Last month I discussed OPM (other people's money) and Financial Promotions. Little did I realise that as you were reading the article, the FCA were releasing Policy Statement (PS) 13/3 where they set out new guidelines.

Moving at a slower pace is the EU who are rolling out AIFMD, the Alternative Investment Fund Managers Directive.

As I have previously mentioned, I am working on setting up a UK REIT. It was while in a meeting with four lawyers that one of them brought up how the REIT would be exempt from PS 13/3. This was news to me as I had not ever heard of PS 13/3 before!

Being curious I asked more questions. The response was a bit of a shock so I posed two scenarios. Let me share them with you and then tell you what I have found out since that meeting in mid-June.

Simple JV using a Ltd structure
I asked if PS 13/3 would apply to a Joint Venture (JV) transaction where myself and one other investor came together to do a deal. We would set up a limited company and the property would be owned by the company. Both investors would have shares in the company. The passive investor would be funding the deal and I would be running the deal.

The corporate lawyer immediately confirmed that this would be a deal which, in her legal opinion, would fall under PS 13/3 given the use of a company structure. Let me explain PS 13/3 a bit.