Fund managers still awaiting clarity on some of the key concepts contained within the Alternative Investment Fund Managers (AIFM) directive should look to guidance recently proposed by the European Securities and Markets Authority (ESMA).
ESMA is the pan-EU regulator responsible for enforcing the directive once its provisions take effect this July.
One major lingering uncertainty has been how exactly the directive will define an alternative investment fund (AIF). The guidelines by ESMA tackle the challenge by first defining some underlying concepts, including clarification on what should be considered “raising capital, “ownership of underlying assets” and “number of investors” in a fund.
Alongside the guidelines, ESMA released a second paper outlining some of the more technical aspects around how different types of funds captured by the directive will be supervised. Funds over a certain threshold will for example need to establish a remuneration committee. The directive also imposes different initial capital requirements to internally-managed versus externally managed funds. Another example is a distinction between managers of AIFs whose investors have the right to redeem their shares at least annually (open-ended AIFs), and those whose investors have less frequent redemption rights (closed-ended).
On all these matters, the regulator asks if its proposals and treatment of various fund types are appropriate and practical. Consultation submissions for both proposal papers are due by 1 February.
Issues not addressed in either paper will be attended to at a later date to allow time for ESMA to digest “level II” implementing measures released by the European Commission late last year. Guidelines and technical standards however are expected to be finalised in the first half of 2013, just before the directive’s 22 July go-live date.