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ESMA guidelines finalised on key concepts of AIFMD - 08/07/2013


The European Securities and Market Authority (ESMA) published its final guidelines on the Alternative Investment Fund managers Directive (AIFMD) on 24 May 2013. These guidelines follow a consultation paper released in December 2012. The final guidelines have reaffirmed much of the proposed guidelines provided in the consultation paper with some additional clarifications.

Purpose of Guidelines

As per Article 4(1)(a) of the AIFMD,  An AIF is “collective investment undertaking”, other than UCITS, which “raises capital” from a “number of investors” with a view to investing it in accordance with a “defined investment policy” for the benefit of those investors.

The publication sets out formal guidelines and recommendations ensuring common, uniform and consistent application of the concepts underlying this definition throughout Europe by providing clarification on each of these concepts :

  • "collective investment undertaking"
  • "raising capital"
  • "number of investors"
  • "defined investment policy"

Also in its final guidelines, ESMA removed the notion of “commercial communication” and replaced it with commercial activity. It removed previous exemptions in respect to members of the governing body and those involved in managing the vehicle. The only exemption remaining concerns the “pre-existing group” of family office.

Definitions to clarify ESMA Guidelines

  • "General commercial or industrial purpose" -  the purpose of pursuing a business strategy which includes characteristics such as running predominantly :
    • a commercial activity, involving the purchase, sale, and/or exchange of goods or commodities and/or the supply of non-financial services, or
    • an industrial activity, involving the production of goods or construction of properties, or
    • a combination thereof.
  • "Pooled Return" - the return generated by the pooled risk arising from acquiring, holding or selling investment assets – including the activities to optimise or increase the value of these assets – irrespective of whether different returns to investors, such as under a tailored dividend policy, are generated.
  • "day-to-day discretion or control" - a form of direct and on-going power of decision – whether exercised or not – over operational matters relating to the daily management of the undertakings’ assets and which extends substantially further than the ordinary exercise of decision or control through voting at shareholder meetings on matters such as mergers or liquidation, the election of shareholder representatives, the appointment of directors or auditors or the approval of annual accounts.
  • "pre-existing group" - a group of family members, irrespective of the type of legal structure that may be put in place by them to invest in an undertaking and provided that the sole ultimate beneficiaries of such legal structure are family members, where the existence of the group pre-dates the establishment of the undertaking. This shall not prevent family members’ joining the group after the undertaking has been established.  
    For the purpose of this definition, ‘family members’ means the spouse of an individual, the person who is living with an individual in a committed intimate relationship, in a joint household and on a stable and continuous basis, the relatives in direct line, the siblings, uncles, aunts, first cousins and the dependants of an individual.

ESMA Guidelines on the four key criteria of the definition of an AIF

Guidelines on “collective investment undertaking”

The following characteristics, if all of them are exhibited by an undertaking, should show that the undertaking is a collective investment undertaking mentioned in Article 4(1)(a) of the AIFMD. The characteristics are that:

  • the undertaking does not have a general commercial or industrial purpose;
  • the undertaking pools together capital raised from its investors for the purpose of investment with a view to generating a pooled return for those investors; and
  • the unit-holders or shareholders of the undertaking – as a collective group – have no day-today discretion or control. The fact that one or more but not all of the aforementioned unit holders or shareholders are granted day-to-day discretion or control should not be taken to show that the undertaking is not a collective investment undertaking.

Guidelines on “raising capital”

The commercial activity of taking direct or indirect steps by an undertaking or a person or entity acting on its behalf (typically, the AIFM) to procure the transfer or commitment of capital by one or more investors to the undertaking for the purpose of investing it in accordance with a defined investment policy should amount to the activity of raising capital mentioned in Article 4(1)(a)(i) of the AIFMD.

For the purpose of the above, it is immaterial whether:

  • the activity takes place only once, on several occasions or on an on-going basis;
  • the transfer or commitment of capital takes the form of subscriptions in cash or in kind.

When capital is invested in an undertaking by a member of a pre-existing group, for the investment of whose private wealth the undertaking has been exclusively established, this is not likely to be within the scope of raising capital.

Guidelines on “number of investors”

An undertaking which is not prevented by its national law, the rules or instruments of incorporation, or any other provision or arrangement of binding legal effect, from raising capital from more than one investor should be regarded as an undertaking which raises capital from a number of investors in accordance with Article 4(1)(a)(i) of the AIFMD. This should be the case even if it has in fact only one investor.

An undertaking which is prevented by its national law, the rules or instruments of incorporation, or any other provision or arrangement of binding legal effect, from raising capital from more than one investor should be regarded as an undertaking which raises capital from a number of investors in accordance with Article 4(1)(a)(i) of the AIFMD if the sole investor:

  • invests capital which it has raised from more than one legal or natural person with a view to investing it for the benefit of those persons; and
  • consists of an arrangement or structure which in total has more than one investor for the purposes of the AIFMD.

Examples of arrangements or structures as mentioned above include master/feeder structures where a single feeder fund invests in a master undertaking, fund of funds structures where the fund of funds is the sole investor in the underlying undertaking, and arrangements where the sole investor is a nominee acting as agent for more than one investor and aggregating their interests for administrative purposes.

Guidelines on “defined investment policy”

An undertaking which has a policy about how the pooled capital in the undertaking is to be managed to generate a pooled return for the investors from whom it has been raised should be considered to have a defined investment policy in accordance with AIFMD. The factors that would, singly or cumulatively, tend to indicate the existence of such a policy are the following:

  • the investment policy is determined and fixed, at the latest by the time that investors’ commitments to the undertaking become binding on them;
  • the investment policy is set out in a document which becomes part of or is referenced in the rules or instruments of incorporation of the undertaking;
  • the undertaking or the legal person managing the undertaking has an obligation to investors, which is legally enforceable by them, to follow the investment policy, including all changes to it;
  • the investment policy specifies investment guidelines, with reference to criteria including any or all of the following:
    • to invest in certain categories of assets, or conform to restrictions on asset allocation;
    • to pursue certain strategies;
    • to invest in particular geographical regions;
    • to conform to restrictions on leverage;
    • to conform to minimum holding periods; or
    • to conform to other restrictions designed to provide risk diversification.

Any guidelines given for the management of an undertaking that determine investment criteria other than those set out in the business strategy followed by an undertaking having a general commercial or industrial purpose should be regarded as ‘investment guidelines’.

You may find the relevant ESMA Guidelines publication on the following link:

We trust this information is of assistance and remain at your disposal for any further questions.

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Benjamin Collette
Deloitte Luxembourg
Job Title:
Partner - EMEA AIFMD Leader
+352 451 452 809
Nick Tabone
Deloitte Luxembourg
Job Title:
Partner - Audit
+352 451 452 264



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