The European Union Alternative Fund Managers Directive (“AIFMD”) regulates hedge funds, private equity funds and alternative investment funds. It imposes organizational , management and systems requirements on alternative investment fund managers (AIFM) that are either domiciled in the EU or that manage investment funds domiciled in the EU. The AIFMD has to be complied with by Member States by July 22, 2013.
The AIFMD permits AIFM that are authorized and that manage EU domiciled funds (and from July 2015, non EU domiciled funds) to market their funds to “professional investors” on a pan-European basis. From July, 2015, AIFMD will permit investment advisers domiciled outside of the EU that are registered with an EU “reference state” and comply with the requirements of the AIFMD to market their 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 to market its funds 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 transparency requirements, including the requirement for the fund to produce an audited annual report.
Investment managers should be considering the following issues:
- If the manager or the fund that it manages is domiciled in the EU, is it ready to become authorisied under the AIFMD?
- If the manger is not domiciled in the EU, does it intend to market its funds to investors in the EU after July 2013? If so it will need to make the required disclosures to investors and regulators, and the fund will need to have a compliant audited annual report.