The Alternative Investment Fund Managers Directive (AIFMD) aims to establish an EEA wide harmonized framework for the monitoring and the supervision of risks posed by AIFMs and the AIFs they manage.
The ability to acquire a passport to market funds throughout the EEA introduced by this Directive is currently restricted to EEA AIFMs of EEA AIFs. So, what have the consequences been for marketing by other AIFMs?
Each Member State is implementing a National Private Placement Regime (NPPR) dealing with the requirements under Article 36 and Article 42 in its own way, creating additional cost and compliance burdens. This article aims to provide a broad European tour of the most common approaches taken by European regulators under NPPR and some of the issues arising, without being a complete summary.
The registration process varies from country to country. Some countries require a simple notification form or email (UK, Luxembourg and the Netherlands regarding non-EEA AIFMs), others require AIFMs to comply with a pre-approval process. It should be noted that many of the member states have opted for the pre-approval registration process (Sweden, Slovakia, Ireland, Finland, Germany, France, Denmark (minimum three month process), Liechtenstein & Austria). The Netherlands, however, do not require any form of notification or pre-approval at this stage for EEA AIFMs.
So far, three different types of fees may be charged: submission fee, periodic fee and annual fee. Submission fees typically range from €2,000 to €5,000 and may be charged for each AIF, sub fund and umbrella fund. The UK however has opted for a fixed fee of £250 per AIF. Denmark, France and Sweden are further requesting annual fees while Ireland and the Netherlands do not require the payment of any fees.
Annex IV reporting will be due for each Member State in which an AIF is marketed. This will involve duplication of effort and AIFMs should be aware that not all European regulators are currently using the same version of the reporting template, adding further complexity. The FCA uses XML v1.1. whereas Ireland has opted for XML v1.2.
“Gold Plating” requirements
Some Member States are gold plating the marketing requirements over and above those defined in the AIFMD. For example, France require the appointment of a French payment agent (“correspondant centralisateur”) which will supply investors disclosure documents and pay the annual fee to the AMF among other services. This requirement is also being imposed on AIFMs using the passport. In Germany and the Netherlands, firms are required to appoint a full depository. Furthermore Germany also requires the submission of AIFMD Annex IV and Article 23 information (investor disclosure) as part of the registration process.
Since the marketing passport is not expected to be made more widely available until at least the end of 2015, AIFMs managing non-EEA AIFs should carefully consider the implications of marketing within the EEA under current arrangements as requirements vary from country to country.
The process implemented by individual Member States to date in respect of NPPR has not been harmonious.