The Alternative Investment Fund Managers Directive 2011/61 (AIFMD) is the main regulatory framework for non-retail fund managers operating in the European Union. It imposes licensing requirements on fund managers and a broad range of regulatory requirements, including capital requirements, conduct of business rules and restrictions on the ability to market non-retail funds to EU investors.
As such, the AIFMD regulates the management, administration and marketing of alternative investment funds (AIFs) in the EU. An AIF is a collective investment undertaking that is not subject to the UCITS regime. This includes hedge funds, private equity funds, retail investment funds, investment companies and real estate funds.
Key issues covered by the AIFMD include authorisation and operating conditions for AIFMs, remuneration, conduct of business and valuation requirements, transparency, marketing and rules in relation to third countries. The AIFMD also includes requirements for firms acting as a depositary of an AIF.
As one of the first European countries The Luxembourg parliament passed the law implementing the AIFMD on 10 July 2013. The AIFM law allows investors to create a special limited partnership (société en commandite spéciale – SCSp) giving promoters of alternative funds an exclusive jurisdiction for domiciling their funds and holding structures of their investments. Other legal forms for AIFs include public limited companies (société anonyme – SA), private limited companies (société à responsabilité limitée – Sàrl), partnerships limited by shares (société en commandite par actions – SCA), limited partnerships (société en commandite simple – SCS), or common investment fund (fond commun de placement – FCP). Moreover, the 2013 law provided for a special taxation regime with a reduced tax rate on carried interest with a view to attracting fund managers to Luxembourg.
In 2018, the European Commission has launched the review process for the AIFMD and the ABBL will actively participate in the first consultations launched by the European authorities.
From the very beginning of the efforts resulting in the final AIFMD project, the ABBL has intervened at all stages of the legislative process to provide relevant industry input in the discussions and texts. The ABBL is further represented in several committees both at national and European level to discuss developments and practical implementation.