AIFMD Countdown:
Level Two Is Here
© 2012 Dechert LLP
AIFMD Countdown:
Timetable Recap
© 2012 Dechert LLP
Timetable Recap
• AIFMD became EU law on 21 July 2011
• Must be implemented by 22 July 2013
• Transitional period until July 2014
3
Level 2: Regulations
• Published on 19 December 2012
• Have ‘direct effect’
• Contain wide ranging implementing measures
4
AIFMD Countdown:
Scope
© 2012 Dechert LLP
Scope and Authorisation
• Do you manage AIFs?
• Can you rely on any exemptions?
- de minimis?
- delegate only?
6
AIFMD Countdown:
Key Impact –
Marketing Funds in
Europe
© 2012 Dechert LLP
Timetable – Marketing
Directive in force
(P)
2011
2012
Changes to
national private
placement
regimes?
2013
EU AIF marketed
by EU AIFM
obtain passport
2014
2015
2016
2017
EU AIF managed by
non-EU AIFM and
Non-EU AIF obtain
passport?
IF ESMA make positive
recommendation, and
requisite implementing
legislation is passed
8
2018
No more private
placements?
Marketing by Asian managers in Europe
Non-EU AIFM marketing 2013-2015
– Member states may allow if:
–
9
•
The AIFM complies with the AIFMD’s
disclosure, reporting and transparency
requirements and with requirements on control
of non-listed companies
•
Its home state meets the cooperation
requirements
Member States may impose stricter rules...
Marketing summary
2010
2011
2012
Implementation date. Passports
made available to EU AIFMs for EU
Funds.
Non-EU Funds or EU
Funds with Asian
AIFMs
2013
2014
Extension of passports to non-EU
AIFMs and non-EU AIFs.
EU Funds with
EU AIFMs
2015
Dual marketing system –
EU passport or private
placement
Private placement only
Dual marketing system –
EU passport or private
placement
2016
2017
ESMA to review the passport
regime. Possible end of national
private placement regime.
18794858_1.PPTX
2018
Passport only ?
Passport only ?
Transparency
New disclosure requirements:
• Impact on fund documents and IR?
• Who will deliver compliance?
11
AIFMD Countdown:
Key Impact – Delegation
© 2012 Dechert LLP
Delegation
• What is your current delegation structure?
• Is it compliant?
– e.g. “third country” issues
– Delegation by EU AIFM to non-EU sub-manager
– Delegation by non-EU AIFM to EU sub-manager
• Letter box entities
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Delegation
Fund
Primary
Manager
?
or
AIFM
?
Submanager
AIFMD Countdown:
What EU AIFMs are facing
over the short term, and
Asian managers may face in
the long term…
© 2012 Dechert LLP
AIFMD Countdown:
Key Impact Areas –
Organisational
changes
© 2012 Dechert LLP
General Operating Principles (1)
• What are “operating conditions”?
• Derived from operating conditions for MiFID and
UCITS managers – so reflect compliance policies,
such as best execution and personal account dealing
• Some obligations relate to the AIF itself, and not the
AIFM
17
General Operating Principles (2)
• Quality and commitment of governing body/personnel
• No “undue costs” charged to investors
• Fair treatment of investors
• Due diligence requirements
• Appointment of prime brokers and counterparties
18
Organisational Matters –
Conflicts of Interest
• AIFM/MiFID investment managers/UCITS
management companies convergence – business as
usual?
• Key features of conflicts policy
• Disclosure and internal reporting
• Impact on personnel structures
• AIF voting rights
19
Organisational Matters –
Risk Management
• Tracks equivalent requirements for MiFID investment
managers and UCITS management companies
• What does “functional and hierarchical separation”
mean?
20
Organisational Matters –
Liquidity Management
• A new requirement under AIFMD
• Match portfolio liquidity to redemption profile and counterparty
commitments
• Guidance on liquidity measurement arrangements, liquidity limits
and use of redemption gates and other liquidity management
tools
• Guidance for funds of funds
21
Organisational Matters – Internal
Procedures and Valuation
• Internal business arrangements
• Data processing and record keeping
• Permanent compliance/Internal audit functions
• Personal transactions
• Valuation/Calculation of NAV
• Use of models/Frequency of
valuation/Professional guarantees for external
valuers
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AIFMD Countdown:
Key Impact Areas –
Depositary and
Other Issues
© 2012 Dechert LLP
Immediate concerns for EU AIFMs –
2015 concern for Asian AIFMs
• Depositary provisions
• Transparency and disclosure requirements
• Other
24
Depositary
• Who?
• New prime broker model?
• Impact on pricing?
• Re-domicile onshore funds offshore?
25
Other Issues
• Remuneration
• Private Equity Restrictions
• Leveraged Funds
... and more!
26
QUESTIONS?
abigail.bell@dechert.com
gus.black@dechert.com
christopher.gardner@dechert.com
dechert.com
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