AIFMD update: Subtle shifts in scope

comment - 12 November 2013

AIFMD update: Subtle shifts in scope

The policy decision by the UK authorities to gold-plate the scope of the AIFMD in the UK was originally buried in DP12/1 and only became prominent with the publication of CP13/09. It was then encapsulated in PS13/5. The UK’s approach, however, was always incorrect legally and we are beginning to see evidence of this elsewhere. It seems that scope issues, and the unresolved policy differences behind them, will continue to expose the shortcomings of the AIFMD. 

In the absence of detailed guidance, the FCA’s PS13/5 has been relied upon by industry around Europe in construing scope. Unfortunately, PS13/5 is very broad in its approach with the result that many private equity ‘funds’ are simply assumed to be AIF without detailed analysis. A more expert approach may be emerging in Luxembourg where we are seeing greater reliance being placed on ESMA guidelines that stress the fact that (as a matter of law) an AIF must be ‘capital raising’ (as a matter of fact, even if very broadly construed). Where this is simply not the case because partners agree to form a business association in advance of establishing the AIFM or AIF (i.e. a true partnership is a simple business arrangement after all), then we are aware of practitioners taking the view that these arrangements cannot be AIF (in line with Q&A ID1160); the AIFMD regulating private equity partnerships ‘that seek capital’ (i.e. AIF) and not the private equity industry per se. This subtle dichotomy was never properly identified and developed by PS13/5. 

Meanwhile we continue waiting to see if ESMA’s opinion on the definition of open and closed ended AIF will be accepted by the Commission. The differences between ESMA and the Commission on this straightforward subject are quite remarkable.

The AIFMD remains a law without a natural perimeter, but we all know this. 

Click Investment Europe to read more.

previous comment / James McCarthy

Brexit: what next for alternative investment funds industry?

After a period of market and political turbulence, the dust has (for now at least) started to settle. Yet despite share prices rebounding and Sterling stabilising, the long-term ra... Read More

Loading image Loading...

If you would like to discuss outsourcing to the Aztec Group or are considering migrating a fund or SPV, please call James Duffield, Head of Business Development, on +44 20 3818 0250.

Aztec Group Guernsey

Aztec Financial Services (Guernsey) Limited
PO Box 656, East Wing, Trafalgar Court
Les Banques, St Peter Port, Guernsey, GY1 3PP

Telephone: +44 1481 749700
Facsimile: +44 1481 749749

LocationDownload PDF Details

Aztec Group Jersey

Aztec Financial Services (Jersey) Limited
Aztec Group House, PO Box 730
11-15 Seaton Place, St Helier, Jersey, JE4 0QH

Telephone: +44 1534 833000
Facsimile: +44 1534 833033

LocationDownload PDF Details

Aztec Group UK - London

Aztec Financial Services (UK) Limited
2 Throgmorton Avenue

Telephone: +44 20 3818 0250

LocationDownload PDF Details

Aztec Group Luxembourg

Aztec Financial Services (Luxembourg) S.A.
8, rue Lou Hemmer, L-1748, Luxembourg – Findel
Grand-Duché de Luxembourg

Telephone:+352 246 160 6000
Facsimile: +352 246 160 6016

LocationDownload PDF Details

Aztec Group The Netherlands

Aztec Financial Services (Netherlands) BV
Spaces Zuidas, Barbara Strozzilaan 201
1083 HN Amsterdam, The Netherlands

Telephone: +31 20 794 4820
Facsimile: +31 20 794 4821

LocationDownload PDF Details

Aztec Group UK - Southampton

Aztec Financial Services (UK) Limited
Forum 3, Solent Business Park
Parkway South, Whiteley, Fareham, PO15 7FH

Telephone: +44 238 202 2300
Facsimile: +44 238 202 2309

LocationDownload PDF Details

Aztec Group Sweden

Cetza Financial Services (Sweden) AB
Strandvägen 7a, 114 56, Stockholm, Sweden

Telephone: +46 8 124 488 88
Facsimile: +46 8 124 488 99

LocationDownload PDF Details