On 29 April, HM Treasury published its Questions and Answers on the transposition of the Alternative Investment Fund Managers Directive (AIFMD). This suggested a number of provisions to the UK implementation of the AIFMD, which have been incorporated into the amended draft Alternative Investment Fund Managers Regulations 2013, (“AIFM Regs”) published in May.
There will be a 1 year transitional period (“TP”) for existing AIFM managers prior to 22nd July 2013. Those making use of the TP for the purposes of managing AIFs in the UK will not be subject to the need to use best efforts to comply with the AIFMD requirement and will only need to comply with the full requirements of the AIFMD once authorisation/permission to manage AIFs has been granted by the Financial Conduct Authority (“FCA”).
In addition, under regulation 73 of the AIFM Regs, if a third country AIFM markets an AIF in an EEA State immediately before 22nd July 2013, it will not need to comply with implementing provisions other than those imposed by the AIFM Regs until the 22nd July 2014 or before this date if the AIFM notifies the FCA.
Consequently, third country managers will not need to comply with the reporting, disclosure and transparency requirements or the need for a co-operation agreement to be in place in the UK to market to UK investors (the AIFMD minimal requirements) until 22nd July 2014. They will only need to comply with the UK private placement regime to market AIFs until July 2014.
Regulatory partner, Jacqui Hatfield’s comments are below:
The need to use best efforts to comply with the AIFMD requirement during the transitional period is unhelpful as it lacks clarity and provides uncertainty to the industry. The UK have thankfully clarified that this will not be applicable in the UK. It would be useful if all member states followed this lead.
The extension of the 1 year TP to third country managers will be a relief to third country managers wanting to actively market into the UK from the trigger date, who as a result of the requirement to have a co-operation agreement in place with each member state regulator in the member state they want to market, were looking potentially at not being able to do so from this date.
This is currently only a UK transitional provision. If other jurisdictions do not follow, third country managers will need to comply with the AIFMD minimal requirements in relation to marketing to other EU jurisdictions from 22nd July 2013.
The extension of the scope of the UK’s transitional arrangements should come as no surprise, as co-operation agreements need to be in place with the Financial Conduct Authority and the supervisory authorities of each third country manager, and at present, as far as I am aware, none have been agreed.
Other member states are likely to follow the UK’s lead. The UK has potentially a year’s competitive advantage if they do not, although this would require active marketing to be restricted to the UK only in Europe. Whilst this may appear unlikely, the need to disclose remuneration as part of the AIFMD minimal requirements may lead to third country managers restricting their marketing in this way.
Other helpful news is that it is looking increasingly unlikely that Germany will amend their PPR to require full compliance with the AIFMD. Apparently internal politics are getting in the way of the proposed amendment to the PPR. Therefore registration with BaFIN and compliance with the existing German PPR should be sufficient.
If Germany fails to amend its PPR, I assume the Netherlands will not do so either.