 2015, which has proven very popular as an investment vehicle. It is a suitable fund vehicle for both UCITS and AIFs and it is not affected by amendments to the company law that are more generally targeted at trading companies. 

Please see further at Topic 7 below in relation to Establishing and Investing in Debt and Hedge Funds.

Some activities require a particular type of legal entity to be used. For example, offering debt securities to the public cannot be done by a private company limited by shares.

Generally

In general terms, the performance of banking/financial activities in Italy is mainly reserved to duly licensed entities, subject both to initial authorization requirements and to ongoing controls and supervision. In this context, some of the authorization procedures set forth under the Italian regulatory framework expressly require certain types of legal entities or corporate forms, modulated on the basis of the activities to be performed and on the related legal and regulatory safeguards to be adopted (eg with reference to sound and prudent management requirements, the relevant capital requirements and liability issues).

The most common type of legal entities involved are limited companies, especially companies limited by shares (società per azioni) or limited liability companies (società a responsabilità limitata), which are generally characterized by separate legal personality and limited liability of the members.

Please note that, in any case, special organizational and governance rules are usually imposed on supervised intermediaries, regardless of the specific legal regime commonly applicable to the adopted corporation. Particular provisions are also set forth in relation to qualifying holdings which:

• an intermediary is entitled to acquire in other entities; and
• other entities are entitled to acquire in an intermediary.

Notwithstanding the above, upon certain conditions, intermediaries' shares can be offered to the public or admitted to trading on a regulated market.

Funds

Italian investment funds can be established by contract or as a corporate entity.

In the case of a fund established by contract, a management company is needed and such entity, usually a Società di Gestione del Risparmio (SGR), shall be a company limited by shares. In the case of corporate funds (Società di Investimento a Capitale Variabile (SICAV) or Società di Investimento a Capitale Fisso (SICAF), based on the open-ended or closed-ended nature of the fund), the vehicle could be both self-managed or externally managed by a management company, qualifying as a company limited by shares.

The types of legal entity that are generally used to undertake financial or investment activity are limited companies, they can be private law companies incorporated as a public limited company.

That type of entity is used for the Regional stock exchange (BRVM) and the Central Depository/Settlement Bank under Article 12 of the General Regulation, where they are specifically characterized as “private law companies incorporated as a public limited company.”

Management and intermediation companies are to be established as Public Limited Companies (Société Anonym, Article 30).

Funds

Open-ended investment companies (SICAV) are also to be established as Public Limited Companies (Instruction N ° 21/99 Relating to the Classification of UCITS, Article 2).

Generally

The most common forms of legal entities in Japan are:

• the Kabushiki Kaisha (KK), which is a joint-stock company; and
• the Godo Kaisha (GK), which is similar to a limited liability company.

While the KK is the most traditional and commonly used type of corporate entity in Japan, GKs are becoming increasingly common due to their streamlined structure which provides more flexibility in corporate governance and management decisions, lower annual costs and decreased regulation.

For both KKs and GKs, the liability of members is limited to the amount of their contribution. There are no minimum capital requirements which apply to KKs and GKs generally, unless they conduct specific types of activity which are otherwise subject to further regulation.

Funds

An Investment Limited Partnership (LPS) formed under the Limited Partnership Act for Investment is the most commonly used investment vehicle. An LPS consists of:

• one or more general partners (GPs) who manage the fund and assume unlimited liability with respect to debts owed by the fund; and
• one or more limited partners (LPs) who do not engage in management of the fund, but whose liability is limited to the amount contributed by the LPS.

An LPS is formed by agreement between its GPs and LPs. It may invest only in the types of investment targets specified in the Limited Partnership Act for Investment. Furthermore, an LPS may not invest a majority of its contributed assets in shares, options or other securities issued by foreign companies. For this reason, a limited partnership formed outside of Japan (such as in the Cayman Islands) is typically used if the fund is targeted towards non-Japanese entities.

An LPS does not pay corporate tax on its investment income because it is treated as a pass-through entity. Taxes are instead levied on each partner.

