AIFMD Requirements for Non-EU Managers

AIFMD Requirements for Non-EU Managers

As of July 22, 2013, the Alternative Investment Fund Managers Directive (“AIFMD”) became effective in the European Union (“EU”). While the directive impacts an EU Alternative Investment Fund Manager (“Manager”) managing and marketing an EU Alternative Investment Fund (“Fund”) immediately, we will now take a closer look at the impact on non-EU Managers and Funds.First, the good news. Non-EU Managers managing non-EU Funds will not be required to implement AIFMD if they no longer market these Funds, even if they currently have EU investors. For non-EU Managers managing EU funds nothing immediately changes either – they can maintain the status quo under current local law.

Non-EU Managers can still market Funds in the EU under member states’ national private placement regimes without being subject to the full directive. However, non-EU Managers are subject to three new requirements.

  1. AIFMD requires non-EU Managers to disclose information about themselves and their funds to both their investors and to European regulators. The non-EU Manager will need to comply with certain transparency and controlling interest requirements, including reporting information on the annual report, disclosure to investors and reporting to regulators. More specifically, some of the disclosure requirements relate to valuation procedures, pricing methodology and methods used in valuing hard to value assets, among others. Further, there are specific disclosures for private equity Managers, including conflicts of interests and the Manager’s policy on internal and external communication.
  2. There must be an information exchange agreement in place between the regulators of the relevant EU state and the country where the non-EU manager is domiciled.
  3. For a non-EU manager to market their fund into Europe, the country of domicile of the non-EU manager should not be on the Financial Action Task Force list of “non-cooperative Countries and Territories” regarding anti-money laundering and terrorist financing. The primary non-EU hedge fund domiciles have long since begun cooperating with the FATF and none are on the current list.

One consequence of not being subject to the full directive right away is that non-EU Managers will not be able to use the marketing passport (“Passport”). The Passport under AIFMD means that the Manager can market the Funds he manages to institutional investors within the EU without having to obtain a license or approval in each of the member states where he markets the AIF. However, using the Passport does require full compliance with AIFMD.

The European Securities Market Authority (“ESMA”) has until July 2015 to issue an opinion on the extension of the Passport to non-EU managers and EU Managers, managing and/or marketing non-EU Funds. If the Passport is extended in 2015, the non-EU Manager managing EU Funds will have to be compliant with AIFMD regardless of whether he is marketing the Fund in the EU or not. The non-EU Manager managing non-EU Funds will have the option of using the Passport. He will only have to be in full compliance with AIFMD if he wishes to use the Passport. If not, marketing in the EU can continue under local private placement rules. Eventually the EU may abolish the national private placement rules, although this is not scheduled to happen until at least 2018.

Houlihan Capital can provide a review and analysis of a fund’s valuation policies and procedures to ensure compliance with AIFMD, as well as provide a professional guarantee as an external valuer based on its professional experience and valuation expertise (See “AIFMD – Professional Guarantee Requirement of External Valuer”). For more information on AIFMD and its potential impact, please visit, contact Jules Pomerantz ( at 312-450-8607 or Paul Clark at 312-450-8656.

Houlihan Capital is a leading, solutions-driven valuation, financial advisory and boutique investment banking firm committed to delivering superior client value and thought leadership in an ever-changing landscape. The firm has extensive experience in providing objective, independent and defensible opinions of value that meet accounting and regulatory requirements. Houlihan Capital is a Financial Industry Regulatory Authority (FINRA) and SIPC member, committed to the highest levels of professional ethics and standards.

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