• AIFMD Update – Central Bank of Ireland confirms that debt issuer SPVs are outside the scope of AIFMD

Following industry consultation, including with the Irish Debt Securities Association (of which Dillon Eustace is a founding member), on 8th November, 2013 the Central Bank of Ireland (the "CBI") issued an update to their Questions and Answers ("Q&A") on the Alternative Investment Funds Managers Directive (Directive 2011/61/EU) and the Commission Delegated Regulation (EU) No 231/2013 ("AIFMD") originally published in May of this year. The updated Q&A addresses the uncertainty that surrounded the applicability of the AIFMD to special purpose vehicles ("SPVs") established in Ireland, in particular in the context of whether such SPVs could be alternative investment funds ("AIFs") for the purposes of the AIFMD and thus subject to regulation thereunder. The following is the terms of the question and the CBI's response:

ID 1065

Q. I am an SPV. Should I now seek authorisation as, or appoint, an alternative investment fund manager ("AIFM")?

A. As a transitional arrangement, entities which are either:

a) Registered Financial Vehicle Corporations within the meaning of Article (1)(2) of the FVC Regulations (Regulations (EC) no 24/2009 of the European Central Bank); or b) Financial vehicles engaged solely in activities where economic participation is by way of debt or other corresponding instruments which do not provide ownership rights in the financial vehicle as are provided by the sale of units or shares are advised that they do not need to seek authorisation as, or appoint, an AIFM, unless the CBI issues a Q&A replacing the current one advising them to do so. The CBI has stated that it does not intend to do that at least for so long as the European Securities and Markets Authority ("ESMA") continues its current work on this matter.

In the event that an entity is of the view that it would fall under b) above, but not a), the CBI have indicated that such entity may wish to write to the CBI to consult in this regard, and may do so by emailing AIFMDsecuritisation@centralbank.ie.

This statement by the CBI is a welcome clarification of their stance in the context of Irish incorporated SPVs and endorses the generally accepted industry viewpoint in Ireland at the moment that, notwithstanding that ESMA has not issued guidance in this context, where investors participate in an SPV by way of debt rather than through shares or units, that SPV is outside the scope of the AIFMD regime.

Link to the updated Q&A publication here.

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