Generally

Credit institutions may only be incorporated as a public-law institution, a société anonyme (public limited liability company), a société en commandite par actions (partnership limited by shares) or a société cooperative (cooperative).

Authorization for any activity involving the management of funds belonging to third parties may only be granted to legal persons having the form of a public entity or a commercial company.

The legal form that a professional of the financial sector (professionnel du secteur financier (PFS)) should adopt, as well as the capital base that it must have, depends on the activity that it intends to carry out. The choice of the legal form of the future PFS shall be made while taking into account the general and special legal conditions applicable to the authorization that is sought.

Investment funds may be set up as companies or partnerships.

Generally 

The most common types of legal entities used are companies limited by shares. Such companies can be private companies (having less than 50 shareholders) or public companies (having more than 50 shareholders). 

Limited Partnerships and trusts are also commonly used. 

Funds 

Funds and fund managers usually take the form of companies limited by shares. We are seeing an increasing number of shares being set up as limited partnerships. 

Generally

The most common type of legal entity is the stock corporation or Sociedad Anonima, which can adopt the variable capital form in order to be a Sociedad Anonima de Capital Variable, the only difference being the flexibility in the latter to increase or decrease its capital stock without having to amend formally its corporate charter.

The Sociedad Anonima are required to adopt the Sociedad Anonima Bursatil or Sociedad Anonima Promotora de Inversión Bursátil forms form when performing an initial public offer of their shares though the Mexican Stock Exchange.

Funds

Investment funds are required to adopt the Sociedad Anonima de Capital Variable form of entity.

Banking institutions headquartered in Morocco must have the legal status of a fixed-capital public limited company or of a cooperative company with floating capital.

Generally

The most common types of legal entities are private limited companies (besloten vennootschap met beperkte aansprakelijkheid, B.V.) and public limited companies (naamloze vennootschap, N.V.), both of which are body corporates with separate legal personality and limit the liability of their members.

Funds

The most common types of legal entities for funds are private limited companies (besloten vennootschap met beperkte aansprakelijkheid, ‘B.V.’), public limited companies (naamloze vennootschap, N.V), cooperative societies (coöperatieve vennootschap, c.v.) and Mutual Funds (Fonds voor Gemene Rekening, FGR).

Generally

The most common form of legal entities are limited liability companies established under the Companies Act 1993. Another common form of investment entity is a limited partnership. Both are bodies corporate with separate legal personality that limit the liability of their members (shareholders/limited partners). Trusts, often with corporate trustees, are also commonly used as a vehicle for private investment.

Funds

Managed investment schemes are usually established as unit trusts. Limited partnerships are becoming more commonly used as investment entities, particularly for closed-ended schemes.

Managers and other type of issuers are usually established as companies.

Generally

The most common types of legal entities that are used to undertake financial or investment activity (ie banks, pension funds, credit institutions etc) are limited liability companies (aksjeselskap) (denoted by the suffix AS), public limited liability companies (allmennaksjeselskap) (denoted by the suffix ASA) and Norwegian savings banks (sparebank).

Funds

Investment funds and fund managers are limited liability companies, public limited liability companies, or similar foreign companies.

Generally

The applicable law establishes that, unless express exceptions apply, banks and financial entities must be established as corporations (sociedades anónimas) with separate legal existence and limited liability for their members.

Corporations may either be privately held (denoted by the suffix sociedad anónima or SA) or publicly held (denoted by the suffix sociedad anónima abierta or SAA) depending on whether their shares are listed in the stock exchange.

Shareholders’ liability may be limited by shares, in which case they are liable to pay for their shares but not for the company's debts, or by guarantee, where they are also liable to pay a certain amount if the company is wound up.

Funds

An investment fund is an independent autonomous entity made up by the contributions of individuals and legal entities to be invested in instruments, financial operations and other assets depending on the type of fund under management by a fund manager for the account of and at the risk of the fund shareholders.

