Hedgeweek on AIFM Directive: implications for third country managers
02 September 2009
Third country managers will be banned from marketing their funds in Europe - whether established in the EU or otherwise - for at least three years following the entry into force of the directive.
Very few of us have not yet heard of the European Commission's draft Directive on Alternative Investment Fund managers published on April 30, 2009. We have all heard that the directive as drafted may have serious repercussions on third country managers, whether based in the US, Canada, Switzerland or any other third country of repute.
Under the proposed directive third country managers will be
· banned from marketing their funds in Europe - whether established in the EU or otherwise - for at least three years following the entry into force of the directive.
· will thus be precluded from raising more funds directly from European investors.
· will be allowed to market their funds in the EU to professional investors (as defined in MiFID) if they obtain authorisation in any member state and provided that they satisfy various conditions.
· The third country must grant access to EU alternative fund managers in the same manner in which the EU is granting access to the third country manager.
· Obliged to provide the competent authority of the member state in which it is seeking authorisation with prescribed information including its shareholders and the funds it intends to market in the EU.
· exchange of information and co-operation agreement between the competent authority of the country where the manager is based and regulated and that of the EU member state in which the manager is seeking authorisation.
· agree on exchange of information in tax matters based on the OECD Model Tax Convention between the country where the manager is based and the EU member state.
If the directive goes through as proposed, European investors requiring information on funds managed by third country managers will have to route such requests through non-EU intermediaries, while third country managers - if based in a 'reputable' jurisdiction - will have to go through the unnecessary trouble of seeking authorisation in a member state.
© Hedgeweek
