Alternative Investment Fund Managers Directive
Countdown to the Directive
On 16 November 2011, the European Securities and Markets Authority (ESMA) published its final advice to the European Commission (EC) on the detailed rules for the Alternative Investment Fund Managers Directive (AIFMD). It will impact how Alternative Investment Fund Managers (AIFMs) distribute their funds, cross-border or otherwise; how they pay their people and how they operate their business.
The Directive seeks to regulate the non-UCITS fund sector, in particular hedge funds, private equity funds and real estate funds. Decision makers within AIFMs should be aware of the additional responsibilities placed on their firms and should plan to implement any additional policies and procedures to ensure those responsibilities are met.
The AIFMD was published in the Official Journal of the European Union on 1 July 2011. UK AIFMs within the scope of the Directive will need to seek authorisation from the Financial Services Authority (or more likely the proposed Financial Conduct Authority) by 22 July 2014 in order to continue to manage funds from the UK.
To continue to market their funds in the UK, offshore AIFMs (non-EU AIFMs) will need to comply with several disclosure-based requirements such as providing information to investors and submitting periodic returns to the FSA. It is likely that these non-EU AIFMs will need to register with the FSA though it is not clear what form this registration will take.
The next steps
During the pre-publication consultation period, the EC and the European Parliament objected to many aspects of ESMA’s advice. These objections leave considerable uncertainty over what changes will be made before mid-2012, when the EC is expected to publish final supplementary legislation.
Fund managers can however begin planning for the impact of AIFMD now based on the substantial information already available.
AIFMs need to understand their current regulatory footprint and how that corresponds with the Directive’s requirements. They then need to identify compliance gaps and plan how to fill them. Crucially, AIFMs must also be aware of their responsibilities in relation to activities carried out by administrators, transfer agents, distributors and by the Alternative Investment Fund (AIF) itself.
Actions AIFMs should undertake include:
- assessing the cost implications of appointing a depositary as well as annual compliance reviews and additional reporting requirements.
- managing change by taking into account the significant numbers of other regulations such as derivatives clearing requirements, UCITS rules, FATCA and the UK Retail Distribution Review.
- reviewing existing business models, including domicile/product structures.
- assessing the strategic costs and benefits of a change to fund structure or location, along with the tax consequence of any change.
The Directive is based on rules for UCITS retail funds, this assumes that the risk management function is readily separable from the investment decision. We anticipate that private equity and real estate funds may find implementation challenging.
The AIFMD has significant implications for all parts of the value chain including administrators, distributors, depositaries, custodians, prime brokers, sub-investment managers and auditors.
Learn more about the AIMFD
AIFMD publications
View our latest point of view articles on the AIFMD.
AIFMD timeline
See the key dates in the run up to the Directive.
AIFMD frequently asked questions
View our responses to key AIFMD questions.
Deloitte’s approach to the AIFMD
Deloitte can assist with planning and execution covering the full range of the Directive’s effects.
We can help assess business strategy and capital adequacy, restructuring advice, compliance readiness, remuneration, due diligence and valuation services.
Our approach comprises impact assessment, compliance gap analysis and implementation of change across functions such as technology, governance, client management and internal controls.
Share this page
 |
© 2012 Deloitte LLP. All rights reserved. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.
Please see About Deloitte for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its Member Firms. View our accessibility statement.