Summary and implications

On 17 February 2014, the European Securities and Markets Authority (ESMA) published a questions and answers paper (Q&A) on the application of the Alternative Investment Fund Managers Directive (2011/61/EU) (the AIFMD).

The purpose of the Q&As is to promote common supervisory approaches in the application of the AIFMD and provide clarity (a concept we are familiar with here at Nabarro!) as to the content of the AIFMD rules to alternative investment funds (AIFs) and alternative investment fund managers (AIFMs).

The Q&As refer to the following:

  • when the remuneration rules and the variable remuneration rules will first apply to an AIFM;
  • the application of the guidelines on sound remuneration policies under the AIFMD (the Remuneration Guidelines) to delegates of AIFMs;
  • EU member state (Member State) notification in relation to new investment compartments of AIFs; and
  • reporting to competent authorities of a Member State.

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You can read the full ESMA Q&As here
The Remuneration Guidelines can be found here

First application of the remuneration rules

The Q&As confirm that the AIFMD remuneration rules and the Remuneration Guidelines apply as at the date of the AIFM's authorisation under the AIFMD. However, it has previously not been clear whether the rules relating to variable remuneration also apply from the date of authorisation.

In this respect, the Q&As state that the variable remuneration rules will apply from the first full performance period after the AIFM becomes authorised under the AIFMD.

The Q&As also provide three examples for existing AIFMs whose accounting period ends on 31 December:

Obtains authorisation under the AIFMD:

Variable remuneration first applies to the calculation of payments in relation to the:

Between 22 July 2013 and 31 December 2013

2014 accounting period

Between 1 January 2014 and 22 July 2014

2015 accounting period

Any time after 22 July 2014 (having submitted an application for authorisation before that date)

2015 accounting period


The Q&As also provide that when an AIFM becomes authorised later than the dates outlined above, the variation remuneration rules will similarly apply in relation to the first full performance period following the date of authorisation.

Remuneration rules when delegating portfolio management or risk management activities

Under the Remuneration Guidelines there must be appropriate contractual arrangements in place between an AIFM and any delegate which performs portfolio or risk management to ensure there is no circumvention of the remuneration rules. The contractual arrangements should cover any payments made to the delegate's identified staff as compensation for the performance of portfolio or risk management activities on behalf of the AIFM.

The Q&As state that this contractual arrangement should apply to identified staff who have a "material impact on the risk profiles of the AIFs it manages as a result of the delegation". The contractual arrangements must cover remuneration for such delegated activities.

The Q&As also state that the remuneration rules in the Capital Requirements Directive (CRD) and those applicable under the Remuneration Guidelines are equally effective. Therefore, if the delegate is subject to the CRD remuneration rules, these are considered to be as effective as those applicable under the Remuneration Guidelines.


The Q&As clarify that AIFMs that wish to market new investment compartments of AIFs in a Member State where these AIFs have been already notified must undertake a new notification procedure via their competent authority.

New investment compartments = new notification procedure


Article 42 of the AIFMD outlines the requirements that a non-EU AIFM must satisfy in order to market AIFs that it manages in Member States. One such requirement relates to reporting certain information to the relevant national regulatory authority of the Member State concerned. In this respect, the Q&A confirmed that only the AIFs that have been marketed in that particular Member State should be taken into account for the purposes of reporting. In other words, if a non-EU AIFM manages AIFs that are not marketed in the EU, or not in that particular Member State, then those AIFs would not need to be included in any reports to the relevant national regulatory authority of the Member State concerned.

Watch this space!

As with Q&As relating to other European directives (such as the European Market Infrastructure Regulation), ESMA intends to update and edit the Q&As continually, as and when new questions are received. ESMA will also review the Q&As on a regular basis to determine whether there is a need to convert any of the material into ESMA 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.