Guernsey is well on the way to introducing a funds regime which is compliant with the EU’s proposed Alternative Investment Fund Managers Directive (AIFMD).
The final Level 2 rules for the detailed implementation of AIFMD were published on 19 December 2012.
However, Guernsey has already begun drafting new regulations to create a regime which is compliant with the AIFMD rules. It is anticipated to be in place from as early as July 2013, which is the deadline for the AIFMD rules to be transposed into local law.
Guernsey will offer two parallel regulatory regimes for investment funds as the way to best meet client needs going forward. The island will introduce a regime which is fully AIFMD compliant, while also maintaining the existing regulations for those investors and managers not requiring an AIFMD fund.
“Guernsey is very well positioned regarding AIFMD,” says Fiona Le Poidevin, chief executive of Guernsey Finance – the promotional agency for the island’s finance industry.
“Guernsey has been fully engaged with developments regarding AIFMD and so we are well advanced with our preparations. A tripartite working group comprising representatives from government, industry and the financial services regulator has been meeting regularly to understand precisely the work we need to undertake. Now the final Level 2 rules have been made public we can continue with drafting our new regulations which will create a regime which is fully AIFMD compliant.
“Our preparations and the nature of Guernsey fund regulation mean that we are very well placed to be able to introduce this new regime as early as July 2013. This will enable distribution of our products into countries that align their private placement rules with AIFMD. In addition, we will be applying for our regime to receive third country passporting status as soon as that option becomes available, which is expected to be July 2015.
“The bottom line is that Guernsey is well prepared for AIFMD and we believe that our approach means that managers will continue to use the Island because we will continue to offer the very same services – to both EU and non-EU investors and managers – that have made us a leading international funds centre.”
Guernsey had already announced at the start of November that it was intending to operate a full AIFMD equivalent regime for those EU investors and managers who are obliged to take this route or any investors or managers who choose this as their preferred option.
It was also announced at the same time that for non-EU investors and managers, investing in the EU and globally, there will remain a parallel regime with its own appropriate set of regulations. This will also be available to EU investors and managers who are able to take advantage of national private placement regimes, which continue until at least 2018, or those who fall outside the scope of AIFMD.
Neale Jehan, executive director at KPMG in Guernsey and chairman of the Technical Committee of the Guernsey Investment Fund Association (GIFA), is leading the local fund industry’s response to AIFMD.
“As a non-EU jurisdiction with close proximity and business ties to the EU, it is essential that we seek to comply with AIFMD for those clients obliged to or who wish to take advantage of the regime in the coming years,” says Jehan. “However, we must recognise that we have clients whose business does not touch the EU at all in terms of management or marketing of funds and it is important that these clients have the choice to elect to fall under the AIFMD regime or remain outside, as is their right. In being able to offer both EU and non-EU solutions from one location, Guernsey will be ideally placed to serve the global fund industry.”
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