The European Securities and Markets Authority published on May 24 its final report on guidelines for key concepts under the Alternative Investment Fund Managers Directive (please see below for a copy under related PDFs). The report reflects feedback received by ESMA following its publication of a discussion paper on key concepts and types of alternative fund managers on February 23 last year, and in particular a consultation paper issued on December 19.
The consultation paper, which received 37 responses from asset managers, banks, law firms, industry associations, a private equity administrator and public authorities, set out formal proposals for guidelines ensuring common, uniform and consistent application of the concepts in the definition of alternative investment funds in Article 4(1)(a) of the directive by providing clarification on each of these concepts. An important factor is avoiding regulatory arbitrage resulting from national regulators interpreting terms used in the directive in different ways.
A cost-benefit analysis conducted by ESMA estimates that the introduction of the guidelines will make relatively little impact on the number of EU-domiciled funds that will fall under the directive according to the definition in the legislative text, estimated at between 25,650 and 28,975. The authority believes there will be “no material impact” on the Luxembourg-domiciled funds affected, which it says number at least 2,000.
ESMA believes 50 additional funds may fall under the directive as a result in Finland, around 1,600 in France on top of up to 12,000, and no more than 33 in Italy. Up to 150 funds could be captured in or excluded from the scope of the directive in the Netherlands, and about 50 could be excluded in Portugal.
The authority says the guidelines should bring clarity to national regulators and to managers, prevent managers falling outside reporting obligations on leverage used to assess systemic risk, enable smoother application of the AIFMD passport for both EU and (after July 2015) non-EU managers, and minimise the risk on entities not targeted by the legislation falling under its scope.
The new report sets out the final form of the guidelines to be issued to national regulators. These will be translated into the official languages of the EU and the final texts be published on the ESMA website. The deadline for reporting requirements will be two months following the publication of the translations and the guidelines will apply from this date.