Financial Regulation and Asset Management

Rules governing financial institutions and asset management, including securities offerings and financial services, are becoming increasingly detailed and complex, not least as a result of increased international regulation.
Securities offerings and asset management often take place on a cross-border basis, and new financial products are being developed. Accordingly, high demands are imposed on the financial institutions and their customers.

We advise a number of leading Danish and foreign financial institutions, including asset managers, on regulatory matters in Denmark. We also have broad experience in assisting Danish clients with structuring financial products abroad, where we benefit from our wide network of contacts with leading law firms abroad.

Kromann Reumert's financial regulation and asset management team is a leading player in Denmark in this field, and our team, which is the largest in Denmark, comprises more than 20 highly specialised lawyers with experience across the whole range of financial institution regulatory work.


We provide advice in relation to:

  • Banking and mortgage credit institution activities
  • Insurance and pensions
  • Investment funds and investment management companies
  • Asset management and custody, and
  • Derivatives

 Our lawyers have extensive expertise in financial regulation and case law, including in relation to the Danish Financial Business Act, the Danish Act on Investment Funds, etc., the Danish Supervision of Company Pension Funds Act, the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism, the Danish Payment Services Act, the Danish Insurance Mediation Act, and the Danish Securities Trading Act.

We are also widely experienced in representing clients in their relations to the Danish Financial Supervisory Authority and other relevant authorities. Our specialists include former employees of the Danish Financial Supervisory Authority and financial institutions.

We work closely together with the firm's other practice areas and benefit from the knowledge and experience of our colleagues particularly in the Banking and Finance, Capital Markets, Insurance and Tort Law, Employment and Labour Law, and
Mergers and Acquisitions practice groups.

ASSET MANAGEMENT

We advise a large number of Danish and foreign financial institutions and other clients in the field of asset management and have broad experience in this field.

Our assistance includes:

  • Preparation, negotiation, and advice regarding asset management agreements, including portfolio mandate agreements, investment advisory agreements, standard terms, etc.
  • Advice on fund structures and establishment of such structures
  • Clients' public tendering of asset management services, including the planning of tendering processes
  • Due diligence investigations of funds and associations for potential investors; and
  • Advice regarding statutory requirements in relation to various forms of asset management and financial instruments, including compliance with investor protection requirements and special requirements in relation to asset management for investment funds, etc.

CLEARING AND SETTLEMENT

We have extensive experience in advising on clearing and settlement of securities.

Our assistance includes:

  • Registration, clearing and settlement of securities in VP Securities, and
  • Advice on the future regulation of central clearing of OTC derivatives (EMIR)

CLOSE-OUT NETTING AND FINANCIAL COLLATERAL

We have in-depth knowledge of the close-out netting and financial collateral provisions set out in the Danish Securities Trading Act and broad experience in advising on these provisions.

Our assistance includes:

  • Drafting of, and advice on, legal opinions in relation to the Danish close-out netting and financial collateral regulation, including both opinions for specific clients regarding their agreements and general opinions for organisations for the benefit of their members, for example under the capital adequacy rules;
  • Drafting of, and advice on, agreements under the Danish close-out netting and financial collateral regulation; and
  • Advice on specific issues in relation to the regulation, e.g. pledge of securities accounts, substitution of collateral and ongoing provision of collateral based on mark-to-market calculations

CROSS-BORDER SECURITIES OFFERINGS

Kromann Reumert's financial regulation and asset management team assists a large number of foreign financial institutions with securities offerings in Denmark, including collective investment schemes.

Our assistance includes:

  • Assessing whether the security is subject to the prospectus rules or the Danish Act on Investment Funds, etc.;
  • Advice regarding compliance with the Danish requirements for securities offerings subject to the prospectus rules, including translation of the prospectus summary into Danish;
  • Advice concerning Danish requirements for the offering of UCITS, including contact to the Danish Financial Supervisory Authority; and
  • Advice concerning compliance with Danish requirements for other collective investment schemes offerings

CUSTODY BUSINESS

We are experienced in assisting custodian banks and clients in relation to their custody and depositary business, including investment funds, Danish mutual funds, etc.