The four types of types of funds commonly established in Peru are:

• private pension funds administrated by private pension fund management companies (contributions of individuals are made for investments in authorized securities for the individuals' retirement pension);
• investment funds administered by investment fund management companies (contributions are made by a closed group for making investments in anything of their interest – investment fund management companies whose funds only issue trust certificates which are not to be placed through public offerings are not supervised by the Superintendence of Securities Market (SMV) and consequently are not subject to heavy regulation);
• mutual funds administrated by mutual fund management companies (contributions are made by an open group for making investments in securities); and
• collective funds administrated by collective fund management companies (periodical contributions of individuals or companies are made for acquiring goods or services of the interests of a group).

Fund Management Companies, on the other hand, tend to be set up as corporations (generally limited by shares) and must be authorized by the SMV or, in case of the Private Pension Fund Management Companies, by the Superintendence of Banking, Insurance and Private Pension Fund Management Companies (SBS).

Generally

The most common types of legal entities are limited companies and limited partnerships.

Limited companies take the form of limited liability companies and joint-stock companies, both of which are corporate bodies with separate legal personality.

Joint-stock companies can be either private or public, depending on whether their shares are offered to the public.

Limited partnerships are similar to limited companies in many ways, with the main difference being that they are formed by partners whose relationship is governed by a private agreement rather than having shareholders and directors.

Funds

Investment funds are legal persons which may take the form of open-ended investment funds, special open-ended investment funds, or closed-ended investment funds. Alternative investment companies (Alternatywna Spółka Inwestycyjna) may take the form of limited companies or limited partnerships, provided that the sole general partner is a limited company.

Fund managers (Towarzystwa Funduszy Inwestycyjnych) take the form of joint-stock companies.

Generally

The most common type of legal entity are limited companies. A limited company is a corporte body with separate legal personality.

A limited company can either be a public company (denoted by the suffix SA) or a private company (denoted by the suffix Lda. or Limitada), depending on whether the identity of the shareholders is publicly known or not and on other legal aspects eg, amount and form of share capital required for constitution. Some activities require a legal entity to be used. For example, banking activity and insurance and reinsurance activity may only be carried out by public limited companies.

Members of a limited company have limited liability.

Funds

Undertakings for collective investment in transferable securities are structured as a fund or corporate body. Undertakings for collective investment structured as corporate bodies corp include (public) real estate investment companies and (public) securities investment companies and might be open or closed (to participation).

Fund managers are typically financial institutions constituted for such effect.

Generally

The most common types of legal entities are corporations and limited liability companies (LLCs), both of which are legal entities with separate legal personality and limited liability with respect to their shareholders or members, as applicable.

Corporations can be private or public, depending on whether their shares are offered to the public. Corporations are usually denoted by the suffix Inc. or Corp. LLCs can also be private or public and are denoted by the suffix LLC.

The liability of a corporation’s shareholders or LLC’s members can be limited by shares or membership interests, in which case they are liable up to the capital contributed to the entity, but not the entity’s liabilities or by guarantee, where they are also liable to pay a certain amount if the company is wound up.

LLCs are similar to corporations in many ways, with the main differences being that they are:

• not required to file public annual reports with the Puerto Rican State Department;
• not required to publicly disclose names of members; 
• are allowed more flexible corporate governance structures; and
• may be taxed as partnerships or corporations.

Funds

Investment funds tend to take the form of limited liability companies, trusts or corporations.

Fund managers tend to be set up as limited liability companies or corporations.

Generally

The most common types of legal entities in the financial sector are joint-stock companies and limited liability companies. They are subject to relatively straightforward rules and their shareholders benefit, in general, from limited liability (up to the amount of the subscribed capital). Unlike limited liability companies, joint-stock companies may be listed on regulated markets and have a more complex organization.

Certain financial activities can only be performed by entities set up in a particular type of legal entity (eg credit institutions and NFIs can only take the form of a joint-stock company).

Investment firms and investment vehicles

Investment firms are set up in Romania as joint-stock companies whose object of activity is to perform investment services.

