AIFM Directive – Application of provisionscontent.linklaters.com/pdfs/mkt/aifm/110512_AIFMD.pdf · A13653382 1 AIFM Directive – Application of provisions EU AIFM managing EU AIF

A136533821

AIFM Directive – Application of provisions

EU AIFM managing EU AIF

EU AIFM managing Non-EU AIF

Non-EU AIFM managing EU AIF

Non-EU AIFM managing Non-EU AIF

Notes

AIFM authorised AIFM authorised AIFM not authorised (may be impossible after 2015)

AIFM authorised (may be required after 2015)

AIFM not authorised AIFM authorised (after 2015)

Authorisation for AIFM Required (Art 6) unless an exemption applies.

Requirement applies from date of transposition (2013).

An AIFM already performing AIFMD activities before 2013 transposition deadline must take all necessary steps to comply with national law stemming from AIFMD but can delay applying for authorisation for 1 year to 2014 (Art 61(1)); an EU AIF could be managed during that grace period, but not marketed in the EU before the AIFM became authorised (Art 31(1); 32(1))except in accordance with a valid Prospectus Directive compliant prospectus published before the 2013 transposition deadline (Art 61(2)).

Required (Art 6; 34(1)) unless an exemption applies.

Requirement applies from date of transposition (2013).

An AIFM already performing AIFMD activities before 2013 transposition deadline must take all necessary steps to comply with national law stemming from AIFMD but can delay applying for authorisation for 1 year to 2014 (Art 61(1)); a non-EU AIF could be managed during that grace period, but not marketed in the EU before the AIFM became authorised (Art 35(1); 36(1))

Required if EU marketing passport is extended in 2015, whether or not AIF is marketed in the EU (Art 37(1); 67(6))

Not required unless and until EU marketing passport is extended (Recital 19, 64).

Not required if AIF will not be marketed in the EU.

Not required if AIF will only be marketed in the EU under local private placement rules (Art 42(1) (this may cease to be possible after 2018).

Required after 2015 if AIFM wishes to use the EU marketing passport (if it is extended to non-EU AIFM/AIF after 2015) (Art 40(1); 68(6))

Small AIFM within the de minimis exemption in Art 3(2) do not need authorisation but must still register.They may be marketed under any available national private placement exemptions. However, they may “opt in” to AIFMD, in which case full authorisation is required, and a passport may be used (if available).

AIFM managing closed-ended AIF before the transposition deadline in 2013 which make no further investments after that date can continue to manage those AIF without authorisation (Art 61(3)). An EU AIFM of an EU AIF of this nature could also (only) market the AIF in accordance with a valid PD compliant prospectus published before 2013 (Art 61(2)). Art 61 suggests that all other aspects of AIFMD must be complied with, but it is unclear whether that is the intention.

AIFM managing closed-ended AIF whose subscription period has closed prior to AIFMD coming into force (2011) and which will terminate prior to three years after the transposition deadline (2016) can continue to manage those AIF without authorisation and without complying with AIFMD other than annual report and unlisted company provisions. Art 61(4)

Authorisation criteria Consent of AIFM’s home country regulator is required (Art 7(1))

Consent of AIFM’s home country regulator is required (Art 7(1))

Even if the non-EU AIF is not being marketed in the EU, there must be cooperation arrangements between regulators in AIFM’s home country and in AIF country (Art 34(1)).

n/a Consent of AIFM’s reference country regulator (as determined under Art 37(4)) is required (Art 37(1))

Requirements (Art 37(7)):

- AIFM must have legal representative in reference country which will perform compliance functions and be a contact point for regulators and investors

- cooperation arrangements between regulators in reference country, the EU AIF country and the AIFM home country

- AIFM’s home country not listed as “non-cooperative” by FATF

- AIFM’s home country has agreement on exchange of tax information with AIFM reference country

- effective supervision is not prevented by the laws of the AIFM’s home country or limitations on the powers of its regulators

n/a Consent of AIFM’s reference country regulator (as determined under Art 37(4)) is required (Art 37(1))


- AIFM must have legal representative in reference country which will perform compliance functions and be a contact point for regulators and investors

- cooperation arrangements between regulators in reference country and the AIFM home country

- AIFM’s home country not listed as “non-cooperative” by FATF

- AIFM’s home country has agreement on exchange of tax information with AIFM reference country

- effective supervision is not prevented by the laws of the AIFM’s home country or limitations on the powers of its regulators

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Notes




Marketing in EU under local private placement exemptions to professional investors

Not available (Recital 59) Available from 2013 (Art 36).

