Initiated as a long due major overhaul of the current text, AIFMD II eventually appears less disruptive than initially feared, with important changes only in requirements relating to loan originating funds, but achievable ones for their managers.
Key takeaways are:
- funds which originate loans will face risk retention requirements, concentration limits, lending restrictions, a ban on distribution strategies, policy & procedure implementation needs (by their AIFMs) as well as rules on proceeds, with some of these changes being subject to grandfathering provisions;
- loan-originating funds will have additional leverage limits and in principle be closed-ended;
- AIFMs managing open-ended funds will need to implement new liquidity management tools (expect ESMA RTS to follow);
- AIFMs will be subject to extended rules on (i) delegation, critically not banning delegation to non-EU managers but clarifying that they will need to comply with AIFMD, and (ii) substance, which will add some challenges to the third-party host AIFM model;
- AIFMs will see their scope of permitted (ancillary) activities increase, just like their obligations to disclose to the investors (under Art. 23) and report to the national competent authority;
- funds will now be able to appoint a depositary in a member state other than their home member state, if certain criteria are met;
Next steps:
Following their publication in November and likely entry into force by end of Q1 2024, (most of) the changes to the current AIFMD will eventually come into effect (once implemented into national law) in spring 2026, while some of the new requirements for loan origination will be applied with delays up until 2029.
