Fiona Le Poidevin explains why Guernsey provides an
excellent platform for AIFMD compliant investments in Europe with
all the options available to a financial centre outside the
Andrew Baker, CEO of the Alternative Investment Management
Association (AIMA) – launching an AIFMD implementation guide
jointly with PwC, said: "AIFMD is a complicated piece of
legislation. It is being implemented in EU member states in a
variety of different ways, while non-EU or 'third country'
jurisdictions are also taking differing approaches to it. This
leaves hedge fund firms across the world facing a lot of complex
While Baker represents the hedge fund sector, I would argue that
his sentiments apply to the wider funds industry. Much wider; it is
necessary for all asset managers that wish to market their funds in
Europe to have considered all of the options available regarding
AIFMD so that they can make a fully informed decision.
Guernsey is not in the EU or wider EEA (although it is in the
European time zone) but has introduced a dual regulatory regime
which allows Guernsey funds to continue to be distributed to both
European and non-European countries. Guernsey's existing
long-standing flexible regulatory regime remains in place for those
investors and managers not requiring an AIFMD compliant fund,
including those that avail of EU National Private Placement (NPP)
regimes and those who market to non-EU investors; and there is a
new opt-in regime which offers full AIFMD equivalence – for
those for whom it is necessary or otherwise desirable to have an
AIFMD compliant fund vehicle to take to market.
Which way to go is solely a commercial decision driven by
distribution policies. Indeed, full-blown AIFMD compliance should
only be sought if there are particular reasons to do so. Managers
and funds with no connection to the EU should continue to use
Guernsey's existing flexible regulatory regime which is
completely free from the requirements of AIFMD and as such, will
have significant operational and cost benefits.
As a third country, Guernsey-based managers and funds who want
to access Europe continue to use NPP regimes, which are expected to
remain until 2018.
The NPP route will likely be favoured by many given that the
requirements to satisfy AIFMD will be significantly over and beyond
what is required under NPP.
Guernsey has an existing base of clients for whom Europe is at
least a very important market and for some their main market and
the opt-in equivalent regime which has been in place since 2
January 2014 will be appropriate and appealing to such funds. It is
for this reason Guernsey enacted the equivalent rules ahead of when
they were actually required to do so.
Full passporting for non-EU AIFMs is expected from July 2015.
Guernsey managers will be ideally placed to market on a
pan-European basis with a single authorisation, as passporting is
currently envisaged to operate.
PARALLEL AND FEEDER STRUCTURES
European Directives cater for European investors and if you only
need to comply with them for certain investments, then it is
advisable to structure those investments in such a way so as to
greatly reduce the compliance obligations and costs that come with
complying with those rules. Funds not solely focused on Europe
should consider parallel or feeder investment structures whereby
European and non-European business can be separated to achieve
efficiencies, i.e. AIFMD compliance would only apply to the
relevant European element of the overall structure.
The message to highlight is that an AIFMD compliant structure
does not have to be based in a mainland European domicile –
Guernsey provides a European platform yet offers optionality at the
* AIMA announces AIFMD implementation tools, 31 January
At the time of writing, Guernsey has signed 27 cooperation
agreements with the securities regulators from the following EU/EEA
countries: Austria; Belgium; Bulgaria; Cyprus; Czech Republic;
Denmark; Estonia; France; Finland; Germany; Greece; Hungary;
Iceland; Ireland; Latvia; Liechtenstein; Lithuania; Luxembourg;
Malta; Norway; Poland; Portugal; Romania; Slovak Republic; Sweden;
The Netherlands; and United Kingdom.
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