ESMA consultation on AIFMD remuneration guidelines
Published July 2012
The European Securities and Markets Authority (ESMA) published on 28 June 2012 a consultation paper on the proposed ‘Guidelines on sound remuneration policies under the Alternative Investment Fund Managers Directive’ (AIFMD).
The draft guidelines set out how AIFMs will be required to implement remuneration policies to comply with the remuneration provisions of AIFMD, which has to be implemented into the national law of EU member states by 22 July 2013.
The guidelines include sections on proportionality, governance, general requirements and specific requirements of risk alignment. Overall, the proposed guidelines are likely to present a marked change for many AIFMs, even once the principle of proportionality is applied. Accordingly, firms should carefully consider the implications of these requirements.
Policies will need to be reviewed and changes made as appropriate to meet the general requirements. Significant changes may be required in the way AIFMs remunerate ‘Identified Staff’, with increasing emphasis on deferral into appropriate instruments and the introduction of retention periods. Consideration will need to be given both to meeting these requirements and managing the commercial impact for AIFs and individuals as well as the tax position. Each EU regulatory body will produce its own rules consistent with the final ESMA guidelines. ESMA has invited comments on the proposed remuneration guidelines by 27 September 2012.