Open-ended investment funds are created on the basis of a simple partnership contract, they have no legal personality and are managed by an investment management company, which must be incorporated as a joint-stock company.

Open-ended investment companies are set up as joint-stock companies and may be managed either by their board of directors or by a separate investment management company.

Closed-ended investment funds are established on the basis of a simple partnership contract and are managed by an investment management company.

Closed-ended investment companies are established as joint-stock companies. The management of the closed-ended investment company is ensured either by its own board of directors or by a separate investment management company.

Financial investment companies are a special type of closed-ended investment companies. They are joint-stock companies the shares of which are then traded on the Bucharest Stock Exchange and are subject to the same rules as the closed-ended investment companies.

Generally

The most common types of legal entities are joint-stock companies (JSC) and limited liability companies (LLC), both of which are body corporates with separate legal personality.

The charter capital of a JSC is divided into shares and the liability of each shareholder is limited by value of its shares. The charter capital of an LLC is comprised of participation interests, the value of which also limits the liability of a participant. JSCs and LLCs are similar in many ways but differ in that LLCs are easier to establish and maintain, and are more flexible with respect to corporate governance.

Companies can either be public (where the shares of a JSC or other securities convertible into shares are placed through a public offering or are traded on a stock exchange) or private (all other JSCs and LLCs). Some activities require a particular type of legal entity to be used, such as the public offering of shares or other securities convertible into shares which can only be done by public JSCs.

Funds

Generally, under Russian law a fund may be established in one of the following ways:

• as an investment fund in a form of a Russian joint-stock company; or
• as a mutual fund being a separate portfolio of assets which does not hold the status of a legal entity.

Management companies of investment funds can be Russian JSCs or LLCs only.

The types of legal entity that are generally used to undertake financial or investment activity are limited companies, they can be private law companies incorporated as a public limited company.

That type of entity is used for the Regional stock exchange (BRVM) and the Central Depository/Settlement Bank under Article 12 of the General Regulation, where they are specifically characterized as “private law companies incorporated as a public limited company.”

Management and intermediation companies are to be established as Public Limited Companies (Société Anonyme, Article 30).

Funds such as open-ended investment companies (SICAV) are also to be established as Public Limited Companies (Instruction N ° 21/99 Relating to the Classification of UCITS, Article 2).

The types of legal entity that are generally used to undertake financial or investment activity are a Public Limited Company, PLC (Société Anonyme SA), Limited Liability Company (SARL) and a Simplified Public Limited Company (Société par Actions Simplifiées SAS).

Simplified Public Limited Companies (SAS) started being used as a legal entity to undertake financial or investment activity with the 2014 Revised Uniform Act due to their flexibility compared to SAs, for instance.

The AUSCGIE provides for company forms which can be with variable capital, to know PLCs not calling for public capital and Simplified Public Limited Companies (SAS). 

Funds

Investment funds can take the following forms. An open-ended investment company (SICAV) is to be established as a Public Limited Company (Instruction N ° 21/99 Relating to the Classification of UCITS, Article 2).

Fixed capital investment companies are provided for under the 2003 Law on fixed capital investment companies in the WAEMU (Loi relative aux entreprises d’investissement à capital fixe dans l’UEMOA). That Law has been transposed, internally, in Senegal under the Uniform Law on fixed capital investment companies (Loi uniforme n° 2007/15 du février 19, 2007, relative aux entreprises d'investissement à capital fixe).

The Uniform Law requires investment firms to obtain prior authorization from the supervisory authority, CREPMF, while international practice has evolved towards prior authorization of fund managers rather than of the funds themselves.

Generally

The most commonly used legal entity is a limited company, which is a body corporate with separate legal personality and which limits the liability of its members.

Limited companies can either be private (denoted by the suffix Private Limited, Pte Ltd, Sendirian Berhad or Sdn Bhd) or public (denoted by the suffix Limited, Ltd or Berhad). At least one director of a limited company must be ordinarily resident in Singapore. There are no minimum share capital requirements to set up a company in Singapore, however, companies which intend to carry on regulated business (such as banking, money lending or fund management activities) may be subject to minimum capital requirements.