May become unavailable after 2018 (Art 68(6))


- AIFM must be authorised

- comply with entire AIFMD (with relaxation of depositary rules)

- cooperation arrangements on systemic risk oversight between regulators in AIFM home country and AIF country

- AIF country not listed as “non-cooperative” by FATF

Member states may impose their own, stricter rules (Art 36(2))

Available from 2013 (Art 42(1))



- compliance with annual report, investor disclosure, regulator reporting and unlisted companies provisions of AIFMD (authorised AIFM must comply with whole directive anyway)

- cooperation arrangements on systemic risk oversight between regulators in AIF country, AIFM country and member states where AIF will be marketed

- AIFM home country not listed as “non-cooperative” by FATF


Available from 2013 (Art 42(1))



- compliance with annual report, investor disclosure, regulator reporting and unlisted companies provisions of AIFMD (authorised AIFM using passport must comply with whole directive anyway)

- cooperation arrangements on systemic risk oversight between regulators in AIF country, AIFM country and member states where AIF will be marketed

- AIF country and AIFM country not listed as “non-cooperative” by FATF


As described in more detail below, a passport will apply to the marketing of EU AIF by EU AIFM from the date of transposition of AIFMD into local law (by 2013), and will be the only permitted means of marketing such AIF. For EU AIFM marketing non-EU AIF and for non-EU AIFM, marketing within the EU will continue to be possible after 2013 on the basis of local private placement exemptions – if applicable exemptions exist in the relevant country.

The EU marketing passport may be extended in or around 2015 to cover non-EU AIFM/AIF. If it is, then three years afterwards (i.e. 2018 at the earliest) ESMA will issue an opinion on whether the ability for non-EU AIFM/AIF to market in the EU under local private placement exemptions should be removed from AIFMD, thus leaving the passport as the sole means of marketing AIF in the EU.

If ESMA recommends terminating the private placement regime, then AIFMD will be amended accordingly within three months, subject to the right of the European Parliament and Council to object.

EU marketing passport – to professional investors

Available from 2013 (Art 31; 32)

AIFM must be authorised (Art 31(1); 32(1))

Consent of AIFM home country regulator required (Art 31(2); 32(2)).

May be available after 2015 (Art 35; Art 67(6)).

AIFM must be authorised (Art 35(1))


- comply with all of AIFMD

- cooperation arrangements between regulators in AIFM home country and AIF country


- AIF country has agreement on exchange of tax information with AIFM home country and each member state where AIF will be marketed

Consent of AIFM home regulator required (Art 35(3) and (5))

Not available unless AIFM is authorised.

May be available after 2015 (Art 39(1); 67(6)).

AIFM must be authorised (Art 39(1)).

Consent of AIFM reference country regulator required (Art 39(2) and (4))

Not available if AIFM is not authorised

May be available after 2015 (Art 40(1); 67(6))

AIFM must be authorised (Art 40(1)).

Requirements (Art 40(2):

- comply with all of AIFMD

- cooperation arrangements between AIFM reference country and AIF country regulators


- AIF country has agreement on exchange of tax information with AIFM reference country and each member state where AIF will be marketed

Consent of AIFM reference country regulator required (Art 40(3) and (5))

An EU marketing passport will be available toauthorised EU AIFM managing EU AIF from transposition of the AIFMD into national law (2013).

Two years after the 2013 transposition deadline (i.e. in 2015), ESMA will advise on whether passport should be extended to cover non-EU AIFM and non-EU AIF. If ESMA recommends the extension, then the relevant provisions of AIFMD will come into force within three months (subject to the ability for the European Parliament and Council to object). The potential for objection means that although the earliest that the passport for non-EU AIFM/AIF could be available is 2015, it could become available after that, or not at all. (Art 67)

“Switching on” the passport regime in or after 2015 would result in it existing alongside the private placement regime for at least three years.

Capital requirements for AIFM (Art 9)

Applicable Applicable Not applicable Applicable Not applicable Applicable

Operating Conditions (Art 12)

Applicable Applicable Not applicable Applicable Not applicable Applicable General conduct of business obligations.

Remuneration (Art 13, Annex II)

Applicable Applicable Not applicable Applicable Not applicable Applicable Requirement for remuneration policies to promote sound and effective risk management.

Conflicts of interest (Art 14) Applicable Applicable Not applicable Applicable Not applicable Applicable Requirements to identify, disclose and manage conflicts

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Notes




Risk management (Art 15) Applicable Applicable Not applicable Applicable Not applicable Applicable Requirement to maintain systems to identify and manage risks; set maximum leverage limit

Liquidity management (Art 16)

Applicable Applicable Not applicable Applicable Not applicable Applicable Requirements to monitor liquidity profile of open-ended/leveraged AIFs and ensure consistency with redemption policy.

