The Council and European Parliament reached a provisional agreement on 20 July 2023 regarding revisions to rules in the Alternative Investment Fund Managers Directive, the regulatory framework that applies to private equity, hedge, real estate, and private debt funds, as well as amendments to the framework for Undertakings for Collective Investment in Transferable Securities. The agreement is based upon the EU’s aim of facilitating the easy flow of savings and investments across all member states. It awaits formal approval by Parliament and Council before its adoption.
These new provisional requirements will aid European fund managers to work through times of financial turbulence and to better manage risk. For instance, under the agreement, there will be a rise in the obtainability of liquidity management tools, as well as new measures to help detect undue costs. Other key revisions include:
Disclosure
Increased disclosure regarding investments with private funds in non-EU countries, such as the United States and United Kingdom.
Loans
Requirement for new issued loans to be held by the originating company and money must be kept aside to help manage liquidity demands in markets with financial instability.
Leverage Limits
Limits on leverage and debt levels to be set for funds which issue loans.
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