The number of members in a private company limited by shares is restricted to a maximum of 50. The constitution of a private limited company must provide for restrictions on the transfer of shares by its members, for example by providing that transfers require the approval of directors or imposing a right of first refusal for existing members.

There is no limit on the number of members of a public limited company, however, if a public limited company is listed on the Singapore Exchange Securities Trading Limited, at least 10% of the issued shares in each class listed must be publicly held. Such public listed company would also be subject to the Rules of the Singapore Exchange Securities Trading Limited.

A company may convert from private to public or public to private by special resolution of its members and lodging certain documentation with the Accounting and Corporate Regulatory Authority of Singapore.

A limited liability partnership (LLP) established under the Limited Liability Partnership Act may also be used. Like a company, a LLP has a separate legal personality. At least one manager of the LLP must be ordinarily resident in Singapore.

Funds

Investment funds typically take the form of:

• a collective investment scheme structure, being a trust established using a trust deed between a manager and trustee;
• a corporate entity; or
• a limited partnership structure.

Fund management activities must be conducted by a company incorporated in Singapore, which must hold a Capital Markets Services license for fund management. The relevant persons (as defined in guidelines issued by the Monetary Authority of Singapore), must be, inter alia, considered 'fit and proper' by the Monetary Authority of Singapore. There are certain exemptions from such requirements under the Securities and Futures Act.

Generally

The most common types of legal entities used to undertake financial or investment activity are joint stock companies, which are body corporates with separate legal personality.

A joint-stock company has registered capital which is divided into shares with a specified nominal value. It can have any number of shareholders. A joint-stock company is liable for the breach of its obligations with its entire property and therefore its liability is limited to the value of this property. The shareholders are not liable for the obligations of the company. However, each shareholder is liable to the company for the issue rate of the subscribed shares. Some activities require a particular type of legal entity to be used. For example, pursuant to the Slovak Act on Banks, banks may only be incorporated in the form of a joint stock company.

The list of shareholders is available at the Central Securities Depository. Joint-stock companies can be either public or private. A public joint-stock company has all or part of its shares accepted for trading on a regulated market in the European Economic Area. Joint-stock companies can have a sole corporate shareholder (not a natural person) or at least two shareholders (who are natural persons). The company must execute a memorandum of association (or founding deed, where there is a sole shareholder), which includes the company’s articles of association.

Funds

Pursuant to the Act on Collective Investment, investment funds are most commonly set up as joint-stock companies although for certain types of investment funds, such as collective investment undertakings, other types of corporate entities may be used.

Generally

Private companies

The choice for most setting up a business in South Africa. Private companies (denoted by the suffix Proprietary Limited (Pty Ltd)) are seen as separate legal, limited liability, entities and as such are taxed in their own right and offer the shareholders protection against liabilities (commonly known as the corporate veil). Private companies are not prohibited from having foreign shareholding and only require one shareholder and one director. The Companies Act, however, prohibits a private company from offering its equity to the public.

Public companies

A public company is a limited liability company incorporated to offer shares to the general public for purposes of capital raising. Public companies are identified by the suffix Limited/Ltd and have their own legal identity. Public companies must have at least three directors.

Partnerships

A partnership is akin to a coming together of between two and 20 people who contractually agree to operate a profit-generating business together. They further agree to split any profits as per their agreement (usually in proportion to their interests). In establishing a partnership each partner needs to make a contribution, which contribution may be in cash, expertise or otherwise. A partnership is not a separate legal entity, leaving partners liable for the liabilities of the partnership and exposed to creditors of the partnership.

