The long awaited Alternative Investment Fund Managers Directive (AIFMD) Level 2 Regulation (AIFMD Regulation) issued on 19 December 2012. The AIFMD must be implemented in the EU by 22 July 2013 and aims to create a comprehensive and effective regulatory and supervisory environment for alternative investment fund managers (AIFM) in Europe. The Regulation, when it enters into force, will be directly applicable and will not require any transposition into Member State law. It will supplement elements of the AIFMD. The rules deal with the:

  • conditions and procedure for the determination and authorisation of AIFMs, including the capital requirements applicable to AIFMs;
  • operating conditions for AIFMs, including rules on remuneration, conflicts of interest, risk management, liquidity management, investment in securitisation positions, organisational requirements, rules on valuation;
  • conditions for delegation;
  • rules on depositaries, including the depositary's tasks and liability;
  • reporting requirements and leverage calculation;
  • rules for cooperation arrangements.  

The Regulation is subject to a three-month scrutiny period by the European Parliament and the Council and will enter into force, provided that neither co-legislator objects, at the end of this period and the day following publication in the Official Journal. As reported previously in the Front Page, the text of the Resolution has been subject to intense lobbying, particularly because the initial draft differed from the ESMA advice which issued following extensive consultations. The most significant differences related to issues concerning third countries, depositaries, delegation, risk management, leverage and professional indemnity insurance. The Regulation is an improvement on earlier versions that we had seen, particularly in the area of delegation, which is good news. Similarly, depositories will be happier with the final text on the possible discharge of liability.