On November 25, 2021, the European Commission released a proposal COM(2021)721 to amend Directive 2011/61/EU on Alternative Investment Fund Managers (the AIFMD). The proposal follows the review of the application and the scope of the AIFMD by the European Commission, as required under Article 69 AIFMD.

We have summarized the key changes introduced by the  proposal (following the  review) which will be relevant for Alternative Investment Fund Managers (AIFMs).

  1. Ancillary services: the list of ancillary services that authorised external EU AIFMs could provide in addition to collective investment management will be extended to include administration of benchmarks and credit servicing.
  2. Licensing: when applying for an AIFM authorization, a detailed description of the appropriate human and technical resources which will be used to carry out the AIFM's functions and, if delegation arrangements are in place, to supervise the delegates, shall be required by national competent authorities of the AIFM's home Member State. In relation to persons who effectively conduct the business of the AIFM, at least two natural persons resident in the Union should be employed on a full-time basis or committed full-time to conduct the business of the AIFM.
  3. AIFs with lending activities: EU authorised AIFMs managing AIFs that engage in lending activities will be subject to new requirements, including:

    - implementing and maintaining effective policies, procedures and processes for the granting of loans to be reviewed at least annually;

    - subject to the application of any specific conditions under the ELTIF, EuVECA or EuSEF Regulations, restricting loans originated to any single borrower by the AIF not to exceed 20 % of the AIF's capital, if the borrower is a financial undertaking, an AIF, or a UCITS (where the AIFs raise or reduce capital, this limit will be temporarily suspended for up to 12 months);

    - AIFs not lending to its AIFM or its AIFM's staff, its depositary or its delegate(s);

    - AIFs retaining, an on ongoing basis, 5% of the notional value of the loans they have originated and sold off on the secondary market, provided that the loans have not been purchased on the secondary market; and

    - AIFs adopting a closed-ended structure where they engage in loan origination to a significant extent (exceeding 60% of the AIFs' net asset value).

    In addition, in Annex I to the AIFMD, it will be explicitly confirmed that loan origination activities and servicing securitisation special purpose entities are activities which can be performed when managing AIFs.
  4. Liquidity management: AIFMs managing open-ended AIFs will be enabled to access the necessary tools for liquidity risk management (LMT) in exceptional circumstances. In addition to the possibility to suspend redemptions, AIFMs will be required to choose at least one other LMT from the harmonized list set out in a new Annex to the AIFMD for possible use in the interest of AIFs' investors. Furthermore, AIFMs will be required to notify the competent authorities about activating or deactivating an LMT.
  5. Delegation: delegation rules apply to all functions listed in Annex I and ancillary services permitted under Article 6(4) AIFMD.
  6. Depositary: central securities depositories (CSDs) will be brought into the custody chain when they are providing competing custody services. Depositaries will be relieved from the requirement to perform ex-ante due diligence when the custodian is a CSD. Competent authorities may allow depositary services to be procured in other Member States, until the measures are taken following a review of the need to introduce a depositary passport.
  7. Disclosure to investors: additional disclosures to investors under Article 23 AIFMD will be required, including (i) possibility and conditions for using LMTs, (ii) fees and charges that will be borne by the AIFM or its affiliates, (iii) on a quarterly basis, all direct and indirect fees and charges that were directly or indirectly charged or allocated to the AIF or to any of its investments, (iv) the portfolio composition of originated loans and (v) any parent company, subsidiary or SPV established in relation to the AIF's investments by the AIFM, the AIFM's staff or the AIFM's direct or indirect affiliates.
  8. EU AIFMs marketing non-EU AIFs without a passport: new requirements for EU AIFMs to market non-EU AIFs without a passport in individual Member States will be added under Article 36 AIFMD, as follows: (i) the third country where the non-EU AIF is established is not listed on the EU list of non-cooperative jurisdictions for tax purposes, (ii) the third country has signed a qualifying agreement on the exchange of information in tax matters with the home Member State of the EU AIFM and with the Member States where the marketing takes place, and (iii) the third country is not identified as a high-risk country according to the latest European laws against money laundering.
  9. National private placement regime (NPPR):  new requirements for non-EU AIFMs to market EU or non-EU AIFs through NPPR will be added under Article 42 AIFMD, as follows: (i) the third country where the non-EU AIFM or the non-EU AIF is established is not listed on the EU list of non-cooperative jurisdictions for tax purposes, (ii) the third country has signed a qualifying agreement on the exchange of information in tax matters with the Member State where the marketing takes place, and (iii) the third country is not identified as a high-risk country according to the latest European laws against money laundering.


At the time of writing, the proposal is open for feedback and will go through a series of readings by the European Parliament and the Council of the EU to review and amend the proposal. After the proposed amendments enter into force, Member States will have 24 months to transpose them into national laws.

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.