Foreign companies

Section 23(2) of the Companies Act requires a foreign company that has established a permanent 'place of business' in South Africa for more than 21 days to register as an 'external company', unless a separate legal entity (ie a private company) is established. The registered external company is colloquially referred to as a 'branch' in South Africa. The effect of registration is not to create a new legal entity, but merely results in the foreign company becoming subject to the Companies Act. Under the Companies Act, a branch does not enjoy an identity separate from that of the foreign company. Consequently, the foreign company will remain liable in respect of all acts carried on by the branch in South Africa through its employees/agents/directors. The foreign company must operate in South Africa in its own name and the foreign country in which the foreign company is incorporated must be disclosed. This therefore creates unlimited liability in South Africa for the foreign company.

Funds

Foreign collective investment schemes

Foreign investment funds may register as 'foreign collective investment schemes' under the Collective Investment Schemes Control Act (CISCA). In order to qualify for South African registration, a foreign fund must have an investment policy which is consistent with the requirements set out under CISCA.

En commandite partnerships

The principal vehicle housing South African private equity funds investing in South Africa is the limited liability partnership (called en commandite partnerships). A trust structure (called a bewind trust, and is governed by the Trust Property Control Act No. 57 of 1988) is also sometimes used. Unless the trust structure is used, there are no registration requirements for establishing, and no legislation regulating, en commandite partnerships.

An en commandite partnership is carried on by one or some of the partners, called the general or managing partner, to which every partner whose name is not disclosed (called a commanditarian partner or partner en commandite) contributes a fixed sum of money on condition that he or she receives a certain share of the profit, if there is any, but that in the event of loss he or she is liable to his or her co-partners to the extent of the fixed amount of his or her agreed capital contribution only. Because commanditarian partners are undisclosed, this means that they are not presented as partners, are not liable for partnership debts (enjoy limited liability), may not actively participate in the business of the partnership and cannot reclaim payment of their partnership contribution or payment of their share of the partnership profits in competition with the creditors of the partnership. The general partner of the en commandite partnership has unlimited liability toward creditors of the partnership in circumstances where the partnership’s assets are insufficient to settle relevant debts.

Generally

The most common types of legal entities are limited companies (sociedad anónima) and limited partnerships (sociedad limitada), both of which are body corporates with separate legal personality and limit the liability of their members.

Limited companies (sociedades anónimas) can either be private or public depending on whether their shares are offered to the public. Some activities require a particular type of entity to be used. For example, banks and investment firms need to be limited companies (sociedades anónimas).

Limited partnerships (sociedades limitadas) are similar to limited companies (sociedades anónimas) in many ways, the main difference being that the transferability of interests in limited partnerships has more restrictions than the transfer of shares in a limited company (which is generally unrestricted, unless otherwise stipulated in the articles of association of the limited company).

Funds

Investment funds can take the form of legal entities (sociedades anónimas) or separate pools of assets without legal personality (fondos).

Investment funds without legal personality shall always have a fund manager in charge of representing, administering and managing the fund.

Fund managers have to be set up as limited companies (sociedades anónimas).

Generally

The most common types of legal entities are limited companies, limited partnerships and economic associations (ekonomiska föreningar). Limited companies and economic associations are body corporates with separate legal personality and with limited liability of their members. Limited partnerships are body corporates with separate legal personality, which require at least one general partner with unlimited liability.

Limited companies can either be private or public (denoted by the suffix AB or Aktiebolag, with the addition of the suffix (Publ) for public companies) depending on whether their shares are offered to the public.

Generally, the shareholders of a limited company are not liable for the company's debts, although in some circumstances the rights and liabilities of the company may be treated as the rights and liabilities of the shareholders.

Limited partnerships are similar to limited companies in many ways, with the main difference being that they are:

• formed by partners whose relationship is governed by private agreement; and
• taxed like a partnership.

Funds

Investment funds are limited companies which have been authorized by the Swedish Financial Supervisory Authority (Finansinspektionen).

Generally

The most common types of legal entities are private limited companies and public limited companies, both of which are body corporates with separate legal personality and limit the liability of their members to their shareholdings (ie shareholders are liable to pay for their shares but no the company's debts).

