December 2016

On November 16th 2016 and one month later, on December 16th 2016, the European Securities and Markets Authority (“ESMA”) issued updated versions of its Q&A on the application of AIFMD (the “Q&A”).

Additional sub-questions have been issued under the sections relating to “Notifications of AIFs”, “Reporting to national competent authorities under Articles 3, 24 and 42” and “Delegation”

In relation the notifications of AIFs the Q&A clarifies that if an AIFM wishes to notify the national competent authorities of the relevant Member State of a material change to a notification made on a cross-border basis pursuant to Articles 32(7) or 33(6) of AIFMD such AIFM is required to hand in the full set of documentation required by Articles 32 or 33 with the revised notification letter and highlight any amendment to both the original notification letter and to the accompanying documentation. However ESMA has expressly excluded the creation of a new share class as falling under the scope of what is considered as being a “material change”.

On the reporting to national competent authorities under Articles 3, 24 and 42 an additional question has been added to clarify the case where a non-EU AIFM reports information to the national competent authorities of a Member State under Article 42 of the AIFMD. In such case the Q&A makes it clear that only the AIFs marketed in that Member State have to be taken into account for the purpose of the reporting. However, when Member States apply ESMA’s opinion of October 1st 2013 for the effective monitoring of systemic risk under Article 24(5), first sub-paragraph, of the AIFMD, AIFMs are also requested to report information on non-EU master AIFs not marketed in the EU that have either EU feeder AIFs or non-EU feeder AIFs marketed in the Union under Article 42. Non-EU AIFMs should apply the same principle if the master AIF is established in the Union and not marketed in the Union (i.e. they should report information on the EU master AIF not marketed in the Union).

In relation to situations where the AIFM does not itself perform the functions set out in Annex I of the AIFMD, and that a third party performs one of them, the Q&A clarifies that the relevant function should be considered as having been delegated by the AIFM to such third party and therefore, the AIFM should be responsible for ensuring compliance with the requirements on delegation set forth by the AIFMD and with the AIFMD itself. The Q&A clearly states that the above provisions apply to all functions stated in point 1 and point 2 of Annex I of the AIFMD. This includes the administration function.

Finally, in relation to delegation of functions, the Q&A clarifies the scope of Article 5(1)(a) of AIFMD and indicates that AIFMs managing externally-managed AIFs may not delegate the performance of the portfolio management or risk management to their governing body or any other internal resource of the externally-managed AIF. Internally managed AIFs may do so. The Q&A explains that if the external AIFM may delegate to third parties the task of carrying out functions on its behalf in accordance with Article 20 of the AIFMD the externally-managed AIF does not, however, qualify as a “third party” in accordance with Article 20(1) of the AIFMD.

The updated Q&A is available at: