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  3. AIFMD II Timeline – latest developments

AIFMD II Timeline – latest developments

Discover our timeline and analysis of the latest developments in the AIFMD II legislative process. We provide a practical explanation of changes, amendments and additions proposed for the revised Alternative Investment Fund Managers Directive. It covers the following areas: liquidity management tools, loan origination, delegation, distribution and national private placement regimes, depositaries, activities and services performed by AIFMs and investor protection. Each aspect of the legislation is considered from three angles: The European Commission proposal, the European Parliament draft report and the EU Council position. Our timeline and analysis will be continuously updated as the AIFMD II legislation is finalised.

Publications 30 January 2023
  • 1. Introduction
  • 2. Liquidity Management Tools
  • 3. Loan origination
  • 4. Delegation
  • 5. Distribution and national private placement regimes
  • 6. Depositaries
  • 7. Activities and services performed by AIFMs
  • 8. Investor protection
  • 9. Miscellaneous
  • Conclusion
January 1, 2021

AIFMD II - Introduction

Intro conclusion

AIFMD II in a nutshell

The European Commission released a proposal to amend the AIFMD along with the UCITS directive and other directives and regulations relating to investment funds on November 25, 2021. Its main aim is to strengthen the EU Capital Markets Union. In particular, the European Commission seeks to address issues relating to the build-up and spread of risks to the broader...

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    November 25, 2021

    AIFMD II - European Commission proposed directive, November 2021 - Liquidity management tools

    European Commission

    LMTs allow AIFMs of open-ended alternative investment funds to manage redemption pressure in exceptional circumstances such as stressed markets, black swan events and other low-probability events that may have a major financial impact on either an AIFM or an AIF or other areas of the financial markets. LMTs may therefore protect either financial market participants or global financial...

    Read More
      May 16, 2022

      AIFMD II - EU Parliament draft report - Liquidity management tools

      European Parliament

      AIFMs of open-ended AIFs based in any member state are required to choose at least one LMT from the harmonised list set out in Appendix V under points 2, 3, 4, 5, 6 and 8) (i.e. redemption gates, notice periods, redemption fees, swing pricing, anti-dilution levy and side-pockets). The European Parliament draft report added the last three LMTs.

      An AIFM that manages an open-ended AIF may, in...

      Read More
        June 17, 2022

        AIFMD II - The Council position - Liquidity management tools

        European Council

        After assessing suitability with regard to the investment strategy pursued, the liquidity profile and redemption policy, an AIFM that manages an open-ended AIF should select at least two appropriate LMTs from the list set out in Appendix V, points 2 to 7 (i.e. redemption gates, notice periods, liquidity fees on redemption, swing and/or dual pricing, anti-dilution levy, and redemptions in kind)...

        Read More
          November 25, 2021

          AIFMD II - European Commission proposed directive, November 2021 - Loan origination

          European Commission

          Since the growth of loan originating funds in the EU internal market is seen as a positive development, amendments and additions seek to remove unnecessary risk retention requirements and avoid creating product-specific rules. Favouring loan originating funds is also a means to increase financing to SMEs, green projects and other companies. The following changes and amendments to the AIFMD are...

          Read More
            May 16, 2022

            AIFMD II - European Parliament draft report - Loan origination

            European Parliament

            The European Parliament draft report has added two definitions:

            Loan origination means the granting of loans by an AIF as the original lender. This definition is relatively narrow and funds acquiring mostly syndicated debt are excluded.

            A shareholder loan is a loan granted by an AIF to an entity in which it holds directly or indirectly at least 5% of the capital or voting rights, where the...

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              June 17, 2022

              AIFMD II - The Council position - Loan origination

              European Council

              Loan origination is the most detailed topic in the Council position, in which the amendments and additions to the AIFMD are somewhat different from those in the Commission proposal and the European Parliament draft report, although there is convergence on some provisions. The amendments and changes included in the Council position are as follows.

              The Council position includes a new definition...

              Read More
                November 25, 2021

                AIFMD II - European Commission proposed directive, November 2021 - Delegation

                European Commission

                The Commission proposal includes clarifications and additions, particularly in cases of delegation where an AIFM delegates more portfolio management or risk management functions to entities located in third countries than it retains.

                The Commission proposal clarifies the application of the delegation requirements (article 20 of the current AIFMD) to all functions listed in appendix I and the...

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                  May 16, 2022

                  AIFMD II - European Parliament draft report - Delegation

                  European Parliament

                  The European Parliament draft report has modified the Commission proposal by removing the reporting by national regulators to ESMA of situations in which an AIFM delegates more portfolio management or risk management functions than it retains. The second point of the delegation section in the  Commission proposal is completely deleted in the European Parliament draft report, including the...

                  Read More
                    June 17, 2022

                    AIFMD II - The Council position - Delegation

                    European Council

                    Before the review by the European Commission of the functioning of the rules laid down in the AIFMD and experience acquired in applying them, ESMA shall provide a report analysing market practice regarding delegation and compliance with articles 7 (AIFM authorisation) and 20 (delegation of AIFM functions), based, inter alia, on data reported to regulatory authorities in accordance with point...

                    Read More
                      November 25, 2021

                      AIFMD II - European Commission proposed directive, November 2021 - Distribution and national private placement regimes

                      European Commission

                      Various changes and amendments have been provided by the Commission proposal regarding the marketing of non-EU AIFs in view of strengthening distribution conditions relating to third countries.

                      More restrictive conditions for the distribution in member states of AIFs managed by a non-EU AIFM, in particular, non-EU AIFs:

                      • The third country in which the non-EU AIF or non-EU AIFM is...
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                        June 17, 2022

                        AIFMD II - The Council position - Distribution and national private placement regimes

                        European Council

                        There is no extension of the professional investor definition in the Council position.

                        The Council position does not refer to the Council conclusions of 2020 on the revised EU list on non-cooperative jurisdictions for tax purposes but only to the Council conclusions on the revised EU list on non-cooperative jurisdictions for tax purposes.

                        Read More
                          May 16, 2022

                          AIFMD II - European Parliament Draft Report - Distribution and national private placement regimes

                          European Parliament

                          The European Parliament draft report extends the definition of professional investor to investors

                          • That have committed to investing a minimum of €100,000 and have stated in writing, in a document separate from the contract incorporating the commitment to invest, that they are aware of the risks associated with the envisaged commitment or investment; or
                          • That are executives, portfolio...
                          Read More
                            November 25, 2021

                            AIFMD II - European Commission proposed directive, November 2021 - Depositaries

                            European Commission

                            The depositary role is vital for trust and confidence in the fund industry. The current AIFMD depositary regime is deemed to be effective concerning investor protection. However, the current regime may entail a lack of competition for depositary business in some member states - hence the creation of the possibility for the depositary to be established in a different member state from the AIF....

                            Read More
                              May 16, 2022

                              AIFMD II - European Parliament draft report - Depositaries

                              European Parliament

                              The provision of services by a CSD acting in the capacity of an investor CSD shall be considered a delegation of the depositary’s custody function, contrary to the case of an issuer CSD.

                              Some institutions (see above) are allowed by the regulatory authorities of the home member state of an AIF or AIFM to be appointed as a depository, although they are established in another member state. The...

                              Read More
                                June 17, 2022

                                AIFMD II - The Council position - Depositaries

                                European Council

                                Unlike the Commission proposal, the Council position refers to investor CSD with the same provision as in the European Parliament draft report: the provision of services by a central securities depositary acting in the capacity of an investor CSD as defined in article 1, point (f) of Commission Delegated Regulation (EU) 2017/392 shall be considered a delegation of the depositary’s custody...

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                                  November 25, 2021

                                  AIFMD II - European Commission proposed directive, November 2021 - Activities and services performed by AIFMs

                                  European Commission

                                  The list of ancillary services member states may authorise AIFMs to provide is extended to benchmark administration and credit servicing.

                                  Originating loans and servicing securitisation special purpose entities are activities added in Appendix I.

                                  An AIFM applying for authorisation shall provide the following additional information to the regulatory authorities of its home member state:

                                    ...
                                  Read More
                                    May 16, 2022

                                    AIFMD II - European Parliament draft report - Activities and services performed by AIFMs

                                    European Parliament

                                    The European Parliament draft report has added the following ancillary service:

                                    Any other ancillary service that is not regulated as an investment service under Directive 2014/65/EU (MiFID II), which represents a continuation of services already undertaken by the AIFM or use of internal capabilities, and which does not create conflicts of interest that cannot be managed by additional rules....

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                                      June 17, 2022

                                      AIFMD II - The Council position - Activities and services performed by AIFMs

                                      European Council

                                      The addition of benchmark administration and credit servicing  to the list of ancillary services is also found in the Council position, but the following clarification is added: “Member states may prohibit AIFs from servicing credits granted to consumers in their territory.”

                                      AIFMs should not be authorised to provide only the activities of points 2, 3 and 4 of appendix I. The change...

