Following our recent post, the Ontario Securities Commission, the Autorité des marchés financiers, the Alberta Securities Commission and British Columbia Securities Commission announced earlier today that they have entered into supervisory Memoranda of Understanding (MOUs) with financial regulators of a number of European Union (EU) and European Economic Area (EEA) member states for the supervision of alternative investment fund managers as required under the EU Alternative Investment Fund Managers Directive (AIFMD). The AIFMD entered into force on July 22.
The AIFMD will directly impact both Canadian managers which manage funds in the EU and Canadian funds marketed in the EU by Canadian or EU-based fund managers. Significantly, the AIFM Directive effectively regulates a much broader array of fund structures than conventional alternative investment funds and covers hedge funds, private equity funds, venture capital funds, real estate funds, commodity funds, investment trusts and other collective investment vehicles. As a result, managers of funds that are not regulated as "investment funds" under Canadian securities laws may be subject to the application of AIFMD in connection with their European activities.
Under the AIFMD, an MOU with the home country regulator must be in place before a non-EU alternative investment fund manager may manage and market alternative investment funds in an EU jurisdiction and perform fund management activities on behalf of EU managers. The MOUs provide a framework for mutual assistance in the supervision and oversight participants in the asset management industry, including portfolio managers and investment fund managers.
The four Canadian regulators have entered into MOUs with the EU/EEA member-state financial regulators of Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxemburg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic, Spain, Sweden, and the United Kingdom.
In Ontario, the MOU is subject to approval by the Ontario Minister of Finance.
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