Limited companies can either be private (denoted by the suffix Co Ltd, Ltd or Limited) under the Civil and Commercial Code of Thailand (CCC) or public (denoted by the suffix PLC or Public Limited Company) under the CCC and the Public Limited Companies Act (PLCA). Only shares in public limited companies listed on an exchange can be publicly traded, subject to approval by the SEC.

Thai public limited companies can choose to list their shares with the Stock Exchange of Thailand (SET) or the Market for Alternative Investment (MAI) depending on its qualifications. Companies listed on the SET or the MAI are required to comply with the regulations of the SEC and the SET applicable to the main exchange or the alternative exchange, as the case may be. Foreigners may invest in listed securities using non-voting depository receipts (NVDRs) through Thai NVDR Co., Ltd. (the Thai NVDR), which is a subsidiary of the SET. The Thai NVDR was established in order to alleviate the constraints on foreign shareholding in Thai companies.

Funds

The most common type of funds used as investment vehicles for the private sector are mutual funds, private funds and provident funds.

Mutual fund

A mutual fund is a form of collective investment, pooled and managed by an asset management company holding a license from the SEC to undertake investment management business. A mutual fund is established as a separate legal entity from the asset management company. Mutual funds may be established for specific investment purposes and/or investors, for example property, infrastructure, carbon credit, retirement and collective investment schemes.

Private fund and provident fund

A private fund is formed of no more than 35 investors. It is managed by an asset management company licensed by the SEC to invest in securities or other assets according to an agreement with its investors. Unlike a mutual fund, a private fund does not have a separate legal personality. To protect the interests of its investors, the asset management company is required to appoint a private fund manager approved by the SEC. In addition, the assets of the private fund must be segregated from the portfolio of the asset management company and a custodian approved by the SEC to safeguard the assets of the private fund must be appointed. The custodian must also separate the assets of the private fund from the custodian's own proprietary portfolio.

A provident fund is a form of pooled fund to which an employer and its employees contribute as an incentive for additional savings for retirement or resignation. Regulations on provident funds are generally in line with those governing mutual and private funds, including asset segregation, asset custody, prevention of conflicts of interest, investment restrictions, asset valuation, information disclosure, investors' choice and unitization of members' rights. Provident funds are managed by a private fund manager who is approved by the SEC and appointed by the asset management company.

The only type of pension fund recognized under the laws of Thailand is the Government Pension Fund established under the Government Pension Fund Act B.E. 2539 (1996) for the purposes of ensuring benefits upon retirement, promoting awareness of saving and providing other welfare to members who are employed by government agencies.

Funds must be managed by an asset management company and such companies are generally required by law to be set up as either a private limited or public limited company and must be licensed by the SEC.

Generally, fund managers must be qualified individuals approved by the SEC.

Others

Other types of investment vehicles recognized under Thai law include:

• trusts for transactions in capital market, established under the Trust for Transactions in Capital Market Act, B.E. 2550 (2007) for the purposes of investing and managing investment eg institutional investors and high net worth trust funds, real estate investment trusts, exchange-traded funds and special purpose trusts (such trusts must be managed by a trustee licensed by the SEC);
• venture capital funds, which are required to be set up as a limited company or a public limited company established specifically to operate a venture capital business (such funds must be managed by a securities company licensed for venture capital management by the SEC); and
• crowdfunding platforms, established in order for small and medium enterprises to fundraise through funding portals approved by the SEC (investors can be retail investors (with an offer limit) or non-retail investors (without an offer limit)).

Banks

In Ukraine, banks are commonly formed as public joint-stock companies.

Funds

Investment funds (corporate funds) are incorporated as joint-stock companies.

Unit investment funds do not have legal entity status under Ukrainian law, however, their operating fund managers shall be established in the form of asset management companies that are either limited liability or joint-stock companies.

Generally

The most common types of legal entities are limited companies and limited partnerships, both of which are body corporates with separate legal personality and limit the liability of their members.

Limited companies can either be private (denoted by the suffix Ltd or Limited) or public (denoted by the suffix PLC or Public Limited Company) depending on whether their shares are offered to the public. Some activities require a particular type of legal entity to be used. For example, offering debt securities to the public can only be done by UK Public Limited Companies.

