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Alternative investment fund managers directive (AIFMD)


AIFMD sets out the authorization process and ongoing requirements for managers of funds other than UCITS.

AIFMD sets out the authorization process and ongoing requirements for managers of funds...

The AIFMD, and the accompanying regulation, does what it says on the tin – it regulates the managers of funds other than Undertakings for Collective Investments in Transferable Securities (UCITS), so-called alternative investment funds or AIFs. Unlike the UCITS directive, AIFMD does not include authorization or regulation of the funds themselves, but it provides a passport for any AIF to be marketed cross border within the European Union (EU) to professional investors.

The AIFMD sets out the authorization process and ongoing requirements across a wide range of areas. Alternative Investment Fund Managers (AIFMs) have had to comply with the requirements since 22 July 2013, which also cover governance, minimum capital and conflicts of interest identification and management.

The directive has a global impact

It imposes requirements on third country asset managers to whom AIFMs delegate portfolio management. Also, any funds being marketed into the EU from third countries are impacted, as are managers outside the EU that manage or wish to manage EU-domiciled AIFs. The Commission has yet to activate the third country passport for non-EU AIFs and non-EU AIFMs. Meanwhile, national private placement regimes continue to apply. [See “Non-EU AIFMs and AIFs” for more detail.]

Member States may choose to allow certain types of AIF to be marketed to retail investors in their jurisdictions, and may impose additional requirements on the AIFM or the AIF for this purpose. Member States must allow other AIFMs or AIFs established in another jurisdiction and that comply with the additional national requirements to be marketed to retail investors in their jurisdictions. Effectively, this is a bilateral passport for non-UCITS retail funds

Next steps

The European Commission is required to have initiated a review of the workings of the Directive by July 2017. In September 2017, the Commission appointed KPMG Law (Germany), in collaboration with a number of other KPMG national firms, to undertake research into the implementation and impact of the AIFMD. KPMG reported in November 2018. The Commission published the report (PDF 5.74 MB) in January 2019 and is considering its findings.

Meanwhile, the Commission issued in March 2018 proposals to amend AIFMD to tackle remaining barriers to cross border distribution within the EU, and in July 2018 proposals (PDF 275 KB) to amend and align the safe-keeping requirements for AIF depositaries with those for UCITS.