                                      Read More
                                        November 25, 2021

                                        AIFMD II - European Commission proposed directive, November 2021 - Investor protection

                                        European Commission

                                        Investor protection is one of the main objectives of EU financial law. The Commission proposal includes the following changes and additions:

                                        Details of the possibility and conditions for using selected LMTs should be made available to investors by the AIFM as part of the description of the AIF’s liquidity risk management.

                                        For each EU AIF that it manages and each AIF it markets in the EU,...

                                        Read More
                                          May 16, 2022

                                          AIFMD II - European Parliament Draft Report - Investor protection

                                          European Parliament

                                          For each EU AIF they manage and each AIF they market in the EU, AIFMs should also disclose:

                                          • The portfolio composition of originated loans.
                                          • On an annual basis, all direct and indirect fees and charges directly or indirectly charged to the AIF. The European Parliament draft report does not refer to any of the AIF’s investments, in contrast to the Commission proposal. These are...
                                          Read More
                                            June 17, 2022

                                            AIFMD II - The Council position - Investor protection

                                            European Council

                                            An AIFM should provide information on the instruments in which it is trading, markets of which it is a member or where it actively trades, and the exposures and holdings of each AIF it manages, along with relevant identifiers to connect the data provided on assets, AIFs and AIFM to other supervisory or publicly available data sources. The disclosure of the exposure and holdings of each AIF is...

                                            Read More
                                              November 25, 2021

                                              AIFMD II - European Commission proposed directive, November 2021 - Miscellaneous

                                              European Commission

                                              The threshold for the regulatory authorities of one member state to notify ESMA and the authorities of the home and host member states of an AIFM suspected of carrying out acts contrary to the AIFMD is lowered to reasonable grounds, but still restricted to acts committed by an AIFM, as discussed above in the Depositaries section.

                                              All information exchanged under the AIFMD between ESMA,...

                                              Read More
                                                May 16, 2022

                                                AIFMD II - European Parliament draft report - Miscellaneous

                                                European Parliament

                                                Clarification of the use of the terms shares and shareholders with additional references to units and unitholders. Use of the term liquidity management tools in appendix V, rather than liquidity management instruments.

                                                ESMA should follow a risk-based approach in carrying out its functions under the AIFMD. Neither the Commission proposal nor the Council position includes such a provision.

                                                All...
                                                Read More
                                                  June 17, 2022

                                                  AIFMD II - The Council position - Miscellaneous

                                                  European Council

                                                  The Council position clarifies the use of the terms shares and shareholders with additional references to units and unitholders, as the European Parliament draft report does.

                                                  The Council position refers to the term liquidity management tools, not liquidity management instruments, as the European Parliament draft report does.

                                                  The notification obligations of the regulatory authorities...

                                                  Read More
                                                    January 1, 2022

                                                    AIFMD II - Conclusion

                                                    Intro conclusion

                                                    The amendments and additions provided by the Commission proposal, the European Parliament draft report, and the Council position should lead to the strengthening and growth of the European alternative investment fund sector. They should help to make capital more accessible in Europe and, without wholesale changes to the AIFMD is not rewritten, some areas could have a significant impact on...

                                                    Read More

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                                                      Key competencies

                                                      arrow_forward Private equity – Fund structuring

                                                      arrow_forward Venture capital funds

                                                      arrow_forward Real estate – Fund structuring

                                                      arrow_forward Hedge funds

                                                      arrow_forward Crypto funds

                                                      arrow_forward Private debt funds

                                                      arrow_forward Infrastructure funds

                                                      arrow_forward Sustainable finance and ESG funds

                                                      arrow_forward Regulatory and compliance

                                                      arrow_forward Restructuring and insolvency

                                                      arrow_forward Investment fund litigation

                                                      Related publications

                                                      arrow_forward Luxembourg RAIF (reserved alternative investment fund)

                                                      arrow_forward Luxembourg special limited partnership (SCSp)

                                                      arrow_forward Luxembourg SIF (specialised investment fund)

                                                      arrow_forward Luxembourg securitisation vehicles

                                                      arrow_forward Your law firm in Luxembourg

                                                      Related news

                                                      Related posts:

                                                      • Amendments of Level 2 Regulations regarding safekeeping obligations for alternative investment funds (AIF) and UCITS depositaries
                                                      • Marketing AIFs : New draft of AIFMD update eases pre-marketing requirements
                                                      • Latest update of ESMA Q&A on information to be provided in AIFMD notification procedure

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