The liability of a company's shareholders can be limited by shares, in which case they are liable to pay for their shares but not the company's debts, or by guarantee, where they are also liable to pay a certain amount if the company is wound up.

Limited partnerships (or LLPs) are similar to limited companies in many ways, with the main differences being that they are:

• formed by partners whose relationship is governed by private agreement rather than having shareholders and directors; and
• taxed like a partnership.

Funds

Investment funds tend to take the form of limited partnerships, limited companies (including open-ended investment companies (OEICs)), unit trusts (authorized and unauthorized), UK public companies (including those approved by HMRC as UK investment trusts) and authorized contractual schemes (ACS).

Fund managers on the other hand tend to be set up as limited companies (generally limited by shares), limited liability partnerships or limited partnerships.

Generally

The most common types of legal entities are limited companies and limited liability partnerships, both of which are body corporates with separate legal personality and limit the liability of their members.

Limited companies can either be private (denoted by the suffix Ltd or Limited) or public (denoted by the suffix PLC or Public Limited Company) depending on whether their shares are offered to the public. Some activities require a particular type of legal entity to be used, such as offering debt securities to the public which can only be done by UK Public Limited Companies.

The liability of a company's shareholders can be limited by shares, in which case they are liable to pay for their shares but not the company's debts, or by guarantee, where they are also liable to pay a certain amount if the company is wound up.

Limited liability partnerships (or LLPs) are similar to limited companies in many ways, with the main differences being that they are:

• formed by partners whose relationship is governed by private agreement rather than having shareholders and directors; and
• taxed like a partnership.

Scottish limited partnerships (SLPs) are also often used in transactions. These differ from limited liability partnerships in that instead of having a number of limited liability partners, a Scottish limited partnership has one general partner who has unlimited liability for the partnership and a number of limited partners (often individuals) who only have limited liability. The limited partners have no right to be involved in the management of the business or to enter into documentation on behalf of the limited partnership, with that right instead being held by the general partner. These partnerships are governed by partnership agreements and differ from the English equivalent limited partnerships in that a Scottish limited partnership has separate legal personality and can enter into agreements in its own name (through the general partner).

Funds

Investment funds tend to take the form of limited partnerships, limited companies (including open-ended investment companies (OEICs)), unit trusts (authorized and unauthorized), UK public companies (including those approved by HMRC as UK investment trusts) and authorized contractual schemes (ACS).

Fund managers on the other hand tend to be set up as limited companies (generally limited by shares) or limited partnerships.

Generally

This question varies according to the type of financial activity being practiced and the rules of the emirate and free zone in which the vehicle is set up. 

Pursuant to the New Banking Law:

• Banks shall take the form of public-joint stock companies (through an incorporating law or though a decree). This does not apply to branches of foreign banks operating onshore UAE. As a general rule, a Bank shall at least have 60% UAE national shareholding.
• Other Financial Institutions (i.e. any juridical person other than a Bank) carrying one or more Licensed Financial Activities may take the form of joint-stock companies or limited liability companies in accordance with the rules and regulations issues by the board of directors of the Central Bank.
• Exchange houses and monetary institutions may be a sole propriertorship or take any other form legal form in accordance with the rules and regulations of the board of directors of the Central Bank.

In the Dubai International Finance Centre (DIFC), the type of entity and activity will generally depend on which category of license being applied for.

In each case this question needs to be examined on a case-by-case basis depending on the financial or investment activity to be carried out.

Lending

It will depend on the nature and purpose of the intended activities and any applicable laws, regulations, or jurisdictional constraints.

Securities generally

Most broker-dealers and Investment Advisers (as defined in the Investment Advisers Act of 1940) are either corporations or limited liability companies (LLCs). Certain firms may operate as general or limited partnerships but this is not common today.

Funds

Funds are often established as LLCs or limited partnerships although other structures are used depending on taxation and regulatory analysis, amongst other things.