ESMA issues Opinion on practical arrangements for the late transposition of the AIFMD

01 August 2013

Without prejudice to any initiatives taken by the European Commission in case of late transposition by Member States, ESMA intends to address the situation at an operational level in order to minimise, as far as possible, the impact on industry and investors deriving from lack of transposition.

The deadline for the transposition of the AIFMD  into  national legislation was 22 July 2013. However, some Member States may not have fully transposed the Directive by that date. Late transposition can create difficult situations where some competent authorities may not have the legislative framework in place to allow a proper implementation of the rights and obligations provided for in the Directive.

Without prejudice to any initiatives taken by the European Commission in case of late transposition by Member States, ESMA intends to address the situation at an operational level in order to minimise, as far as possible, the impact on industry and investors deriving from lack of transposition. ESMA proposes practical arrangements for operations under Articles 31, 32 and 33 of the Directive involving one MS that has not transposed the Directive.

Not all situations arising from non-transposition can be accommodated by way of practical arrangements that are legally sound.

ESMA has identified the following issues which could be addressed via practical arrangements between competent authorities:

• An AIFM in a Member State where the Directive has been transposed may not be able to manage an EU AIF established in another Member State that has not transposed the Directive.
• AIFMs and competent authorities in Member State that have transposed the Directive may have difficulties notifying the marketing of EU AIFs (including AIFs established in a Member State other than the home Member State of the AIFM) to relevant competent authorities if the host Member State has not transposed the Directive.

The practical arrangements proposed are based on the jurisprudence of the Court of Justice of the European Union (CJEU) on direct effect of provisions contained in the relevant EU Directives.

According to the general statement of primary law, “A Directive shall be binding as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods” (Article 288 of the Treaty on the Functioning of the European Union).

In the process of transposition Member States are obliged to create a legal framework in which the rights and obligations arising from a directive can be recognised with sufficient clarity and certainty to enable citizens to invoke them. In other words, Member States have an obligation to reconcile their legal order with the objectives of a directive at the end of the transposition period.

It must also be noted that the CJEU has held that Member States are liable to pay damages where loss is sustained by reason of failure to transpose a Directive in whole or in part. ESMA analysed the relevant provisions of the Directive and adopted this opinion on the practical arrangements to be followed by EU competent authorities.

Full opinion

© ESMA