AIFMD — One Year to Go

What is happening?

The EU Alternative Investment Fund Managers Directive (“AIFMD”) will be transposed into the national laws of EU Member States, and will have to be complied with, on 22nd July 2013.

What is it?

The AIFMD regulates the hedge, private equity and alternative investment fund industry in Europe.

The AIFMD imposes organisational, management and systems requirements on alternative investment fund managers who are either domiciled in the EU or which manage investment funds domiciled in the EU (“AIFM”).

The AIFMD permits AIFM which are authorised in accordance with the requirements of the directive and that manage EU-domiciled investment funds (and from July 2015, non-EU domiciled investment funds) to market those funds to “professional investors” on a pan-European basis.

From 2015, the AIFMD will permit investment managers domiciled outside of the EU, but which are registered with an EU “reference state” and comply with the requirements of the directive, to market those funds to “professional investors” on a “passported” pan-European basis.

The AIFMD allows (but does not compel) each EU Member State to permit (until July 2018) a non-EU investment manager (that is a manager that is not domiciled in the EU and which does not manage a fund domiciled in the EU) to market its fund to professional investors in that Member State on a private placement basis, but only where the non-EU investment manager (and fund) complies with certain pre- and post-sale transparency requirements, including the requirement for the fund to have an audited annual report.

What should investment managers be doing?

Investment managers should consider how they will strategically respond to the AIFMD. Questions that investment managers should be asking include:

• If the manager (or a fund that it manages) is domiciled in the EU, is it ready to become authorised pursuant to the AIFMD?
• If the manager is not domiciled in the EU, does it intend to market its funds to investors in the EU after July 2013? If so, will the manager be willing and able to make the required disclosures to investors and regulators, and will the fund have a compliant audited annual report?
• Does the manager have any mandates that have been delegated from an AIFM subject to the AIFMD? If so, have the delegation arrangements been amended to reflect the AIFMD outsourcing requirements?

How can Bingham help?

Bingham lawyers have been following the development of AIFMD, and advising clients on its impact, since the initial proposal for a directive was made in 2009. Bingham’s Investment Management lawyers in Europe, Asia and the US understand the directive, its potential impact on managers and the particular requirements of managers in multiple jurisdictions. Bingham can help investment managers prepare for implementation of AIFMD and to take their businesses forward in the new environment.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: