Andrew Baker, CEO of the Alternative Investment Management Association (AIMA) – launching an AIFMD implementation guide jointly with PwC, said: "AIFMD is a complicated piece of legislation. It is being implemented in EU Member States in a variety of different ways, while non-EU or 'third country' jurisdictions are also taking differing approaches to it. This leaves hedge fund firms across the world facing a lot of complex choices."
Guernsey is not in the EU or wider EEA (although it is in the European time zone) but has introduced a dual regulatory regime which allows Guernsey funds to continue to be distributed to both Europe and to non-European countries. Guernsey’s existing long-standing flexible regulatory regime remains in place for those investors and managers not requiring an AIFMD compliant fund, including those that avail of EU National Private Placement (NPP) regimes and those who market to non-EU investors; and there is a new opt-in regime which offers full AIFMD equivalence – for those for whom it is necessary or otherwise desirable to have an AIFMD compliant fund vehicle to take to market.
As a third country, Guernsey based managers and funds who want to access Europe continue to use NPP regimes, which are expected to remain until 2018. The NPP route will likely be favoured by many given that the requirements to satisfy AIFMD will be significantly over and beyond what is required under NPP. Full passporting for non-EU AIFMs is expected from July 2015. Guernsey managers will be ideally placed to take advantage of being able to market on a pan-European basis with a single authorisation, as passporting is currently envisaged to operate.
European Directives cater for European investors and so if you only need to comply with them for certain investors, then it is advisable to structure in a way so as to greatly reduce the compliance obligations and costs that come with complying with those rules. Funds not solely focussed on Europe should consider parallel or feeder investment structures whereby European and non-European business can be separated to achieve efficiencies, i.e. AIFMD compliance would only apply to the relevant European element of the overall structure.
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