The introduction of the AIFMD by the European Commission in 2011, transposed into Dutch law on 22nd of July 2013, led to significant changes in the regulation of managers of Alternative Investment Funds that are managed or marketed in the European Union. The AIFMD requires such manager to be authorized by, or registered with, the competent authority in the European Union. In return of the new harmonized regulation authorized managers may avail for a passport to market Alternative Investment Funds to professional investors across the European Union and to manage these funds in each European member state. For authorization to be granted by the competent regulator, the manager needs to evidence that it is able to comply with all requirements of the AIFMD.
The AIFMD regulates the manager and not the fund itself. The main provisions of the AIFMD apply when the manager of the Alternative Investment Fund manages assets exceeding EUR 100 million or EUR 500 million when unleveraged and a lock-up of at least a five years’ period is applicable Managers whose total assets under management remain below the aforementioned limits only fall under a registration regime. However, in order to benefit from a European passport, these managers may opt for a full AIFMD license.
AIFMD contains a broad definition of an Alternative Investment Fund and basically applies to each fund not being a UCITS investment fund. However, the AIFMD contains a number of exceptions including holding companies, joint-ventures, securitization vehicles, pension and employee participation schemes and family offices.
One of the main objectives of AIFMD is to enhance investor protection and this legislation introduces, amongst others, the concept of a depositary. The depositary of an Alternative Investment Fund has a central function in securing compliance with the applicable rules and regulations.