Investment in securitisation positions (Art 17)

Applicable Applicable Not applicable Applicable Not applicable Applicable Eligibility criteria for investment in securitisation provisions (rules to be adopted by Commission)

Organisational requirements (Art 18)

Applicable Applicable Not applicable Applicable Not applicable Applicable Requirements for proper administrative, accounting, data processing arrangements, personal dealing rules, etc.

Valuation (Art 19) Applicable Applicable Not applicable Applicable Not applicable Applicable Requirement for independent valuations of AIF assets, disclosure of NAV

Delegation (Art 20) Applicable Applicable Not applicable Applicable Not applicable Applicable Conditions for delegation of AIFM functions to a third party.

Depositary (Art 21) Applicable

Depositary must be established in AIF’s home member state (Art 21(5)(a)).

No marketing of AIF in the EU

Not applicable (Art 34(1)(a))

Marketing of AIF in EU only under local private placement exemptions (whilst applicable)

Not applicable but AIFM must appoint an entity other than itself to perform certain depositary functions (Art 36(1)(a))

Marketing in EU using passport (if permitted after 2015)

Depositary rules apply (Art 35(2)).

Depositary must be established in the AIF country or AIFM’s home country (Art 21(5)(b))

Use of a non-EU depositary is subject to additional requirements set out in Art 21(3) and 21(6).

Not applicable Applicable

Depositary must be established in AIF’s home country (Art 21(5)(a).

Not applicable Applicable

Depositary must be established in the AIF country or AIFM’s reference country (Art 21(5)(b))

Use of a non-EU depositary is subject to additional requirements set out in Art 21(3) and 21(6).

Requirement to appoint a depositary.

Criteria relating to identity of depositary

Functions of depositary and criteria for appointment of delegates.

Liability of depositary.

Annual report (Art 22) Applicable Applicable if AIF is marketed in the EU (Art 34(1)(a))

Applicable if AIF is marketed in the EU (Art 42(1)(a))

Applicable Applicable if AIF is marketed in the EU (42(1)(a))

Applicable if AIF is marketed in the EU

Requirement to make available an annual report for EU AIF/ AIF marketed in the EU

Disclosure to investors (Art 23)

Applicable Applicable if AIF is marketed in the EU

Applicable if AIF is marketed in the EU (42(1)(a))

Applicable Applicable if AIF is marketed in the EU (42(1)(a))

Applicable if AIF is marketed in the EU

Requirement to disclose certain information to investors before they invest; and to make periodic disclosure in relation to liquidity/risk profile and leverage.

Reporting to competent authorities (Art 24)

Applicable Applicable

Most requirements under Art 24 only apply to a non-EU AIF if it is marketed in the EU

Applicable if AIF is marketed in the EU (Art 42(1)(a))

Reporting must be made to regulators in EU states where AIF is marketed.

Applicable Applicable if AIF is marketed in the EU (Art 42(1)(a))

Reporting must be made to regulators in EU states where AIF is marketed.

Applicable

Most requirements under Art 24 only apply to a non-EU AIF if it is marketed in the EU.

Requirement to report to regulator on principal markets and investments in which it trades for AIF; information on liquidity and risk profile; provision of annual report and list of AIFs managed, information on AIF leverage levels and sources of borrowing.

Leveraged AIF (Art 25) Applicable Applicable Not applicable Applicable Not applicable Applicable Requirement for AIFM to demonstrate reasonableness of, and compliance with, leverage limits. Ability for regulators to impose leverage limits.

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Notes




Control of Unlisted issuersand Asset Stripping (Art 26-30)

Applicable Applicable Applicable if AIF is marketed in the EU (Art 42(1)(a))

Applicable Applicable if AIF is marketed in the EU (Art 42(1)(a))

Applicable Applies to AIFM managing AIF which aim to acquire control of unlisted companies other than SMEs and real estate holding SPVs.

Requirements to notify regulators/the company/employee representatives when acquiring or disposing of voting rights/control in unlisted companies

Requirement for certain disclosures in annual reports.

Prohibition on distributions/reduction of capital.

Documents

AIFM Directive – Application of provisionscontent.linklaters.com/pdfs/mkt/aifm/110512_AIFMD.pdf · A13653382 1 AIFM Directive – Application of provisions EU AIFM managing EU AIF