A Practical Guide to the AIFMD (Speechly Bircham)

July 2013

KEYWORDS: AIFMD, EU Marketing Passport, marketing, European Union, UCITS, MiFID, hedge fund registration, valuation, capital requirements, execution, conflict of interest, risk management, leverage, net asset value, Liquidity, transparency, Hedge Fund Regulation, regulatory requirements, remuneration

Authors:

Speechly Bircham

Organizations:
  • Speechly Bircham

Summary:
The philosophy behind the EU Directive on Alternative Investment Fund Managers (the AIFMD) is to create a level playing field for alternative investment fund managers (AIFMs), reduce systemic risk and enhance investor protection. The AIFMD, which must be implemented by EU member states by 22 July 2013, seeks to achieve this by requiring AIFMs operating in the European Union to meet specific organisational and operating requirements, with the prospect of an EU passport as the main benefit arising from meeting these requirements.
Whether these overarching goals will be achieved will only become apparent as time passes, but it is clear that many AIFMs will find themselves in a new environment with greater regulation of their activities and the alternative investment funds (AIFs) which they manage. The legislation has extra-territorial impact as even AIFMs established and managing AIFs outside the EU are obliged to implement certain requirements if they wish to market those AIFs inside the EU.
As such, all AIFMs or prospective AIFMs will need to carry out a careful analysis of their current arrangements and also consider how those arrangements might be altered to best fit within the strictures of the AIFMD. With this in mind, the key points to consider for managers are (i) whether they and their funds are within scope; and (ii) the organisational and operational implications if they are. Within these broad categories we outline a number of specific requirements, including the appointment of depositary, leverage and transparency. This guide aims to provide a framework for these considerations, but ultimately each set of arrangements will need its own bespoke analysis.
To assist with this process, we can help our clients with understanding not only the implications of the AIFMD for their business, but also some of the opportunities it presents to ensure they experience a smooth transition into the post-implementation world

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