The Act of 19 April 2014 on alternative investment funds and their managers (the “AIFM Act”) was published in the Belgian Official Journal on the 17th of June 2014.
The complete text of the AIFM Act can be found here.
The AIFM Act implements the Alternative Investment Funds Managers Directive (Directive 2011/61/EU, the “AIFMD”).
The AIFM Act introduces a new regulatory framework for alternative investment fund managers (“AIFM”) governed by either Belgian law or the laws of an EEA or non-EEA Member State that are managing alternative investment funds (“AIF”) governed by Belgian law or marketing EEA or non-EEA AIFs in Belgium. An AIF is 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 for the benefit of those investors and which does not require authorisation pursuant to the UCITS Directive 2009/65/EC.
Certain types of funds are excluded from the AIFM Act’s scope of application. These include UCITS, holding companies, institutions for occupational retirement provision, securitisation special purpose entities, supranational institutions, national central banks, social security vehicles, employee participation schemes or employee savings schemes, family-office vehicles, joint ventures, and insurance contracts.
In parallel, a particular set-up for Belgian real estate investment trusts (REITs) is being created. Closed-end real estate investment funds (sicafis/vastgoedbevaks), as currently regulated by the Act of 3 August 2012 on certain forms of collective management of investment portfolios (the “Collective Investment Act”), will become subject to the AIFM Act. As an alternative, a separate new Act on regulated real estate companies, which is expected to be published in the Belgian Official Journal soon, introduces a new category of regulated real estate company that will not fall under the scope of the AIFM Act. Existing closed-end real estate investment funds (sicafis/vastgoedbevaks) will have the option to convert into such a regulated real estate company within four months after the new Act on regulated real estate companies enters into force, as a result of which they will avoid coming within the scope of the AIFM Act.
The AIFM Act also amends substantially the Collective Investment Act so that this legislation will going forward only govern (i) those investment undertakings that qualify as undertakings for collective investment in transferable securities under the UCITS Directive 2009/65/EC and, (ii) as a separate category of investment vehicle, the undertakings for investment in receivables (i.e., Belgian dedicated securitisation vehicles).
The AIFM Act lays down a broad set of rules regarding, inter alia, authorisation, operating conditions (for example, rules on remuneration, conflicts of interest, risk management, liquidity management, valuation, delegation, depositary, …), transparency requirements for AIFMs (annual report, disclosure to investors, and reporting obligation to competent authorities), and special obligations for AIFMs managing specific types of AIFs, such as leveraged AIFs or AIFs which acquire control of non-listed companies and issuers (notification, disclosure, annual report, asset stripping). Furthermore, the AIFM Act introduces a passport mechanism for management and/or marketing for EEA AIFMs managing or marketing EEA AIFs.
However, the AIFM Act provides for a “light regime” whereby certain smaller AIFMs (amongst which are most Belgian private equity fund managers) will not have to comply with the abovementioned requirements under the AIFM Act unless they choose to opt in. AIFMs able to benefit from the light regime are merely subject to registration with the FSMA. The light regime applies to the following types of AIFMs:
- AIFMs who manage portfolios of AIFs whose assets under management in total, including any assets acquired through use of leverage, do not exceed a threshold of EUR 100 million; or
- AIFMs who manage portfolios of AIFs whose assets under management in total do not exceed a threshold of EUR 500 million when the portfolios consist of AIFs that are unleveraged and have no redemption rights that are exercisable during a period of 5 years from the date of initial investment in each AIF.
Furthermore, the AIFM Act implements partially the provisions of:
- Directive 2013/14/EU containing measures aiming to reduce over-reliance on credit ratings
- Directive 2011/89/EU regarding the supplementary supervision of financial entities in a financial conglomerate
- Regulation (EU) No. 345/2013 on European venture capital funds and Regulation (EU) No. 345/2013 on European social entrepreneurship funds
- Directive 2010/78/EU regarding the powers of the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority.
The new AIFM Act is accompanied by theAct complementing the AIFM Act, in respect of recourse against decisions of the supervisory authority. This Act was also published in the Belgian Official Journal today (17 June 2014) and will enter into force on 27 June 2014. The text of this Act can be found here)
Entry into force
The principal provisions of the AIFM Act enter into force on 27 June 2014.