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AIFMD Update

Central Bank updates AIFMD Q&A

On 5 November 2014, the Central Bank of Ireland published the eleventh edition of its ‘Questions and Answers’ document in relation to AIFMD.

The updated Q&A answers queries relating to marketing by non-EU AIFMs and loan originating Qualifying Investor AIFs (ID 1078 and ID 1079-1084).

Marketing by a non-EU AIFM of an AIF to professional investors in Ireland

The Central Bank has confirmed that once a non-EU AIFM has notified it of its intention to market an AIF to professional investors in Ireland, the AIFM must report to the Central Bank in accordance with the AIFM Regulations.  The Central Bank has clarified that the obligation to report will end once the AIFM has notified the Central Bank that it has not commenced marketing and is withdrawing its notification or if the AIFM ceases to market in Ireland and there are no Irish resident investors in the AIF. 

Loan originating Qualifying Investor AIF

The Central Bank’s Q&A document clarifies the following in respect of loan originating QIAIFs:

  • An AIF may invest in different levels of debt, e.g. tranched or mezzanine or subordinated debt.  Levels of debt and priority of claim are not part of determining whether an investment is a loan or not.
  • If an intermediary introduces a borrower to a loan originating QIAIF who subsequently lends to that borrower, the introducer will not be regarded as the originator of the loan.
  • A loan originating QIAIF may hold debt securities solely for treasury management purposes.
  • The assets of a loan originating QIAIF may include equity where equity securities have been received as a result of a loan work out.  The timeline for disposing of these equity securities should primarily take account of the best interests of the investors in the loan originating QIAIF.
  • A loan originating QIAIF, in so far as its activities relate to the provision of credit, may fall within the scope of the Credit Reporting Act 2013.
  • A QIAIF may fund the activities of a subsidiary by way of a loan without seeking authorisation as a loan originating QIAIF.

ESMA call for evidence on AIFMD passport and third country AIFMs

On 7 November 2014, ESMA published a call for evidence on the EU passport under AIFMD and third country AIFMs.

Under Articles 36 and 42 of AIFMD, non-EU AIFMs and non-EU AIFs managed by EU AIFMs are subject to the national private placement regime of each of the member states where the AIFs are marketed or managed. However, AIFMD makes provision for the EU passport to be potentially extended in the future. Article 67 of AIFMD requires ESMA to provide the European Commission with:

  • An opinion on the functioning of the passport for EU AIFMs and on the functioning of the national private placement regimes
  • Advice on whether the passporting regime should be extended to the management and marketing of AIFs by non-EU AIFMs and to the marketing of non-EU AIFs by EU AIFMs

Responses to the call for evidence will help ESMA develop this opinion and advice.

The deadline for responses is 8 January 2015.

ESMA is required to deliver the opinion and advice to the Commission by 22 July 2015.

ESMA Q&A on the application of AIFMD

On 11 November 2014, ESMA published an updated Q&A document in relation to the application of AIFMD.

The Q&A document provides clarity on the application of the following aspects of AIFMD:

  • Remuneration
  • Notifications of AIFs
  • Reporting to national competent authorities
  • Notification of AIFMs
  • MiFID services under AIFMD
  • Depositaries
  • Calculation of leverage
  • Delegation
  • Calculation of the total value of assets under management

Contributed by Niall Crowley