AIFMD Essentials
The AIFMD regulates the management and marketing of alternative investment funds (AIFs) in the EU (and more broadly the European Economic Area including Iceland, Liechtenstein and Norway). The scope of application of AIFMD is broad. Geographically, the only scenario that does not fall within the scope of the AIFMD is where a non-EU AIFM manages and/or markets a non-EU AIF outside the EU. Some managers may however only be registered under the Directive based on their size and structure.
The AIFMD imposes harmonized obligations and requirements on the structure and operation of managers. This includes:
requirements for authorization of the fund manager,
compliance with certain operating conditions,
adherence to transparency and reporting obligations.
This Guide is designed to give you an overview of the various requirements that apply to managers operating in the EU or setting up funds in the zone. It was prepared with the help of a high number of industry experts working for top European law firms active in the private equity space. The list of these firms is available below the list of topics and at the end of each section.
At the end of each section, a button will allow you to ask follow-up questions to the Invest Europe Secretariat. While this Guide – and any of Invest Europe material – is not intended to be nor does it replace legal advice, please do not hesitate to take the opportunity to raise with us any concerns you have with the interpretation of the Directive or of its national implementation.
Explore the guide
1 Scope & application
Describes the scope and key exemptions for EU and non-EU fund managers.
2 Authorisation & registration
Explains the authorisation process and registration requirements for AIFMs and their funds, distinguishing between full-scope and sub-threshold managers.
3 General compliance requirements
Sets out conduct of business rules, risk management standards, governance frameworks, and investor protection measures.
4 Regulatory capital
Details the capital requirements imposed on AIFMs (initial capital, own funds, professional indemnity insurance).
5 Remuneration
Defines the AIFM remuneration policies, addressing proportionality, risk alignment, and governance requirements for staff compensation.
6 Delegation
Examines the conditions under which AIFMs may delegate functions and restrictions on sub-delegation.
7 Depositaries
Describes the role and responsibilities of depositaries, including asset safekeeping, cash flow monitoring, and other oversight functions.
8 Liquidity management
Sets out the requirements for managing liquidity risk for open-ended funds, including the liquidity management tools that are required to be set up.
9 Leverage
Defines the calculation and reporting of leverage under AIFMD, outlining regulatory limits and their implications for risk management and investor protection.
10 Loan origination
Establishes the regulatory framework for AIFs engaged in direct lending, covering diversification rules, leverage restrictions, prohibitions, and transitional provisions under AIFMD II.
11 Portfolio company provisions
Addresses AIFMD’s requirements for fund managers investing in portfolio companies, including disclosure obligations, notification requirements, and asset-stripping rules.
12 Valuations
Specifies the methodologies and requirements for valuing AIF assets, differentiating between internal and external valuation processes.
13 Reporting requirements
Details AIFMD’s transparency obligations, including disclosures to investors and to regulators, and their frequency.
14 Marketing
Defines the rules governing the marketing and pre-marketing of AIFs, covering notification requirements, compliance with investor communication standards, and restrictions on retail distribution.
Note:
This Guide covers both the original AIFM Directive and its 2023 revision “AIFMD II”, as well as its different Delegated measures set in EU law. EU Member States have until 16 April 2026, to implement the new rules foreseen in the recently enacted AIFMD II, with certain provisions allowed for transposition until 16 April 2027. Do note that some Member States will not necessarily transpose AIFMD by these deadlines or may implement it in a way that is not coherent with EU rules.
The key changes under AIFMD II pertain to the authorisation of AIFM, loan origination and liquidity management, substance and delegation, depositaries, disclosure and reporting, national private placement regimes, and non-EU AIFMs. They are referred to explicitly in this Guide with a “NEW” reference for convenience. Some Delegated measures for AIFMD II have not been finalised at the time of drafting.
Industry experts involved in the creation of this guide
Abreu Advogados
Arendt
Debevoise & Plimpton
Gide
Goodwin
Legance
Simmons & Simmons
Simpson Thacher
Travers Smith
