The ALTERNATIVE INVESTMENT FUND Managers Directive (aifmd) continued its progress towards becoming law after separate versions were adopted by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) on 17 May 2010, and by the Council of the EU’s Economic and Financial Affairs Council (ECOFIN) the following day.
The AIFMD increases the regulation of managers of alternative investment funds (AIF), the definition of which will include all non-Undertakings for Collective Investment in Transferable Securities funds, not just hedge funds and private equity funds.1 These proposals, once implemented, will affect AIF managers (AIFMs) and their service providers, and will include new conduct of business and disclosure requirements, as well as higher capital adequacy requirements, and will introduce formal remuneration policies.
Since the publication of the initial draft of the AIFMD by the European Commission on 29 April 2009, there have been several ‘compromise texts’ published by Sweden, Spain and Belgium as part of their respective Presidencies of the Council of the EU. The compromise text provides the basis for the ECOFIN position.
The European Parliament appointed rapporteur Jean-Paul Gauzès to prepare its own version of the AIFMD. Gauzès published his report in November 2009 and 1,669 amendments were tabled for consideration by ECON, which resulted in the draft adopted by ECON.
The ECON and ECOFIN drafts are now being discussed in ‘trialogues’, which are three-way discussions between the European Commission, ECOFIN and ECON, to agree a final text. A reconciled version of the AIFMD was expected to have been adopted by the European Parliament in July 2010, but, at the time of writing, was likely to be enacted in November.
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Certain aspects of the AIFMD are now broadly settled, such as increased capital adequacy, disclosure and marketing requirements for EU-based AIFs. However, other aspects are still in contention. The key differences between the ECOFIN and ECON drafts are highlighted in the table on p10.
Once the AIFMD is adopted by the European Parliament, there will be a 24-month period during which the Commission, advised by the Committee of European Securities Regulators, will draft and release detailed implementing measures that each member state will need to comply with.
By Sean Donovan-Smith, solicitor, and Anna Styles, solicitor, Speechly Bircham LLP.