Alternative Investment Fund Managers Directive

Earlier today, the bill realizing the implementation of the Alternative Investment Fund Managers Directive (2011/61/EU, the “AIFMD”) into Dutch legislation was adopted by the First Chamber of the Dutch Parliament (the “Bill”). The AIFMD entered into force on 21 July 2011 and must be implemented by EU member states before 22 July 2013. The Bill will take effect on 22 July 2013.

The AIFMD introduces rules with regard to the licence requirement, business activities and transparency for alternative investment fund managers. The implementation of the AIFMD brings significant changes to the Financial Supervision Act (Wet op het financieel toezicht). The changes will effect all investment institutions other than those who fall under the scope of the directive which applies to undertakings for collective investment in transferable securities (2009/65/EC, "UCITS IV"). This includes not only managers of private equity funds and hedge funds, but all managers of investment institutions, such as real estate funds, non-retail funds and debt funds. Under the AIFMD these investment institutions fall within the definition of an alternative investment fund.

Regulation
On 19 December 2012, the European Commission adopted a delegated Regulation supplementing the AIFMD. The delegated Regulation contains further detail and requirements on exemptions, general operating conditions, depositaries, leverage, transparency and supervision.

Licence and ongoing requirements
The AIFMD prescribes a licence requirement for alternative investment fund managers who are (i) established in the EU, (ii) established outside the EU and manage alternative investment funds established within the EU or (iii) established outside the EU and offer participations within the EU. An alternative investment fund manager needs to comply with requirements to obtain a licence, including minimum capital requirements and organizational and conduct-of business principles. The ongoing requirements relate to conflict of interest, leverage, delegation, the appointment of a depositary, risk management, liquidity management, due diligence standards, valuation of the assets, remuneration policy and transparency.

Exemptions and lighter regime
There are certain exemptions from the licence requirement. The AIFMD does not apply to holding companies, pension funds, joint ventures and employee participations or savings schemes. Furthermore, an exemption applies to alternative investment fund managers whose only investors are their group companies.

If no exemptions apply, managers may qualify for a lighter regime. The lighter regime is available to managers (i) managing a portfolio that does not exceed a threshold of € 100 million or (ii) managing only unleveraged alternative investment funds without redemption rights during a period of 5 years with a cumulative value that falls below a threshold of € 500 million. The lighter regime also applies to managers offering to non-professional investors (retail funds only). In addition to these conditions, to benefit from the lighter regime, the offer must be made to less than 150 investors or with a value of more than € 100,000 per investor. Under the lighter regime the manager should register and needs to comply with certain information requirements.

European Passport
The AIFMD introduces a European Passport. If an alternative investment fund manager has obtained a licence issued in any member state pursuant to the AIFMD, no licence from another member state is required if (i) the manager offers participations to professional investors (professionele beleggers) in that other member state or (ii) if the manager is in charge of the management of alternative investment funds in that other member state.

Transitional regime
The Bill contains several transitional provisions. An alternative investment fund manager who immediately prior to the effective date of the Dutch legislation manages alternative investment funds is exempt from the licence requirement provided by the AIFMD until 21 July 2014. However, the manager is obliged to make an effort to comply with the new rules. Furthermore, if a manager manages a closed-end investment fund before 22 July 2013 it is permitted to continue the management thereof after 22 July 2013 without a licence in the event no new investments are made after that date. The manager of a closed-end investment fund is also permitted to continue the management thereof if the fund will be terminated before 22 July 2016 and if the subscription period for new investors closed before 22 July 2011. There are, however, certain information requirements.