On 30 July 2015, ESMA published its advice to the European Commission on the extension of the management and marketing passports under AIFMD to non-EU AIFMs and non-EU AIFs (the "Advice"). ESMA also published its opinion on the functioning of the passport for EU AIFMs and the national private placement regimes (the "Opinion").


The Advice proposes that the AIFMD passport, which is currently only available to EU entities, be extended to non-EU AIFMs and AIFs on a country-by-country basis.

ESMA assessed six non-EU jurisdictions and concluded that no obstacles exist to the extension of the passport to Guernsey and Jersey, while Switzerland will remove any remaining obstacles with the enactment of pending legislation. ESMA did not come to a definitive view regarding the extension of the passport to Hong Kong, Singapore or the US due to concerns related to competition, regulatory issues and a lack of sufficient evidence to properly assess the relevant criteria.

ESMA aims to finalise the assessments of Hong Kong, Singapore and the US as soon as practicable and to continue to assess further groups of non-EU countries until it has provided advice on all non- EU countries that it considers should be included in the extension of the passport.


The Opinion details ESMA's preliminary assessment of the functioning of both the EU passport and the national private placement regimes. ESMA's preliminary view is that, given the short time period that has elapsed since the implementation of AIFMD in Member States, a definitive assessment of the functioning of the EU passport and the NPPRs is difficult. ESMA recommends that a further opinion be prepared after a longer period.


The Advice has been sent to the European Commission, Parliament and Council for their consideration on whether to activate the relevant provision in AIFMD that extends the passport. According to the timetable in AIFMD, the Commission has until October 2015 (3 months from the Advice) to adopt the relevant delegated act. For the delegated act to become effective, the Parliament and Council must not raise an objection to the delegated act.

However, ESMA suggests that the EU institutions may wish to wait until ESMA has delivered positive advice on a sufficient number of non-EU countries, before introducing the passport in order to avoid any adverse market impact that the decision to extend the passport to only a few non-EU countries might have. In this regard, ESMA may carry out assessments of significant non-EU fund domiciles such as Bermuda, Cayman and BVI that were not covered by this initial Advice.


In its AIFMD Q&A the Central Bank of Ireland has stated that Irish AIFs established as professional investor funds (PIFs) or qualifying investor alternative investment funds (QIAIFs) may continue to be managed by non- EU AIFMs under the Central Bank's existing transitional arrangements until at least 22 October 2015. After this time "this position will be revisited and, if necessary, revised to align it with the European Commission's decision and any transitional arrangements provided".

Accordingly, should the European Commission and other EU institutions agree on a delegated act that extends the AIFMD passport to Guernsey, Jersey and Switzerland, it is likely that the Central Bank will terminate the transitional period and require AIFMs from those jurisdictions that are managing Irish AIFs to comply in full with AIFMD as authorised AIFMs.

In light of ESMA's conclusion that there would be "significant obstacles" impeding the application of the AIFMD passport to Hong Kong, Singapore and the US, it seems less likely that the passport will be extended to those countries in the near term. Therefore, the Central Bank may decide to extend the existing transitional arrangements to AIFMs from those countries managing Irish AIFs unless and until the view changes at EU level. We would expect the Central Bank to update its Q&A in this regard.

We will continue to monitor developments in this area and provide further updates.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.