Alternative Investment Funds
By 2013 the Alternative Investment Funds Directive (AIFMD) is set to be implemented across the EU. Examples of such funds are Hedge Funds, Commodities Funds, Funds of Funds, Real Estate Funds etc. The AIFMD regulatory framework applies to funds as the above which are considered non UCITS and therefore do not fall under the scope of the UCITS IV Directive.
The AIFMD makes provision for the authorization, ongoing operation and transparency of Alternative Investment Fund Managers (“AIFM”) of AIFs and applies to any AIFM which:
- has its registered office in the EU;
- manages any AIF which is authorized or registered in, or has its registered office or head office in the EU; or
- markets any AIF in the EU.
AIFMD significant implications for investment managers and funds both within and outside the EU
- Passporting effect of AIFs located in the EU across all member states (to professional investors)
- Authorization requirements for marketing services
- Restrictions on marketing to retail investors
- Detailed reporting and disclosure requirements.
- Additional authorization requirements for Non EU managers and non EU funds
- Minimum capital requirements of AIF managers of €120,000
- Restrictions and requirements for leveraged investments
UCITS IV and AIFMD
The passporting regime of management companies across the EU applies to UCITS managers only and not to management companies of other types of funds such as the AIF’s. So UCITS managers, which also manage non UCITS local funds, will have no passport under the UCITS IV Directive for the non UCITS part of their activity. This is where the AIFMD steps in and provides the passport for the non UCITS activities making it possible to consolidate management remotely; at least in certain instances (the AIFMD (non UCITS) passport is only available for sales to professional investors).