EU Alternative Investment Fund Managers Directive
Adoption of Level 2 Regulations
On 19 December 2012, the Level 2 AIFMD Regulations (the “Regulations”) were adopted by the European Commission. With this, the final pieces in the long-running AIFMD puzzle will finally drop into place, and AIF sponsors/investment managers and their legal advisers can start planning for the new regime with a degree of certainty. Our lawyers have been monitoring the development of AIFMD since the outset and our Partners have been advising clients, industry bodies, regulators and government departments on implementation in key onshore and offshore fund jurisdictions - the British Virgin Islands, the Cayman Islands and Ireland.
The Regulations supplement and clarify the:
(a) conditions and procedure for the determination and authorisation of AIFMs, including the applicable capital requirements;
(b) operating conditions for AIFMs, including rules on remuneration, valuation, conflicts of interest, risk management, liquidity management, investment in securitisation positions, and organisational requirements;
(c) conditions for delegation;
(d) rules on depositaries, including the depositary's tasks and liability;
(e) reporting requirements and leverage calculation; and
(f) rules for co-operation arrangements.
The Regulations will be subject to a three-month scrutiny period by the European Parliament and the Council. Provided that neither body objects, the Regulations will enter into force at the end of this period.
Release of ESMA Consultation Papers
In a related development on 19 December 2012, the European Securities and Markets Authority (“ESMA”) issued consultation papers on two key AIFMD concepts. Both consultations aim to add clarity to the AIFMD text and foster a common, uniform and consistent application once the rules take effect.
The first consultation elaborates on the definition of an ‘AIF’ (and thereby clarifies which types of funds will be within the scope of AIFMD), by expanding on what shall be meant by the terms “collective investment undertaking”; “raise capital”; “number of investors”; and “defined investment policy”.
The second consultation provides draft regulatory technical standards on how AIFMD will affect certain types of AIFM. Specifically, it distinguishes between managers of AIFs whose investors have the right to redeem at least annually (open-ended AIFs), and those whose investors have less frequent redemption rights.
The deadline for responses to both consultations is 1 February 2013.
How can Maples and Calder help?
With the new rules due to come into force as soon as 22 July 2013, Maples and Calder will be actively reviewing the impact on the regulatory frameworks of the British Virgin Islands, the Cayman Islands and Ireland. We intend to issue a number of updates and hold a series of seminars early in 2013. We will focus on practical solutions and structures to add something different to standard AIFMD updates. In particular we will be examining what the new regime will mean, in practice, for managers, funds and service providers in the Cayman Islands, the British Virgin Islands and Ireland, looking at structuring, marketing and operational issues with a focus on case studies and the particular issues in the AIF domiciles that our clients and their advisers are using.
The Regulations and ESMA consultation papers may be found at the following links:
If you would like to discuss the AIFMD, the Regulations or the ESMA consultations and the implications for your business, please speak to your usual Maples and Calder contact or any of our AIFMD experts listed above.