Regulatory updates

The Alternative Investment Fund Management Directive (AIFMD) Level 1 was passed into law at the beginning of July 2011, providing greater clarity for the timeline of implementation for elements of the Directive.

By 22 July 2013, Member States will need to have in place regulations in order to bring into effect the key provisions of the AIFMD envisaged to become effective from this date. Alternative investment fund managers therefore now face clear deadlines for compliance with the requirements of the Directive.

The AIFMD Level 2 Implementing Provisions are currently under Consultation, which will clarify specific details around how regulations are to be implemented, and are expected to be agreed by the middle of 2012. This will, theoretically, leave a year to implement the necessary domestic Member State legislation. However, this may slip as the true extent of the difficulties inherent in this Directive becomes clear to legislators.

Who will it affect?

The provisions that come into effect as of 22 July 2013 will impact:

• EU Alternative Investment Funds (those established in a Member State), EU Alternative Investment Fund Managers (those established in a Member State),Third Country Alternative Investment Funds which are marketed to EU Member State investors, EU Alternative Investment Fund Managers who manage and/or promote EU Alternative Investment Funds and Third Country Alternative Investment Funds.

Next steps

The AIFMD has reached the end of the first stage of its journey and we are currently poised to receive a framework for implementation under Level 2 of the Directive. This will provide greater guidance as to how regulations will be implemented and what fund managers need to do in order to ensure compliance.

Nonetheless, EU and non-EU managers are advised to start preparing now for the practical issues with which they are likely to be faced, such as changes required at an operational level, the new remuneration rules, and the effect of the promotion rules on existing business models.

For further details please contact Andrew Lowin or call +44 20 7862 0700 to speak to your usual Kinetic Partners’ contact.