The Alternative Investment Fund Managers Directive (the AIFMD) came into force on 21 July 2011 and must be transposed into national law of EU Member States by 22 July 2013.

Co-operation agreements are necessary under the AIFMD for non-EU alternative investment funds (AIFs) to be marketed in the EU. Marketing of non-EU AIFs can only occur where there is a co-operation agreement in place between the EU country where the AIF is to be marketed and the competent authority of the non-EU country where the Alternative Investment Fund Manager (AIFM) is based.

The co-operation agreements will permit non-EU AIFs to continue to be marketed under existing private placement regimes and also specify what requirements the AIFMs will need to comply with in the relevant country.

ESMA (European Securities and Markets Authority) recently negotiated co-operation agreements with the competent authorities of 34 jurisdictions outside of the European Union on behalf of the 27 EU securities regulators and those of Iceland, Norway, Liechtenstein and Croatia. This is good news for non-EU AIFs whose continued marketing in the EU after the implementation of the AIFMD in July 2013 is dependent upon these agreements.

The jurisdictions that have negotiated co-operation agreements with ESMA include, among others: Cayman Islands, Australia, United States, China, Brazil, Isle of Man, British Virgin Islands, Switzerland, Jersey, Guernsey and Hong Kong.

The co-operation agreements must be bilaterally signed by each EU member state and each third country to allow the non-EU AIFs to be marketed in the EU after 22 July 2013. The co-operation agreements provide some level of certainty for third country AIFMs who now know that they can continue to use each relevant EU member state’s private placement regime until at least 2015. However it is important to note that each EU member state can either refuse to sign the co-operation agreement or seek to add additional requirements to their co-operation agreement.

Each co-operation agreement will be a memorandum of understanding (MoU) between the EU member state and the third country. The MoU will apply conditions to EU AIFMs wishing to market their funds in the third countries. Co-operation agreements will assist in enforcing the supervisory laws of each country and allow for a mutual exchange of information.

ESMA has indicated that negotiations with other jurisdictions are on-going and that the full MoUs will be published shortly.