The Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the EU (OJEU) on 1 July 2011 and entered into force on 21 July 2011. The transposition deadline was 22 July 2013 with a transitional period, up to 22 July 2014.
Provisions amending AIFMD which set out a uniform definition and conditions for "pre-marketing" of alternative investment funds were published in the OJEU on 12 July 2019. The transposition deadline is 2 August 2021.
Level 2 delegated legislation fleshing out the details was largely published in 2013 and 2014. See Key documents.
On 9 June the European Commission consulted on several delegated regulations to integrate sustainability risks and factors into sectoral legislation.
Following the financial crisis that began in 2008, the EU set out to create an effective regulatory system for alternative investment funds (AIFs) – ie non-UCITS investment funds. The European Commission (EC) stated that alternative investment fund managers (AIFMs) had become "very significant actors in the European financial system, managing a large quantity of assets on behalf of pension funds and other investors; accounting for a significant proportion of trading activity in financial markets; and constituting an important source of counterparty risk for other market participants."
The resulting Directive 2011/61/EU - Alternative Investment Fund Managers Directive (AIFMD) – published in the OJ on 1 July 2011 after two years of controversy and debate – establishes an EU-wide harmonised framework for monitoring and supervising risks posed by AIFMs and the AIFs they manage, and for strengthening the internal market in alternative funds.
The Directive applies (with certain exemptions) to:
- all EU-based managers of AIFs (AIFMs)
- non-EU-based AIFMs managing EU AIFs
- non-EU-based AIFMs managing AIFs marketed in the EU.
The AIFMD entered into force on 21 July 2011 and had to be transposed into member state law by 22 July 2013. In most cases it was also to be effective from this date. Certain AIFMs were allowed a transitional period, lasting up to 22 July 2014, in which to seek the necessary variation of permission, authorisation or registration prior to implementation.
However, the compliance process took longer than planned and in December 2014 the EC found it necessary to issue a formal warning to Spain, Latvia and Poland that they needed to put adequate measures in place or face fines.
The Directive is now fully in effect and in force. It has been supplemented by Level 2 Regulations – see Key documents. For more dates, see the Timeline below.
Amendments to AIFMD (AIFMD 2)
In March 2018 the EC adopted a package of measures with the aim of reducing regulatory barriers to the cross-border distribution of investment funds in the EU. The new regulatory framework facilitating the cross-border distribution of collective investment undertakings was published in the EU’s Official Journal on 12 July 2019. These new measures are expected to reduce the cost for fund managers of going cross-border and should support more cross-border marketing of investment funds. The legislation amends the AIFMD (2011/61/EC) and the UCITS Directive (2009/65/EC).
The package consists of:
- a Directive which harmonises the conditions under which investment funds may exit a national market and allows European asset managers to test the appetite of potential professional investors for new investment strategies through pre-marketing activities; and
- a Regulation, which aligns national marketing requirements and regulatory fees, and harmonises the process and requirements for the verification of marketing material by national competent authorities. It further enables the European Securities and Markets Authority (ESMA) to better monitor investment funds.
The new Directive provides for a uniform regime for "pre-marketing" of alternative investment funds ("AIFs") across the European Union. Currently, AIFMD only regulates "marketing" of AIFs to investors, and not "pre-marketing". Throughout the EU activity may be viewed differently, as pre-marketing in one state (thus exempt from AIFMD rules) but marketing in another thus triggering application of AIFMD. AIFMD 2 introduces a new uniform definition of pre-marketing across the whole of the EU and sets out the conditions thereto.
The Directive also sets out a new formalised process whereby AIFMs will be able to discontinue marketing a fund in a particular member State.
The Directive also amends the the requirements surrounding notification procedures. New Article 30a states that when a subscription takes place within 18 months of the AIFM beginning pre-marketing this will be deemed to have resulted from marketing and the necessary registrations are thus required.
Member States must transpose the new AIFMD requirements by 2 August 2021. The new requirements will apply from this date.