EUROPEAN UNION: Commission Delegated Regulation on Alternative Investment Fund Managers

Wednesday December 19 2012

On 19 December 2012 the European Commission adopted a Delegated Regulation supplementing Directive 2011/61/EU (Alternative Investment Fund Managers Directive) of the European Parliament and of the Council.

The Directive on Alternative Investment Fund Managers (AIFMD) introduces harmonised requirements for entities involved in the management of alternative investment funds (AIFs) marketed to professional investors in the EU. The Directive covers a wide variety of AIFs and their managers (AIFM) as well as all possible investment strategies and legal forms of AIFMs and AIFs.

The Delegated Regulation implements the empowerments for delegated acts contained in the AIFMD and thereby creates a single rulebook that ensures a level playing field among AIFMs in the Union. A Regulation is the appropriate legal instrument for creating a single rulebook that contains uniform rules for all AIFMs. Since there is no substantial transposition, the risk of divergent application in the different Member States is avoided. As a consequence, the use of a Regulation facilitates the cross-border management and marketing of AIFs by AIFMs.

While the AIFMD does not contain deadlines for the delivery of these delegated acts, the Commission aims to adopt the entire package of implementing legislation before the end of the transposition period for the AIFMD (July 2013). It should be noted that the European Parliament and the European Council have three months in which to scrutinise, and/or oppose the text. However, it is widely believed that opposition will be improbable, given the difficulty of achieving a qualified majority in the Council, and the level of support given by the Parliament`s rapporteur on the AIFMD.

The AIFMD makes provision for a very extensive set of implementing measures (‘level 2 measures’) covering a wide range of topics which include:

• Calculation of assets under management;
• Methods and calculation of leverage;
• Additional own funds and professional indemnity insurance;
• Operating conditions for AIFMs – general principles and conflicts of interest;
• Operating conditions for AIFMs–risk management;
• Operating conditions for AIFMs – liquidity management;
• Operating conditions for AIFMs — investment in securitisation positions;
• Organisational requirements;
• Valuation;
• Delegation of AIFM functions;
• The obligations and rights of depositaries;
• Transparency requirements and the exchange of information; and
• Rules related to third countries.

Please see the below link for a full copy of the Delegated Regulation: