Guidelines on Key Concepts of AIFMD

ESMA published a report setting out its final guidelines on key concepts of the Alternative Investment Fund Managers Directive (AIFMD) on 24 May 2013.

The purpose of the guidelines is to ensure a harmonised approach by competent authorities in determining whether or not an entity is to be considered an alternative investment fund (AIF) under the definition set out in AIFMD.  AIFMD has a wide ambit which covers most collective investment vehicles that are not UCITS and so the definition of AIF is vital. AIFMD describes an AIF as a “collective investment undertaking”, which “raises capital” from a “number of investors”, with a view to investing it in accordance with a “defined investment policy”. The guidelines illustrate and explain in more detail the characteristics likely to lead to an undertaking being considered an AIF, but are not intended to alter the provisions of AIFMD. All elements of the definition must be met for an investment vehicle to be considered an AIF. Notably, an umbrella vehicle will also constitute an AIF if one of its sub-funds meets all the criteria of an AIF.

It is worth noting that having a single investor in a fund is not necessarily sufficient to bring that fund outside the definition of an AIF. The guidelines confirm that there must also be a legally enforceable restriction to raise capital solely from a single investor. Therefore, an AIF which has, in fact, a single investor, but does not have such a legal restriction, would be regarded as having a “number of investors”.The guidelines will apply two months after their publication in all the EU official languages on the ESMA website.

Consultation Paper on Guidelines on Reporting Obligations

AIFMD imposes reporting obligations on an alternative investment fund manager (AIFM) requiring the submission of specified information to the relevant national competent authority (NCA). These obligations will apply to non-EU fund managers that manage or market AIFs in the EU and to EU fund managers that manage or market AIFs in third countries. ESMA has published a consultation paper incorporating draft guidelines on those reporting obligations.

The purpose of the guidelines is to ensure common, uniform and consistent application of the reporting obligations by providing clarification on the information that AIFMs must report to NCAs, the timing of such reporting and the procedures to be followed when AIFMs move from one reporting obligation to another. ESMA has also suggested that the format of information sent to the NCAs by AIFMs be standardised to further facilitate exchange of information between NCAs. Examples of the information to be provided by an AIFM include:

  • The specific types of AIF under management (including master and feeder AIFs)
  • The geographic focus, trading instrument and risk profile of each AIF
  • The value of turnover in each asset class over the reporting period

The draft guidelines propose that all existing AIFMs as of 23 July 2013 and any AIFMs authorised or registered after this date should report for the first time by January 2014 (or 15 February 2015 for funds of funds). The first round of reporting should cover the period from 23 July 2013 to 31 December 2013.

The consultation process will close on 1 July 2013.