The EU Parliament’s Economic and Monetary Affairs Committee (ECON) was scheduled to vote on a final version of the Directive for Alternative Investment Fund Managers, but the vote was delayed at the last minute for legal and procedural reasons.
The vote was the first item on the committee’s agenda today, but committee chair Sharon Bowles realised that a necessary reconciliation with an earlier version approved by the Committee on Legal Affairs (JURI) had not yet occurred. Bowles decided to delay the vote by one week.
The JURI committee was first scheduled to vote on the directive at a meeting on 19 April. That meeting was also delayed as clouds of ash from Icelandic volcano Eyjafjallajokull grounded flights across Europe. The JURI committee finally approved their version of the legislation on 28 April. The ECON committee must reconcile its version of the directive with the version approved by the JURI committee before voting next week.
One important difference between the JURI version and the ECON version concerns “asset-stripping” at companies bought by private equity firms. The JURI version leaves current laws unchanged, but the ECON committee wants to create tougher restrictions on GPs.
“[The delay] was a real surprise,” said Lisa Cawley, a partner at law firm Kirkland & Ellis. “It’s obviously frustrating because everyone was anxiously awaiting the outcome of the vote. But it’s possibly a good thing – at the moment the UK government is in a state of flux, and there was a real concern that there was no one to argue the UK’s interest.”
The UK has opposed sections of the directive that would prohibit foreign fund managers from marketing within the EU unless they can demonstrate that they are subject to a regulatory regime of equivalent rigor in their home country.
During the vote next week, the ECON committee will have to approve a final version of the legislation, which could be a challenging fact as more than 3,000 amendments have been proposed by members of the European Parliament.
Once a final version is agreed, it will be brought before the Council of Ministers, which has representatives from each member state. Once the council has agreed on a final version, the legislation will pass into law.