HM Treasury has published a draft version of the Alternative Investment Fund Managers (Amendment) (EU Exit) Regulations and an accompanying explanatory note. The statutory instrument (SI) will make amendments to retained EU law related to the Alternative Investment Fund Managers Directive (AIFMD) for investment funds and their managers to ensure it continues to operate effectively after Brexit. The SI:
- amends the definition of an AIF (regulation 3(5)(a)) so that all non-UK funds, including EEA UCITS, will be defined as AIFs;
- disapplies the national private placement regime (NPPR) information and reporting requirements for funds that are recognised under section 272 of the Financial Services and Markets Act 2000 (FSMA) for marketing to retail investors (Regulation 10(9)(e));
- sets out the design and structure of the temporary passporting regime for AIFs and AIFMs (including EuVECAs, EuSEFs, ELTIFs and MMFs which use an AIF structure) (Regulation 14);
- amends regulation 14 relating to EEA AIFMs marketing third country AIFs. This draft SI aligns the treatment of EEA AIFMs with that of other third country AIFs by requiring them to notify under regulation 59 of the AIFM Regulations (which implemented Article 42 of AIFMD). The SI will enable the EEA AIFM to enter the temporary permissions regime, and market the relevant fund on the same terms and subject to the same conditions as it could have been before exit day, before notifying and becoming recognised under regulation 59;
- requires new EEA AIFs marketed in the UK after exit day to notify the FCA under the NPPR, as is required for the marketing of third country AIFs;
- removes the requirement for a UK AIFM to report and make disclosures when it acquires control of an EU company. A UK AIFM will only need to report when it acquires control of a UK company; and
- removes provisions in the legislation requiring cooperation and information sharing between UK supervisors and EU authorities.
The FCA will make relevant rulebook and binding technical standards changes to reflect the amendments introduced through this SI. The FCA intends to consult on these changes in the autumn of 2018. HM Treasury will lay this instrument before Parliament in the autumn of 2018.