The Alternative Investment Fund Managers Directive (AIFMD) came into force on 22 July 2013. It regulates the management and marketing of alternative investment funds (AIFs) and aims to harmonise the market for alternative investment fund managers (AIFMs) within the EU.
The Directive offers a marketing passport to compliant EU AIFMs of EU AIFs. This passport is expected to be extended to non-EU AIFs, and to non-EU AIFMs. Jersey received two positive recommendations from ESMA stating that Jersey should be among the first wave of third countries to get access to a European passport under the AIFMD.
Considering the Brexit vote, expectations are that the decision to extend the AIFMD passport to third countries will be delayed. Jersey, with two positive ESMA recommendations, is a front running jurisdiction to obtain the passport once it becomes available to third countries.
Until three years after the passport becomes available to third countries, the AIFMD provides that EU member states are permitted to allow non-EU AIFs to continue to be sold to professional investors in that member state via their own national private placement rules (NPPRs).
In this regard, the AIFMD imposes several rules, including that cooperation agreements between the relevant countries are in place and significantly, that certain provisions of the directive are complied with, including rules around gaining control of EU-registered non-listed companies, and the Transparency Rules of the directive.
To take advantage of the NPPR regime, AIFMs of Jersey AIFs need to be familiar with the NPPR regime applied in each relevant state in which it seeks privately to place the AIF. Certain EU Member States are NPPR friendly and navigating the NPPRs can be a very efficient and cost friendly solution for managers that intend to market their funds to a select group of EU Member States.