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Financial Services

Environmental, social and governance: financial services

Few issues have attracted focus, attention and at times controversy, in the same way as environment, social and corporate governance (ESG) issues.

It is therefore unsurprising we have seen an increased interest by regulators in legislation surrounding these issues, presenting new challenges for individuals, businesses and governments.

Financial services initiatives on ESG matters are steadily developing, with a large body of rules and regulations coming into force that will have direct and comprehensive impacts on financial services institutions and the products they manufacture.

Our leading financial services practice works with key industry bodies in the ESG space to ensure we stay at the forefront of regulatory developments and understand the impacts such regulation is likely to have on the sector.

If you require assistance with scoping, planning and implementation of any ESG projects, please get in touch with a member of the team.

Investment Funds

Ways our dedicated Asset Management & Regulatory team can help your business:

Helping you to scope

We can assist with initial scoping exercises to determine which products will be affected by the various forthcoming regimes (or which regimes are relevant). We can assist you with an obligation tracker, which may be used to identify and document implementation steps and may subsequently be used as an audit trail.

Helping you to interpret and implement

Interpreting new laws is a key skillset. Combined with our broad view of the market, we can help you to understand your obligations and prepare commercially-acceptable outputs.

Crafting disclosures

We have hundreds of hours of experience working on ESG product disclosures and are well placed to help you prepare product descriptions that will satisfy the regulator but still resonate with investors. We are well versed in plain language drafting.

Training

We offer a series of training sessions covering broad ‘what is out there’ discussions to ‘deep dives’ into specific regimes, such as the Sustainable Finance Disclosure Regulation (SFDR). In light of COVID-19 we would add that training can be delivered virtually.

International regulatory monitoring

We been monitoring ESG developments closely throughout Ireland, Europe and beyond. We also maintain a database of essential reading, including mandatory local laws, policy frameworks and guidance, for these jurisdictions.

Pensions

Irish pension funds fall squarely within the ambit of European sustainable investment and ESG legislation, and will be heavily impacted by EU sustainability disclosures legislation coming into force from March 2021 (the “SFDR”), as well as existing EU law in this area. Pension trustees need to have policies on and to disclose how they deal with the stewardship and sustainability of their investments and on environmental, social and governance (ESG) issues. We advise trustees and pension providers on the scope of their legal obligations in this area and how these interact with their wider fiduciary duties as trustees, and we advise trustees on the formulation of policies and disclosures to address their regulatory obligations in this area.

Tax

Corporate Tax

Increasingly, corporate tax has become a leading governance consideration, specifically corporate income tax responsibility and disclosures targeting aggressive tax strategies.

The spotlight is firmly on companies to be more transparent about their tax arrangements and to pay their fair share of tax. The heat of this spotlight has grown markedly in recent times, with a number of major corporation’s tax affairs having been uncovered to show less than scrupulous behaviour.

Tax transparency is now backed by global institutions including the UN, OECD and the EU. The UN’s Sustainable Development Goals mention tax as a key metric to take into account when contributing to the goals. BEPS has been an ongoing OECD initiative which seeks to align the recognition of profits in the jurisdiction where the assets, functions and risks of an entity are located. This initiative has seen a significant decline in the number of “offshore” structures in recent years, as well as the reform of taxation rules in many countries. Furthermore, multinationals based or doing business in the EU, and intermediaries including financial advisers, must report on a wide range of cross-border tax arrangements under the DAC6 Directive. This serves to increase transparency in the tax affairs of multinationals, and arms taxing authorities to conduct targeted investigations into harmful tax practices.

ESG initiatives also contemplate disclosure of a company’s tax policy or approach to tax, as well as governance and risk management processes relating to tax.

Our tax lawyers are experienced across a wide range of practice areas and can advise on DAC6 disclosures, assist with developing tax governance strategies, tax risk appetite statements, and advise on the implementation of policies to ensure that transparency is the cornerstone of a company’s tax strategy and related policies.

Investment Funds Tax

Ireland’s world renowned asset management tax regime allows income and gains to accumulate within the fund, without attracting Irish income or capital gains tax. Furthermore, this regime is stable, transparent and fully compliant with OECD guidelines and EU law and our legislation based system does not rely on rulings.

Our multidisciplinary team of leading tax, legal and accounting professionals have in-depth experience in:

  • advising on the structuring for all types of investment funds, restructuring/ reorganisation of fund structures and advising on the tax consequences for foreign and Irish investors investing in Irish and in non-Irish domiciled funds;
  • advising arrangers, lenders and originators on securitisation and related tax structuring for various classes of asset portfolios;
  • advising on the tax efficient structuring of financial products; and
  • expertise and experience in contentious and non-contentious tax dispute resolution in the financial services sectors.