We have negotiated a large number of custody agreements between Danish financial institutions and custodian banks and assisted foreign financial institutions in providing custody services in Denmark.

Our assistance includes:


  • Structuring of custody business in Denmark
  • Advice in connection with financial institutions' public tendering of the custody function
  • Drafting and negotiating custody agreements, service level agreements and ancillary agreements
  • Advice on statutory requirements for the depositaries, including in relation to investment funds, and
  • Establishment and acquisition of custody business in Denmark

DERIVATIVES

We have considerable experience in, and knowledge of, OTC and exchange-traded derivatives and related regulation.

Our work includes:

  • Advice and assistance with negotiating framework agreements for derivatives, repo transactions and securities lending, including the ISDA Master Agreement, the TBMA/ISMA Global Master Repurchase Agreement, the Global Master Securities Lending Agreement, and the EFET General Agreement;
  • Preparation of, and advice and assistance regarding, financial institutions' and commercial businesses' own form derivative agreements and derivative agreements for specific transactions; and
  • Regulatory advice and assistance in relation to entering into OTC derivatives and exchange-traded derivatives

 Our clients include pension funds, banks, investment management companies and other financial institutions, and commercial businesses

FORMATION, MERGER AND TRANSFER

We are widely experienced in setting up new financial institutions, including banks, insurance companies (both general insurance companies, life insurance companies, and pension funds) as well as investment companies and investment funds.

Our assistance includes:


  • Advice regarding licence application for/ approval of the type of institution in question;
  • Advice concerning foreign institutions' conduct of financial business in Denmark and Danish institutions' conduct of financial business abroad;
  • Drafting and negotiation of transaction documents; and
  • Advice regarding the rules of ownership and change in ownership in financial institutions

We have broad experience in transfers and mergers of financial institutions and investment funds. We assist our clients through the entire transfer or merger process and have also taken the role of overall manager of the process. We advise in connection with obtaining the required licences/approvals from relevant authorities, including the Danish Financial Supervisory Authority

GOOD PRACTICE, PROTECTION OF INVESTORS AND CONSUMERS

We have advised extensively on good practice rules for financial institutions and rules on protection of investors and consumers.

Our work includes:

  • Advice on the contents of these rules
  • Drafting of guidelines for investment companies and banks
  • Assessment of, and dealing with, complaints and liability issues under these rules, including in relation to the Danish Financial Supervisory Authority, complaints boards, the Danish Consumer Ombudsman, and the Danish courts
  • Advice on the organisation of market functions and trading functionality
  • Drafting of terms and agreements under consumer protection rules

INSURANCE MEDIATION

We have considerable experience in insurance mediation, including advising in connection with insurance mediation services, reinsurance mediation and insurance agent services.

Our assistance includes:

  • Setting up (re)insurance mediation services and obtaining licences from the Danish Financial Supervisory Authority to perform such services
  • Setting up insurance agent services and registration of a business as an insurance agency service
  • Establishment of cross-border activities
  • We advise Danish businesses on the conduct of insurance mediation services in other EU/EEA countries and foreign businesses on the conduct of insurance mediation services in Denmark
  • We also assist our clients with the rules concerning board members' and executive officers' experience, etc., good practice, disclosure obligations and other ongoing reporting obligations

LICENCE REQUIREMENTS

We advise Danish and foreign financial institutions and other clients with licence requirements in connection with the conduct of financial business, including the offering of financial products, in Denmark.

Our assistance includes:


  • Assessing whether a licence to offer a product is required
  • Advice concerning
  • The establishment of financial institutions
  • The establishment of Danish branches of foreign financial institutions
  • Applications for extension of existing licences
  • Applications for licences to conduct cross-border securities trading activities from third countries

MANAGEMENT AND ORGANISATION

We have considerable experience in advising on and assisting with management and organisation of financial institutions, including banks, insurance companies, investment companies and investment funds.

