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Regulators in Europe need to provide private equity and other alternative investment managers with greater clarity about what constitutes reverse solicitation versus active marketing under AIFMD (the Alternative Investment Fund Managers Directive).

Managers must continually monitor their Regulatory Assets under Management (RAuM) so as to ensure they do not inadvertently exceed the Annex IV reporting thresholds laid down in AIFMD (the Alternative Investment Fund Managers Directive).

Reporting frequency for Annex IV is determined by RAuM. Hedge funds running between €100 million and €1 billion are expected to file Annex IV on a semi-annual basis, while managers in excess of €1 billion must submit the report quarterly. Those managing less than €100 million must file annually.

“The fund industry is a big success story in Luxembourg and who wants to end a success story?” began H.E. Pierre Gramegna, Luxembourg’s finance minister, in his address at the recent ALFI Global Distribution Conference in Luxembourg. Indeed, the fund industry has expanded out in the country with the arrival of AIFMD. The number of UCITS funds domiciled in Luxembourg was a good starting point for the nation as a fund centre; with many opting to extend their operations into the AIFMD remit.

Private equity managers ensnared by AIFMD ( the Alternative Investment Fund Managers Directive) have been urged to start making preparations to appoint a depositary, or depositary-lite, now, despite the grandfathering period that applies to them not ending until 2015.

Private equity firms which are not fundraising or are managing close-ended funds that existed prior to 22 July 2013, and have not made additional investments after that date are exempted from some of the provisions of AIFMD including the obligation to appoint a depositary until 2015.

The Council of the European Union formally adopted the proposals for the fifth version of the undertakings for collective investment in transferable securities (UCITS V) on 23 July, one day after the arrival of the Alternative Investment Fund Managers Directive (AIFMD). Given that the changes within UCITS V are at least in part aimed at further aligning the Directive with AIFMD, the timing was apt.

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