By Phillip Graham (Partner) Harneys – The AIFMD comes into force on 22 July 2013 and will affect managers falling within the definition of "AIFM" under the AIFMD which:
(a) are based in the EU and manage AIFs (wherever those AIFs are situated); or
(b) are based outside the EU but manage EU AIFs; or
(c) are based outside the EU but market their non-EU AIFs (including AIFs domiciled in the British Virgin Islands and the Cayman Islands) to investors in the EU.
A number of non-EU based managers of AIFs domiciled in the British Virgin Islands and the Cayman Islands currently market into the EU using existing regimes in place in the relevant EU countries. One of the initial consequences of the AIFMD coming into force is that in order for these practices to continue after 22 July 2013, certain preconditions need to be met.
One of the key conditions is for there to be a cooperation agreement in place between both the British Virgin Islands Financial Services Commission (FSC) and each of the relevant EU securities regulators where marketing of the non-EU AIFs takes place.
The ESMA Announcement
Steven Maijoor, the ESMA Chair, made the following announcement: “The approval by EU securities regulators of these co-operation arrangements is a significant step towards the successful implementation of the supervision of alternative investment funds by the July 2013 deadline, and their negotiation is a key achievement for ESMA in its co-ordinating role for EU securities markets. The agreements set high standards for co-operation on the supervision of cross-border alternative funds, thereby strengthening investor protection and the global consistency of supervision.”
ESMA has announced that the key elements of the cooperation arrangements are:
The news from ESMA is a very positive and significant step towards the British Virgin Islands ensuring that they are ready to meet all of the initial requirements necessary to ensure that AIFs based in the jurisdiction are able to be marketed within the EU region from 22 July 2013. As a result of our very close connections with both the FSC, we are acutely aware of how tirelessly the FSC has been assisting ESMA with this process and thank them for their hard work and diligence in this matter.
This article originally appeared in the June 2013 edition of BVI Finance