On 24 May 2013, the European Securities and Markets Authority (“ESMA”) issued a final report entitled “Guidelines on Key Concepts of the Alternative Investment Fund Managers Directive (AIFMD)” (the “Report”).

The publication of the Report follows the publication of a discussion paper in February 2012 on key concepts of the AIFMD and types of Alternative Investment Fund Managers (“AIFM”) which was then followed by the publication of a consultation paper (the “CP”) issued in December 2012 seeking the opinion of stakeholders on guidelines on the key concepts of the AIFMD (the “Guidelines”). The Guidelines were produced so that a common, uniform and consistent application of the concept of an Alternative Investment Fund (“AIF”) could be determined.

The CP consisted of 14 questions focusing on the key concepts extracted from the definition of an AIF. Section II of the Report provides details of the 37 responses received from stakeholders to the questions and also highlights the views of ESMA following its consideration of the responses.

The Report sets out the final text of the guidelines and these are contained in Annex III (the “Final Guidelines”).

The Final Guidelines are aimed at AIFMs and competent authorities alike. The purpose of the Report is to ensure a common, uniform and consistent application of the concept of the AIF defined in Article 4(1)(a) of the AIFMD.

An entity will not be considered an AIF unless all the elements contained in the Article 4(1)(a) are satisfied. Article 4(1)(a) states:

‘AIFs’ means collective investment undertakings, including investment compartments thereof, which:

(i) raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and

(ii) do not require authorisation pursuant to Article 5 of Directive 2009/65/EC (the UCITS IV Directive)

However, the Report also states that the absence of any of the characteristics, e.g. “collective investment undertaking”, does not conclusively demonstrate that an undertaking does not fall into this category. Rather, an undertaking should be considered an AIF if the presence of these concepts can otherwise be established.

In this regard, the Final Guidelines detail the characteristics that would lead an undertaking to be considered an AIF. This does not alter the AIFMD provisions.

The key sections of the Final Guidelines are as follows:

  • Compliance and reporting obligations;
  • Guidelines on the treatment of investment compartments of an undertaking;
  • Guidelines on ‘collective investment undertaking’;
  • Guidelines on ‘raising capital’;
  • Guidelines on ‘number of investors’; and
  • Guidelines on ‘defined investment policy’

Upon translation of the Final Guidelines into the official languages of the European Union, the final text will be published on ESMA’s website and the Final Guidelines will apply from two months after their publication.

For a link to the Report, please click here