The Alternative Investment Fund Managers Directive (AIFMD) has been transposed into UK law with effect from 22 July 2013. An Alternative Investment Fund (AIF) is any collective investment undertaking that raises capital from a number of investors and makes investments in accordance with a defined investment policy (excluding retail funds that are regulated by the UCITS Directive). The AIFM imposes a number of new obligations and restrictions on those who either manage an EU AIF or market a non-EU AIF within the EU.
The AIFMD states that joint ventures are excluded from its scope – but it contains no definition of joint venture. Guidance from the regulator indicates that:
- a JV is generally an arrangement in which investors raise capital for their joint investment, rather than where capital is raised and invested by a third party on their behalf.
- the active involvement of all investors in day-to-day management and control of a commercial arrangement can indicate that it is a JV.
- day-to-day management and control would most obviously be evidenced in the case of a JV company if each party appointed a board director.
- in circumstances where limited partnership structures are used to facilitate a JV, they may fall outside the scope of AIFMD. The exclusion will not apply to the common fund structure in which passive investors in a limited partnership have their assets managed by a general partner and/or manager.
The above points are relevant regardless of the underlying asset class (or classes) of the JV.
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This article does not consider the ramifications of complying with the AIFMD, or the AIFMD more generally. For further information on these topics, please click here.