In the draft proposal for a new law on alternative investment fund managers ("AIFM"), necessary to meet the requirements of the EU directive on AIFMs, the application process for authorization of AIFMs is shorter than in other similar application processes. In the draft proposal, the Financial Supervisory Authority, the competent authority, must decide whether or not authorization has been granted within three months of a complete application's submission.
This fairly short time limit puts pressure on the Financial Supervisory Authority. For this reason, the draft proposal stresses that applications for authorization should be completed properly before being submitted to the Financial Supervisory Authority. According to the draft proposal, applicants may contact the Financial Supervisory Authority before submitting their applications to ensure that the applications are completed properly. The fundamental principles of good administration contained in the Administrative Procedure Act oblige the Financial Supervisory Authority to provide advice and consultation regarding administrative matters, such as the drafting of applications.
It is also suggested in the draft proposal that applicants could begin the application process before the proposed law comes into effect. If the proposal is adopted, the Financial Supervisory Authority will start accepting applications for authorization and registration notifications before the law takes effect.
The Financial Supervisory Authority may prolong the initial three month period where there are substantial reasons, but only by an additional three months. A substantial reason may be that specific circumstances apply to the case. These specific circumstances could be, for example, that the information submitted by the applicant is per se complete but requires extensive background verification. For example, the application process may take longer for AIFMs with a complicated ownership structure or foreign ownership or management.
To prolong the application period, the Financial Supervisory Authority must make an appealable decision and notify the applicant. When making an appealable decision, the Financial Supervisory Authority must follow the Act on the Financial Supervisory Authority and related procedure.
In the draft proposal, the question of whether an AIFM must apply for authorization is determined by the cumulative AIFs of the AIFM. According to the draft proposal, an AIFM which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs whose assets under management, including any assets acquired through use of leverage, in total exceed a threshold of EUR 100 million, shall apply for authorization. An AIFM who manage portfolios of AIFs whose assets under management in total exceed a threshold of EUR 500 million when the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of 5 years following the date of initial investment in each AIF shall also apply for authorization.
An AIFM whose cumulative AIFs do not exceed the said thresholds is subject to registration with the Financial Supervisory Authority. The draft proposal also provides a lighter regime for AIFMs that are subject to registration.
The Financial Supervisory Authority must regard an application as complete when it has received all the documents and information legally required to decide whether to grant authorization. Which documents and information are required will be specified in the law and Ministry of Finance decree. At the moment, the draft Ministry of Finance decree has not been published.
According to the draft proposal, the following details must be included with an AIFM's application for authorization: sufficient information about its ownership, management, auditors, organization of operations, remuneration policies, and details of its outsourcing operations. An AIFM must also give sufficient details about, inter alia, the investment strategies of the AIFs that it has or will have, risk profiles, characteristics, and specify the countries in which the AIFs are located or will be located.
Alternative Investment Fund Managers Directive, 2011/61/EU, came into force in July 2013. The proposed law to enforce the Directive in Finland is currently in the draft phase.
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