Following the financial crisis that began in 2008, the EU set out to create an effective regulatory system for alternative investment funds (AIFs) – ie non-UCITS investment funds. The EC stated that alternative investment fund managers (AIFMs) had become "very significant actors in the European financial system, managing a large quantity of assets on behalf of pension funds and other investors; accounting for a significant proportion of trading activity in financial markets; and constituting an important source of counterparty risk for other market participants."
The resulting Directive 2011/61/EU - Alternative Investment Fund Managers Directive (AIFMD) – published in the OJ on 1 July 2011 after two years of controversy and debate – establishes an EU-wide harmonised framework for monitoring and supervising risks posed by AIFMs and the AIFs they manage, and for strengthening the internal market in alternative funds.
The Directive applies (with certain exemptions) to:
The AIFMD entered into force on 21 July 2011 and had to be transposed into member state law by 22 July 2013. In most cases it was also to be effective from this date. Certain AIFMs were allowed a transitional period, lasting up to 22 July 2014, in which to seek the necessary variation of permission, authorisation or registration prior to implementation.
However, the compliance process took longer than planned and in December 2014 the EC found it necessary to issue a formal warning to Spain, Latvia and Poland that they needed to put adequate measures in place or face fines.
The Directive is now fully in effect and in force. It has been supplemented by Level II Regulations – see Key documents. For more dates, see the Timeline below.
|April 30||EC publishes original draft proposal for the Directive on Alternative Investment fund Managers|
|1 July||Directive 2011/61/EU - Alternative Investment Fund Managers Directive (AIFMD) - published in the OJ|
|21 July||AIFMD enters into force|
|22 July||AIFMD transposed into national law and applied by Member States|
|22 July||Deadline for EU member states to transpose AIFMD into their national legislation and for AIFMs to comply with relevant requirements|
|8 October||ESMA’s Guidelines on reporting obligations under AIFMD apply|
|26 November||European Commission issues infringement decisions against Latvia, Poland and Spain regarding their failure to comply with AIFMD and giving them 2 months to do so|
|30 July||ESMA’s issues first advice on extending AIFMD passport to Non-EU countries, confirming positive assessments for just two countries so far|
|18 July||ESMA‘s second advice on Non-EU country passports includes further positive assessments but notes there is more work to be done|
|22 July||EC scheduled to complete review of the application and scope of AIFMD|
|October||ESMA due to issue an opinion as to whether to 'turn off' domestic private placement regimes|
|22 January||Depending on ESMA's recommendation of October 2018, EC may 'turn off' private placement regimes|
The Directive allows for two methods for marketing to professional investors: the “marketing passport“ and the member states’ AIF private placement regimes. Whether a particular marketing method is available depends on the jurisdiction of the AIFM and the relevant AIF.
The AIFMD passport is a UCITS-style passporting system for marketing AIFs across Member States. Once an AIFM is authorised under the AIFMD in one member state and complies with the rules of the Directive, it is entitled upon notification to manage or market funds to professional investors throughout the EU.
Under the Directive, AIFMs to which the marketing passport could apply can either become authorised to use the passport or continue to use existing private placement regimes (until, subject to ESMA's opinion, these are compulsorily phased out in 2018).Extension of the passport
The AIFMD also envisages extending the passport to the marketing of non-EU funds, managed both by EU AIFM and AIFM based outside the EU. Currently, non-EU AIFMs and EU AIFMs of non-EU AIFs can only market their funds into member states where permitted by national private placement laws. The Directive required ESMA to review the situation two years after implementation and stated that the process for extending the passport would only be initiated upon receipt of positive advice from the Authority.
On 11 October 2016, ESMA Chair Steven Maijoor stated in a speech to the EU Economic and Monetary Affairs Committee that work was about to start on assessing a third group of Non-EU countries as well as on putting in place the extensive framework foreseen by the co-legislators in case the passport should indeed be extended to one or more non-EU countries. By the end of 2016, ESMA had published two sets of advice on extending the AIFMD passport to Non-EU countries. However, the three-month period enactment period has meanwhile expired without any enactment of a delegated act by the EU Commission.