The European Union’s Directive on Alternative Investment Fund Managers will come into force on 21 July following its publication in the Official Journal of the European Union last Friday.
Perhaps not coincidentally, the publication of the directive – the last step before it become part of EU law – took place on the same day that the Ucits IV directive on cross-border retail fund distribution was due to be implemented by member states.
The directive received formal approval by the EU Council at a meeting of transport, telecommunications and energy ministers on 27 May, and it was formally signed in Strasbourg on 8 June by Jerzy Buzek, the president of the European Parliament, and Enikő Győ, Hungary’s minister of state for European affairs, on behalf of the Council.
The formal title of the legislation is now Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010.
The finalisation of the legislation, which was agreed by EU economic affairs and finance ministers and then by the European Parliament last November, was delayed for several months by the length of the process of legal and linguistic revision, designed to correct any typographical or drafting errors in the text and to ensure the internal consistency of the directive’s provisions. The legislation then had to be translated into the various official languages of the European Union.
The final version of the directive was published on 13 May. EU member states will now have until 22 July, 2013 to transpose the directive into their national legislation. This is one day longer than the two-year period allocated for transposition, apparently because 21 July, 2013 falls on a Sunday.
Detailed regulations and subsidiary legislation to implement the AIFM Directive will be drawn up by the European Commission over the next two years on the basis of advice provided by the European Securities and Markets Authority, which is due to report back to the Commission in November. In April Esma issued a discussion paper on its proposals for implementing measures, soliciting views from market participants.
Under the legislation, EU-domiciled funds run by managers also based within the union will benefit from a ‘passport’ enabling them to be marketed to sophisticated investors throughout the union from 22 July, 2013.
According to the timetable set out in the directive, Esma is due to report on the functioning of the passporting system and advise the Commission on its extension to non-EU managers and funds by 22 July, 2015. Extension of the passport is due to be carried out by the commission through a so-called delegated act, which does not require approval from member states but to which they can raise objections.
Three years after access is extended to non-EU managers and funds, Esma is required to publish its advice on the planned abolition of current national regimes permitting distribution of alternative funds through private placement arrangements. Once that has taken place, distribution of funds aimed at sophisticated investors in Europe will be possible only through a passport and compliance with the AIFM Directive.