On 3 April, ESMA released guidelines on performance fees for UCITS funds and certain AIFs. The guidelines follow the consultation paper which closed 31 October 2019, covered in our Fund Distribution Alert of 18 July 2019, and aims to harmonize how and when fund managers charge performance fees to investors. The items covered by the guidelines are as follows:
Important to note:
The AIFs impacted by the guidelines are those which are open-ended and marketed to retail investors in accordance with AIFMD art. 43, except for EuVECAs (or other types of venture capital AIFs), EuSEFs, private equity AIFs or real estate AIFs.
ESMA will have the guidelines translated into the official EU languages and subsequently published on their website. Two months after publication they will become applicable. Existing funds with performance fees should apply the guidelines by the beginning of the financial year following six months from the application date. New funds created after the guidelines become applicable and which intend to make use of performance fees should be compliant upon inception.
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Please note that any information provided is general in nature, is based on the latest publicly available information as analyzed on a best endeavor basis and does not constitute any specific legal opinion or advice.
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