With just five months until the deadline for complying with the Alternative Investment Fund Managers Directive (AIFMD), hedge fund administrators are reporting that up to a fifth of fund managers are still not prepared.
A strong regulatory environment in each EU member state and guidelines from regulators are critical to providing fund managers with the necessary framework to ensure that the requirements of AIFMD are met by the looming deadline, says Nicola Smith, CEO of Gibraltar-based fund administrator, Helvetic Fund Administration.
Smith believes that full compliance with AIFMD is unavoidable and active steps should be and can still be taken during this final period to achieve compliance, or face penalties.
“The implementation and the specific requirements of AIFMD have become a long running battle and the hedge funds industry in general has continued to voice its concerns as to the additional requirements and costs associated with fulfilling such requirements,” says Smith. “However, with just under five months until the deadline, managers need to consider that substantial delays in the application process are likely to ensue if the relevant arrangements are not dealt with, which may lead to the application deadline being missed.
“All non-UCITS funds domiciled in the EU will eventually have to register with a local regulator or regulators and all non-UCITS funds managed by an EU based manager, wherever the fund is domiciled, will also eventually be subject to registration, even if the fund managed is out of scope of AIFMD. Our recommendation would be for managers to contact their service providers and find an affordable solution that is appropriate for their particular situation. By taking prompt action, managers will have a greater understanding of what arrangements need to be made in order to comply, and what support they can expect from their service providers.
“Once AIFMD is in full force, the choice of whether fund managers manage vehicles domiciled and regulated in an EU location will be important. Historically, Dublin and Luxembourg have been preferred jurisdictions for funds, however in recent years, limited capacity and cost issues in these centres have allowed territories such as Gibraltar to develop as a viable alternative. Gibraltar offers a number of incentives as a jurisdiction, including access to a highly skilled workforce, a supportive infrastructure of ancillary services and lower business costs, which all point to Gibraltar being an ideal location for access to the EU with an attractive fiscal environment.”
These sentiments are echoed by Philip Canessa, senior executive of Gibraltar Finance, which is focused on advising the Gibraltar government on all financial services policy matters.
“The fact that Gibraltar is part of the EU and fully compliant with AIFMD is a major benefit for those seeking to re-domicile a fund, as well as the fact that our fund regime is based on UK common law, domestic legislation and EU directives,” says Canessa.” It is these principles which we believe puts Gibraltar in its current position of rapid growth, and our dedication to implementation and preparing for regulations like AIFMD has put us in an excellent position.”