AIFMD: private placement update

The Alternative Investment Fund Managers Directive (AIFMD), first proposed in early 2009 as part of the EU G20 commitment towards a secure and stable financial system, will soon be fully in force for EU fund managers and for non-EU fund managers marketing their funds into the EU. Any fund that is not regulated under the UCITS Directive is classified as an alternative investment fund (AIF) under AIFMD and its fund manager is classified as an alternative investment fund manager (AIFM). AIFMD fundamentally changes the rules for marketing anywhere in the EU of non-EU funds and funds with non-EU managers, introducing new transparency and disclosure requirements for these funds as well as new registration and authorisation requirements.

The implementation of AIFMD is subject to a transitional period that finally expires on 22 July 2014. EU AIFMs marketing EU AIFs will have access to an EU-wide passport to market these AIFs to professional investors. No passport will be available for AIFs managed by non-EU AIFMs or for non-EU AIFs managed by EU AIFMs until at least 2016. From the end of the transitional period, it will be necessary to comply with new national private placement regimes introduced under AIFMD to market such AIFs in the EU, except in cases of genuine reverse solicitation. National private placement regimes under AIFMD are implemented on a country-by-country basis — AIFMD imposes certain minimum requirements but individual EU member states can (and do) impose stricter or additional requirements. To comply with the private placement regime in an EU state, it is generally necessary to register the AIF with or obtain marketing authorisation for the AIF from the regulator in that country. In some jurisdictions, for example France and Germany, a lengthy prior approval process, stretching to as much as eight months, will be required to market by way of private placement. The need to go through this process may be commercially unappealing and cause significant interruptions to business…

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