The Alternative Investment Fund Managers Directive (AIFMD or Directive 2011/61/EU) creates a comprehensive regulatory and supervisory framework for the management and marketing of private equity, venture capital and other alternative investment funds (AIFs) in the European Economic Area. The harmonised European standards for alternative investment fund managers (AIFMs) aim to enhance the transparency of the activities of AIFMs and the funds they manage towards investors and public authorities. The AIFMD entered into force on 22 July 2011.
The practical application of the AIFMD is affected by other pieces of legislation. In the first half of 2019, the EU institutions agreed a new horizontal measure to facilitate and improve cross-border capital investment flows in the EU. Among the measures contained in the new Directive, which will be applicable across EU Member States from August 2021, is an EU-wide approach to the pre-marketing of investment funds.
The AIFMD is the piece of EU law with by far the biggest direct impact on the private equity and venture capital industry, particularly fund managers (regardless of whether or not they are located in the EU or meet the minimum threshold) as well as European LPs.
The Directive is directly applicable to private equity fund managers with assets under management greater than €500 million and enables them to manage and market their funds more easily across the EU through a single internal market passport. To benefit from this access, fund managers need to be authorised with their national competent authorities, and comply with stringent operational requirements in the field of depositaries, valuation, capital adequacy, disclosure, investor reporting and remuneration.
While fund managers with less than €500 million under management are exempted from the full requirements of the AIFMD, they are still subject to a simplified registration and reporting regime.
A review of the AIFMD framework was presented on 25th November 2021, introducing important changes to the framework at the request of the industry:
These changes are currently in discussion in the European Parliament (initial draft report published on 17 May) and the Council. The European Parliament is expected to vote on the text in July (with last amendments to be presented by end June) while the Council is expected to agree on a "general approach" in June.
Depending on trilogue negotiations between the two institutions, new rules will not enter into force until 2023 at the earliest
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