Newsflash Capital Markets, 2012, issue 1
On 19 April 2012, a bill realising the implementation of the Alternative Investment Fund Managers Directive (2011/61/EU, “AIFMD”) into Dutch legislation was presented for approval to the Second Chamber of the Dutch Parliament. The AIFMD entered into force on 21 July 2011 and must be implemented by EU member states before 22 July 2013.
The AIFMD introduces rules with regard to the licence requirement, business activities and transparency for alternative investment fund managers. The implementation of the AIFMD brings significant changes to the Financial Supervision Act (Wet op het financieel toezicht, the “FSA”). The changes will effect all investment institutions other than those who fall under the scope of the directive which applies to undertakings for collective investment in transferable securities (2009/65/EC, “UCITS IV”). This includes not only managers of private equity funds and hedge funds, but all managers of investment institutions, such as real estate funds, non-retail funds and debt funds. Under the AIFMD these investment institutions fall within the definition of an alternative investment fund. Among the most important changes are the following:
The AIFMD prescribes a licence requirement for alternative investment fund managers who are (i) established in the EU, (ii) established outside the EU and manage alternative investment funds established within the EU or (iii) established outside the EU and offer participations within the EU.
There are certain exemptions from the license requirement. The AIFMD does not apply to holding companies, pension funds, joint ventures and employee participations or savings schemes. Furthermore, the directive does not apply to alternative investment fund managers whose only investors are their group companies. The AIFMD prescribes a lighter regime for managers (i) managing a portfolio that does not exceed a threshold of EUR 100 million or (ii) managing only unleveraged alternative investment funds without redemption rights during a period of 5 years with a cumulative value fall below a threshold of EUR 500 million. The lighter regime also applies to managers offering to non-professional investors (retail funds). Except for the conditions mentioned above, additional conditions apply: the offer must be done to less than 150 people or with a value of more than € 100,000 per investor. These additional conditions are derived from the current applicable exemptions.
Alternative investment fund managers are obliged to appoint a depositary for each separate alternative investment fund that they manage. The AIFMD provides for the following possibilities to appoint a depositary: (i) a credit institution, (ii) an investment firm or (iii) an institution subject to prudential regulation and permanent supervision and is considered to be an eligible depositary under UCITS IV.
The AIFMD introduces a European Passport System. If an alternative investment fund manager has a licence issued pursuant to the AIFMD, no licence from a member state is required if (i) the manager offers participations to professional investors (professionele beleggers) in that other member state or (ii) if the manager is in charge of the management of alternative investment funds in that other member state. The AIFMD defines ‘professional investors’ in accordance with the Markets in Financial Instruments Directive (“MiFID”). The AIFMD also introduces a Passport System for managers and funds established or managed in a third country (non-EU country). This Passport System is part of the third country policy of the AIFMD and will be introduced in 2015, two years after the effective date of the AIFMD. However, national regulations will maintain applicable at least until 2018.
The AIFMD contains several transitional provisions. An alternative investment fund manager who immediately prior to the effective date of the Dutch legislation manages alternative investment funds is exempt from the licence requirement provided by the AIFMD until 21 July 2014. However, the AIFMD requires that after the effective date of the Dutch legislation a manager is obliged to make an effort to comply with the new rules in the phase before he has a license. Furthermore, if a manager manages a closed-end investment fund before 22 July 2013 he is permitted to continue the management thereof after 22 July 2013 without a licence in the event no new investments are made after that date.