In addition to advice and assistance regarding the special company rules applicable to financial institutions and investment funds, we advise i.a. on the "fit and proper" requirements applicable to board menbers and executive officers.

We advise our clients, i.a. in the preparation of operating plans, risk assessments, guidelines (including for the divisions of powers between the board of directors and the executive board), the rules of procedure for the board of directors, financial resources plans, and advice on risk profiles, risk policies and risk management, monitoring of risk bearing tasks, outsourcing, disclosure requirements, conflicts of interest and remuneration of i.a. members of the management.

MEASURES AGAINST MONEY LAUNDERING AND FINANCING OF TERRORISM

We advise a number of businesses on compliance with money laundering and the financing of terrorism legislation. We are among the leading Danish experts in this field.

Our assistance includes:

  • Drafting or advice in connection with the drafting of internal rules and procedures in respect of customer risk assessment
  • Training of employees in measures against money laundering and financing of terrorism
  • Advice on specific legal issues
  • Advice in connection with inspections

OUTSOURCING

We advise financial institutions and suppliers in connection with outsourcing arrangements, often acting together with our IT and outsourcing practice group.

Our assistance includes:

  • Preparation and negotiation of transaction documentation
  • Drafting or advice in connection with the drafting of internal rules, including business procedures on outsourcing, contingency plans, etc.
  • Monitoring the observance of the rules on outsourcing, disclosure of personal data, etc.

PAYMENT SERVICES AND ELECTRONIC MONEY, ETC.

We are experienced in advising and assisting both Danish and foreign clients in connection with provision of payment services and issuance of electronic money.

Our assistance includes:

  • Advice regarding applications by banks, electronic money institutions, and payment institutions for licences to provide payment services and/or issue electronic money
  • Advice regarding applications for licence to provide limited payment services or limited licences to issue electronic money and registration of issuance of payment substitutes
  • Advice regarding foreign institutions' provision of payment services or issuance of electronic money in Denmark as well as Danish institutions' provision of payment services or issuance of electronic money abroad
  • Preparation of, and advice on, agreements covered by the Danish Payment Services Act
  • Advice on whether specific services are covered by the Danish Payment Services Act

REGULATED MARKETS AND SECURITIES MARKETS PLACES

We have extensive experience with the regulation of licensing and operations of regulated markets and multilateral trading facilities as well as with the rules on systematic internalisation (real-time transaction systems).

Our assistance includes:

  • Assessment of whether systems or platforms are governed by the rules on regulated markets and multilateral trading facilities or the rules on systematic internalisation
  • Advice on compliance with statutory requirements regarding regulated markets, multilateral trading facilities and systematic internalisation

SOLVENCY, LIQUIDITY AND PLACING OF FUNDS (PLACEMENT RULES)

We have expertise in the rules on financial institutions' base capital set out in the Danish Financial Business Act and ancillary regulation, and are widely experienced in advising on hybrid core capital and subordinate loan capital. In this connection we also advise our clients on the expected consequences of the Basel III rules and the Solvency II Directive.

We advise, and participate in discussions with the Danish Financial Supervisory Authority on the weighting of assets etc. in connection with major transactions.

We advise on the rules governing solvency requirements in the Danish Financial Business Act and ancillary statutory orders and guidelines.

In addition, we have broad experience:

  • In advising on the liquidity requirements in the Danish Financial Business Act, including the drafting of agreements on binding loan commitments which may be included in determining liquidity. We also advise on the expected consequences of the Basel III rules
  • In the rules on large exposures in the Danish Financial Business Act and related statutes, including the rules on connected customers
  • In advising on investment rules governing insurance companies, including the expected consequences of the Solvency II Directive

Contacts within Financial Regulation and Asset Management