Alert July 19, 2013

The Alternative Investment Fund Managers Directive - Implementation Throughout Europe

The Alternative Investment Fund Managers Directive becomes effective for EU member states on July 22, 2013, having implications for both EU and non-EU fund managers. Most of the major countries for fund investors have published final or near-final rules, each implementing the AIFMD differently.  The chart below highlights the most important issues for fund investors and outlines the regulatory requirements for each country.  

Finland France Germany Netherlands Norway* Sweden UK
Transitional
period for
non-EU
managers(1)
The AIFMD is unlikely to be implemented before year- end. There is no useful guidance as to what the new requirements will be. Marketing may continue under the existing private placement requirements. France is unlikely to implement the non-EU regime until 2015.  Non-EU managers of closed ended funds may therefore continue to market under the private placement regime until then without having to comply with the AIFMD.  Marketing of open ended funds is generally not permitted in France. Yes, but only for existing funds as of July 22, 2013 Yes No proposal yet Yes Yes
Registration of
fund required?(2)
  Yes Yes, up to 2 months in advance for professional only funds Notification,
not registration
Yes Yes Notification,
not registration
Non-EU managers as sub-threshold managers?(3)   No No No Yes No No
Types of funds that may be sub-threshold(4)   Funds with professional investors only (for French managers) Spezial-AIFs only (for German managers)  No restrictions  No restrictions  Non-retail
funds only
Self-managed funds and certain property funds
Marketing requirements in addition to Article 42(5)    Appointment of a depositary  Appointment of a
depositary
No No No No
Regulatory guidance on reverse solicitation(6)   RS should be on a fund- by-fund basis No No No No A certificate from an investor stating that he or she initiated the contact should usually be sufficient
Requirement to be authorized in the manager’s home country(7)   No No No Yes No No

* These are the current proposals for Norway. Implementation is not  likely to occur before the end of 2013.

Notes

(1) The AIFMD provides a one-year transitional period for “existing managers,” although it is not specific as to whether the transitional period will be available to non-EU managers. 

(2) For these purposes, “registration” means applying for consent from a local regulator; marketing may not commence until it has been obtained. “Notification” means that the regulator is notified when marketing commences. No approval is required. 

(3) The AIFMD provides fewer requirements for managers of funds where the total assets under management are less than €100m (approximately US$131m) for leveraged and closed-ended funds or less than €500m (approximately US$655m) otherwise. The AIFMD, though, is not specific as to whether this requirement is restricted to EU managers. 

(4) The AIFMD does not restrict the type of funds that may be managed by a sub-threshold manager, although certain European countries have, at their initiative, imposed such a restriction.

(5) Article 42 of the AIFMD permits non-EU managers to market to professional investors if the manager complies with certain disclosure requirements for both investors and the regulatory authorities of the countries into which the fund is marketed. Certain EU countries, however, have chosen to impose additional requirements to those set out in Article 42. 

(6) AIFMD requirements are triggered only where funds are “marketed” to potential investors. Funds that are “reverse solicited” have not been marketed and the Article 42 obligations are not therefore triggered. The AIFMD contains no guidance on what is meant by reverse solicitation, although some regulatory authorities have given separate guidance. 

(7) Non-EU managers can market into the EU only where there has been a co-operation agreement signed between the regulatory authorities of the EU country into which the fund will be marketed and the regulatory authorities of the manager. The AIFMD does not state, though, whether the relevant manager must be regulated by that authority.