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European Commission Publishes AIFMD Implementing Regulations

The European Commission has adopted implementing regulations relating to the Alternative Investment Fund Managers Directive (AIFMD) establishing procedures for:

  • Opting-in under AIFMD
  • Determining the Member State of reference of Non-EU alternative investment fund managers (AIFMs)

Opting-in under AIFMD  

Smaller EU-based AIFMs are permitted to “register” with national regulators in the EU rather than seek a full authorisation under AIFMD.  This registration-only regime avoids most of the burden of AIFMD and is available to those managers that have:

  • Assets under management (AUM) of no more than €100,000,000 (including assets acquired through the use of leverage); or
  • AUM of no more than €500,000,000, but only where its funds are unleveraged and investors are not permitted to redeem their investments for at least five years

AIFMs that meet the conditions for the registration-only regime may choose to opt-in under AIFMD in order to benefit from the rights granted under the Directive (e.g. the passport). If an AIFM chooses to opt-in, AIFMD becomes applicable in its entirety. 

An AIFM that chooses to opt-in must follow the same procedure and submit the same documents for authorisation as is required by AIFMs whose authorisation is mandatory under AIFMD.  A competent authority may exempt an AIFM from submitting all information and documentation required under AIFMD provided that the exempted information has already been submitted as part of the registration-only regime or (if applicable) as part of the authorisation procedure pursuant to the UCITS Directive and provided that the AIFM confirms in writing that the information and documentation is still up-to-date.

Determining the Member State of Reference of a Non-EU AIFM

If a non-EU AIFM intends to manage an EU alternative investment fund (AIF) and/or to market AIFs in the European Union, it is required to apply for prior authorisation to the competent authority of its Member State of reference.  A non-EU AIFM may intend to market or manage several EU AIFs in different Member States and so more than one Member State could be considered as a potential Member State of reference. 

In such cases, the non-EU AIFM must submit a request to the competent authorities of all Member States that are potential Member States of reference disclosing details such as the Member States where the AIFs are established and the value of the AUM of the non-EU AIFM in the EU. The competent authorities concerned must jointly determine the Member State of reference and ESMA must ensure that all potential Member States of reference are duly involved in such decision-making.  The Regulation imposes strict deadlines on competent authorities to reach a determination. 

Both procedures will apply from 22 July 2013.

Contributed by Vincent Coyne