(Bloomberg News) Hedge-fund and private-equity regulations that restrict bonuses and require increased disclosure at the firms were approved today by European Union lawmakers in Brussels.
The European Parliament voted 513 to 92 in favor of the rules after negotiators representing the parliament and 27 member states reached a preliminary deal last month.
Finance ministers from the EU agreed on a compromise at a meeting in Luxembourg in October to give the European Securities and Markets Authority powers over a so-called passport system for non-EU hedge-fund managers. The Brussels-based European Commission had proposed the rules last year.
"The directive will increase transparency, reinforce investor protection and strengthen the internal market in a responsible and non-discriminatory manner," Financial Services Commissioner Michel Barnier said in an e-mailed statement today.
The passport would give managers access to investors across the EU with a single registration, in return for complying with transparency rules. The rules stop short of preventing hedge funds based outside the EU without a passport from taking EU investors' money.
The measures aimed at non-EU fund managers "will impact materially on private-equity funds," Alan Greenough, private equity lawyer at Hogan Lovells International LLP, said in an e- mail, "since cross-border investment in such funds has been commonplace for many years."Asset Stripping
As part of the law, private-equity managers will also face tougher rules on asset stripping, with limits placed on the selling of assets immediately after a corporate takeover.
Private investors will also be required to provide information on their strategic plans to employees of companies they control.
"Much of the detail still remains to be thrashed out" in talks between ESMA and the commission, Greenough said. "It is this further detail that will ultimately determine the depth of impact on the industry."
Disagreements between the U.K. and France on the treatment of non-EU fund managers led to the cancellation of parliament votes earlier in the year. Britain is home to about 80 percent of Europe's hedge-fund management industry and 60 percent of private-equity firms, according to a report last year from the U.K.'s Financial Services Authority.
Ministers of the EU's 27 member states are scheduled to formally approve the agreed rules later this month.