ESMA AIFMD Q&A: Clarity on key remuneration and marketing issues

19 February 2014

On 17 February 2014, the European Securities and Markets Authority ("ESMA") issued a Questions & Answers ("Q&A") paper in relation to the Alternative Investment Fund Managers Directive ("AIFMD") (ESMA/2014/163).

ESMA notes that the aim of the Q&A is to promote a common supervisory approach by national regulators and also to help alternative investment fund managers ("AIFMs") by providing clarity as to the content of the AIFMD rules.

In general, the Q&A addresses technical points and will not materially alter existing AIFMD planning for the majority of the market. However, it does provide some very helpful guidance on remuneration issues, delegation and regulatory reporting.

Below are some key highlights from the Q&A:

Equally as effective remuneration requirements 

The Capital Requirements Directive ("CRD") rules are deemed "equally as effective" as AIFMD remuneration rules.

Pursuant to paragraph 18(a) of the ESMA Guidelines (ESMA/2013/201), AIFMD remuneration rules are not required to be applied to delegates who are subject to regulatory requirements on remuneration that are "equally as effective" as those applicable under the ESMA Guidelines.

In the Q&A, ESMA clarifies that "Identified Staff" that are subject to CRD rules will be considered to be subject to regulatory requirements on remuneration that are equally as effective as those applicable under the ESMA Guidelines.

This clarification will greatly aid delegation structures within the EEA where an EEA AIFM may delegate to a group entity or third party applying CRD standards without having to impose the AIFMD remuneration rules on that delegate.

Start date for remuneration rules

For existing entities, ESMA clarifies that the bonus rules will apply to the next full performance period after the entity becomes authorised as an AIFM.

For existing entities seeking authorisation as an AIFM during the transition period, the remuneration rules are to apply from the point of authorisation. However, the requirements relating to variable remuneration (i.e. the bonus provisions) "should apply only to full performance periods and should first apply to the first full performance period after the AIFM becomes authorised".

One of the specific examples given is as follows:

"An existing AIFM whose accounting period ends on 31 December obtains an authorisation between 1 January 2014 and 22 July 2014: the AIFMD rules on variable remuneration should apply to the calculation of payments relating to the 2015 accounting period."

Application of ESMA Guidelines to delegates

ESMA clarifies that the scope of Identified Staff at a delegate (carrying out portfolio management or risk management activities) is restricted to staff who have a material impact on the risk profiles of the AIFs managed as a result of the delegation.

Further to paragraph 18(b) of the ESMA Guidelines, it is clarified that "such contractual arrangements must only be in place in respect of the delegate’s identified staff who have a material impact on the risk profiles of the AIFs it manages as a result of the delegation, and only in respect of the remuneration for such delegated activities."

Clarification in this area is to be welcomed as it addresses concerns that the scope of Identified Staff was too broad and could apply AIFMD remuneration rules to the delegate's entire organisation as opposed to the narrower group now set out.

Marketing points

• A marketing notification under Annex IV of AIFMD should detail all information in Article 23(1) (the offering document disclosure points) not otherwise included in the actual Annex IV reporting template in respect of the relevant AIF;

• Pursuant to earlier ESMA guidelines umbrella or segregated cell structures are considered a single AIF. However, AIFMs marketing a new sub-fund/segregated cell/investment compartment of an AIF in a Member State where the relevant AIF has already been notified must undertake a new notification procedure for the specific sub-fund/segregated cell/investment compartment; and

• Reporting by non-EU AIFMs being made in respect of AIFs being marketed without an AIFMD passport (under Article 42) is only required to take into account AIFs marketed in the relevant Member State and not all AIFs which that AIFM manages. This is a useful clarification for large managers with funds who wish to only market certain products in a particular country.

A copy of the Q&A is available at this link. The Q&A will be updated from time to time as further issues are raised with ESMA that it wishes to provide clarity on. General questions on the practical application of AIFMD can be submitted to ESMA at the following email address:

If you would like further information on the above, please contact any of the individuals listed or your usual Maples and Calder contact on AIFMD.

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