The European Securities and Markets Authority ("ESMA") has published final guidelines (the "Guidelines") on remuneration of alternative investment fund managers ("AIFM").  The publication of the Guidelines follows a consultation on draft remuneration guidelines which closed in September 2012.  The Alternative Investment Fund Managers Directive ("AIFMD") establishes a set of rules that AIFMs must comply with when establishing and applying a remuneration policy for certain categories of their staff and the Guidelines are intended to further clarify the AIFMD provisions.

Which entities / individuals are affected?

The remuneration provisions in the AIFMD apply to all AIFM that fall within its scope.  The Guidelines will apply to identified staff whose professional activities might have a material impact on the profile of the alternative investment fund ("AIF").  This includes:

  • senior management, risk takers, control functions; and
  • any employee receiving a total remuneration that takes them into the same remuneration bracket as the aforementioned categories of staff.

Application to delegates of the AIFM

The identified staff to whom the Guidelines will apply are defined to include "categories of staff of the entity(ies) to which portfolio management or risk management activities have been delegated by the AIFM".  The Guidelines require that either:

  1. the entities to which portfolio management or risk management activities have been delegated should be subject to regulatory requirements on remuneration that are equally as effective as those applicable under the AIFMD Guidelines; or
  2. appropriate contractual arrangements should be put in place in order to ensure that there is no circumvention of the remuneration rules. These contractual arrangements should cover any payments made to the delegates' identified staff as compensation for the performance of portfolio or risk management activities on behalf of the AIFM.


The practical implications of the Guidelines should be considered by AIFM and their advisers, and will depend on whether the AIFM is an EU or non-EU entity.  If there are any particular aspects of the Guidelines or the AIFMD which you would like clarification or advice on, please get in touch with your usual Asset Management and Investment Funds Group contact or any of the contacts listed in this email.

The Guidelines are available here: ESMA AIFMD Remuneration Guidelines.

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.