Further to a consultation paper issued by the European Securities and Markets Authority (“ESMA”) in December 2012, ESMA has published its final report on the draft regulatory technical standards on the types of alternative investment fund managers (“AIFMs”) (the “Final Report”).
Pursuant to the provisions of the alternative investment fund managers directive (the “AIFMD”), ESMA is required to draft regulatory technical standards (“RTS”) for the purposes of determining the different types of AIFMs.
One method of determining the type of AIFM is through the categorisation of the alternative investment fund (“AIF”) it manages as either an open-ended or closed-ended AIF. An AIF will be deemed to be open-ended if, in accordance with the RTS:
- there is a right to redeem at least once a year; and
- the redemption price does not vary significantly from the net asset value per unit/share of the AIF available at the time when the price is determined in accordance with the rules or instrument of incorporation of the AIF.
The RTS also outline that no weight will be given to any holding periods outlined in the constitutional documents or the prospectus of the AIF when determining whether an AIF is open-ended or not. In addition, any powers to exercise the use of side-pockets, gates or other special arrangements will not be considered when making a determination on the categorisation of the AIF.
It can be noted that the categorisation of an AIF as either open-ended or closed-ended has been provided for in the RTS solely for the purposes of determining the application of the provisions of the AIFMD.
The RTS will now be submitted to the European Commission (the “Commission”) for endorsement. The Commission will have 3 months from the date of receipt of the RTS to determine whether or not to endorse them. The European Parliament and the Council will then be asked to consider them.