The Directive on Alternative Investment Fund Managers (Directive
2011/ 61/EU or "AIFMD"), regulates the
management and marketing of Alternative Investment Funds
("AIFs") and aims to provide for and
harmonise an internal market for Alternative Investment Fund
Managers ("AIFMs") within the EU. AIFMD
currently offers a marketing passport
("Passport") to compliant EU AIFMs of EU
AIFs. The AIFMD contemplates that this Passport can be extended to
non- EU AIFs, and to non-EU AIFMs from 2015. The extension of the
Passport is subject to the acceptance by European Parliament,
Council and Commission of positive advices from the European
Securities and Markets Authority
ESMA has today published its advice in relation to the
application of the Passport to non-EU AIFMs and AIFs
("Advice") together with its opinion on
the functioning of the passport for EU AIFMs and the national
private placement regimes ("NPPRs")
("Opinion"). The Advice and Opinion,
required under AIFMD, will now be considered by the European
Commission, Parliament and Council.
As Expected, Cayman Excluded from Initial Assessment
Regarding the advice on the potential extension of the passport,
ESMA opted for a country-by-country assessment to allow for a
distinction to be made between the different situations of non-EU
countries with respect to the aspects that ESMA has to consider it
is assessment. In the advices issued today, ESMA assessed six
jurisdictions (Guernsey, Hong Kong, Jersey, Singapore, Switzerland
and the United States of America), excluding the Cayman Islands
from its assessment as had been widely expected. However, in a
positive note for those jurisdictions not considered in the initial
advices, ESMA has stated that it intends to continue its
assessments until it has provided advice on all the non-EU
countries that it considers relevant for the purposes of the
extension of the Passport under Article 67 of AIFMD.
Advice and Opinion
The Advice and Opinion have been sent to the European
Commission, Parliament and Council for their consideration on
whether to activate the relevant provision of the AIFMD in respect
of extending the Passport.
In issuing its Advice, ESMA has indicated that those
institutions may wish to consider delaying any activation of the
Passport until a sufficient number of non-EU countries have been
assessed positively by ESMA, taking into account such factors as
the potential impact on the market that a decision to extend the
passport might have.
In issuing its Opinion on the functioning of the Passport and
NPPRs, ESMA has stated that its preliminary view is that in light
of the short timeframe between implementation of AIFMD in the EU,
and the date of the issue of the Opinion, a definitive assessment
on the functioning of the Passport and NPPRs is difficult. ESMA has
therefore recommended that a further opinion be issued by it after
a longer period.
Impact for Cayman Funds
The status quo for Cayman Funds will remain until such time as
ESMA updates its Advice and Opinion to specifically deal with
Cayman. That is, (and excluding any sale by reverse solicitation),
where a Cayman Fund is being sold in the EU it will be done by way
of private placement and in particular the relevant NPPRs of the
member state in which the target investor is based.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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