By Claire Cummings, of Cummings Solicitors
Managers of hedge funds based outside the European Union who wish to either manage or market their AIFs (“Alternative Investment Funds” – “funds”) inside the EU, will need to begin planning and preparing as soon as possible for the implementation of AIFMD on 22 July 2013.
AIFMs who intend to either manage EU-based funds, or market funds which are managed by them in the EU, will be subject to AIFMD in broadly the same way as EU managers, will find our “Checklist for Managers” useful. Such AIFMs will however need to identify an EU “Member State of reference” and obtain authorisation in that state, and will need to discuss this (and the way in which the AIFMD applies to them generally) with their UK counsel.
This Checklist therefore deals with the position of a non-EU manager who is managing a fund which is based outside the EU (“non-EU fund”).
The first step is to talk to UK counsel to discuss their specific structure and consider what actions need to be taken. Initially, managers in conjunction with their UK counsel should:
- check the continuing application of the relevant “private placement” exemptions for marketing funds in the EU countries in which they market, or intend to market, their funds (note that the private placement exemptions may be revoked, subject to ESMA advice, in 2018, but only if passporting has by then been introduced for non-EU funds, for which see below);
- check that no stricter requirements have been introduced in the private placement exemptions of any EU country in which the non-EU funds are to be marketed (as permitted by the AIFMD);
- check that co-operation agreements are in place between the country (or countries) of the fund’s and manager’s domicile and the EU countries in which the non-EU funds are to be marketed;
- check that the country or countries of the non-EU manager and non-EU fund are not non-cooperative for FATF purposes;
- review and update the offering memorandum and all marketing documentation to reflect the need to comply with the disclosure and transparency requirements of the AIFMD and any local private placement laws in any EU country in which the non-EU fund is to be marketed;
- review all internal and external reporting procedures and amend to comply with the AIFMD requirements as regards disclosure and transparency;
- from 2015 onwards, subject to ESMA advice, non-EU funds may potentially benefit from passporting arrangements. Non-EU managers intending to use such arrangements should, in advance of their introduction, review (in conjunction with their UK counsel) the applicability of all potential passporting arrangements, including the existence of an OECD model tax convention between the country of the non-EU fund and each EU country in which the non-EU fund is to be marketed, the identification of a “Member State of reference” and compliance with the AIFMD generally.
For more information see www.cummingslaw.com