Five years after AIFMD came into force, the time has come for a review of this directive. While the process is still at an early stage, the Commission has indicated that it will probably make limited, targeted changes to the existing framework.
The Alternative Investment Fund Managers Directive was adopted in June 2011 as a consequence of the financial crisis, which started in 2008. Policymakers at the level of the G20 came to the conclusion that the alternative investment fund sector was not sufficiently regulated. However, contrary to the UCITS directive, which was the first harmonised fund framework in Europe, the legislator did not opt for another product regulation, but was in favour of regulating the managers of alternative investment funds. In return for more regulation, both a management and a marketing passport were introduced across Europe. Areas covered by the AIFMD were the following: authorisation of managers, operating conditions, valuation, delegation of functions, depositaries, transparency obligations, remuneration, reporting, marketing and tax aspects.
The final provisions of the AIFMD stipulated that the European Commission should start a review of the directive by 22 July 2017. This timing turned out to be challenging, because further steps foreseen by the AIFMD with regard to third countries, such as a full phasing-out of national private placement regimes, have not yet happened. The AIFMD passport was meant to become available for non-EU managers and non-EU alternative investment funds in 2015, and to become the sole marketing option for passporting into Europe from 2018. In January 2015, ALFI responded to ESMA’s call for evidence on the AIFMD passport and third-country AIFMs. Then the United Kingdom decided to leave the European Union, a decision that indirectly has an impact on the timeline of the AIFMD review.
ALFI and EFAMA nonetheless started early collecting feedback from members on areas that would require improvement. Some of the aspects identified turned out to be useful in the context of other EU initiatives as well. For example, the request to remove national requirements hampering the marketing of funds (such as local agents) was addressed in the legislative proposals concerning the cross-border distribution of funds. In parallel, the Commission launched a targeted consultation on how to improve regulatory reporting. ALFI’s response relayed criticism by stakeholders considering AIFMD reporting requirements burdensome and a duplication of work.
In 2017, the European Commission decided to entrust KPMG with an analysis on the functioning of the AIFMD. During the detailed analysis that KPMG conducted, ALFI and EFAMA participated in each step, which allowed for detailed and consolidated feedback on behalf of the Luxembourg and European fund industry. Taking into account EU elections in 2019, a legislative proposal will most probably presented by the “new” Commission only towards the end of 2019.
Senior Legal Advisor, ALFI