ESMA Approves Cooperation Agreements

Under the European Union's Alternative Investment Fund Managers Directive ("AIFMD" or the “Directive"), non-EU managers will be prohibited from marketing interests in non-EU alternative investment funds to investors in Europe after July 22, 2013 unless "cooperation arrangements" are in place between the competent authorities of each EU member state in which the funds are marketed and the supervisory authorities of the third country or countries in which the non-EU fund managers and their funds are established.

On May 22, 2013, the European Securities and Markets Authority (“ESMA”) approved cooperation agreements on behalf of all 27 EU member state securities regulators as well as the securities authorities in Croatia, Iceland, Liechtenstein and Norway. The non-EU counterparts to the cooperation agreements include the securities regulators in the United States and a number of key jurisdictions in which alternative investment funds are commonly established, including Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man and Jersey.

The cooperation agreements authorize EU and non-EU regulators to supervise alternative investment fund managers that operate on a cross-border basis both within and outside the EU. National regulators will also share information, conduct on-site inspections and assist one another in investigations and enforcement proceedings.

The deadline for transposition of the Directive into national law by EU member states is July 22, 2013. While non-EU fund managers may initially continue to rely on the private placement regimes in the individual EU member states in which they market fund interests, fund managers will become subject to significant additional investor disclosure, regulatory reporting and other requirements under the Directive. These new requirements are highlighted in Baker & McKenzie’s March 2013 alert “EU Alternative Investment Fund Managers Directive - Impact on Non-EU Fund Managers.”