Qi Qi Dong May 20, 2022
The ESMA Q&A on the AIFMD provides key clarifications on compliance requirements and operational guidance for Alternative Investment Fund Managers (AIFMs). Below are the main updates to the AIFMD covered in the document:
1. Cross-Border Management and Marketing
- AIFM Passporting: AIFMs can use an EU passport for cross-border activities, but they must notify all details regarding managed funds and adhere to host country regulations. For umbrella AIFs managed cross-border, each compartment must be identified in the notification.
- Material Changes: Any material change to a fund’s structure, such as launching a new share class in a notified host country, does not automatically require new notifications, reducing administrative burdens for existing managers.
2. Third-Party Management and Delegation
- Third-Party Initiators: Investment strategies developed by third parties must comply with pre-marketing guidelines. If a third party conducts pre-marketing, it must be authorised under relevant EU legislation, like MiFID or UCITS.
- Delegation Rules: While AIFMs may delegate functions to external parties, they retain overall responsibility for compliance and must monitor their third-party managers closely. Functions that support investment management cannot operate independently under the AIFM passport.
3. Non-EU AIFMs and Pre-Marketing Rules
- Pre-Marketing Limitations: Non-EU AIFMs are restricted from conducting pre-marketing activities under AIFMD. National laws in host Member States govern the scope of activities that non-EU AIFMs may carry out, though these activities do not benefit from cross-border passporting under AIFMD.
4. Crypto-Assets and High-Risk Investments
- Investment Scope: The AIFMD allows flexibility in asset types but advises caution around crypto-assets, which carry high risk. Specific national restrictions may apply to AIFs investing in crypto, especially around risk diversification and investor eligibility.
5. Specific Clarifications for SPACs
- SPAC Classification: SPACs (Special Purpose Acquisition Companies) require case-by-case analysis to determine if they meet the definition of an AIF. Generally, SPACs focusing solely on mergers without an independent investment policy may not qualify as AIFs under AIFMD.
This overview reflects ESMA’s efforts to streamline AIFMD compliance, especially in cross-border fund management and the use of new financial instruments, while maintaining investor protection across EU jurisdictions.
The full Q&As are available from the ESMA website: