Talks continue on new Belgian AIFM directive compromise

Talks are continuing on a fresh compromise draft of the Directive on Alternative Investment Fund Managers issued by the Belgian EU presidency last week despite the failure of representatives of the European Parliament, the European Commission and member states to reach agreement at a meeting in Brussels on Monday, October 11.
The new round of meetings, which was scheduled to continue on Tuesday, follows France’s indication that it is willing to compromise by allowing funds and managers from outside the EU to benefit from the same marketing ‘passport’ as EU-based managers, as long as their compliance with the directive is monitored by the future European Securities and Markets Authority.
The revised draft of the directive would offer non-EU managers a choice between compliance with the directive in order to qualify for their funds to be marketed freely within the EU, and continued use of national private placement rules.
The draft text says the private placement mechanism may be abolished after a transitional period of five years if the Commission certifies that that passport system is operating with “no negative effects” in areas including investor protection, market disruption, competition and monitoring of systemic risk.
The draft also proposes the designation of a “member state of reference” that would authorise the marketing of funds within the EU by non-EU managers and within which the manager must appoint a legal representative to act as a contact point for EU-based investors and regulatory authorities.