At present only EU alternative investment fund managers (AIFMs) of EU alternative investment funds (AIFs) are able to take advantage of the pan-European marketing passport introduced by the Alternative Investment Fund Managers Directive (AIFMD). Non-EU AIFMs and managers of non-EEA AIFs are only to market funds in Europe through national private placement regimes – country by country rules which govern the marketing of AIFs to professional investors.
AIFMD requires the European Securities Markets Association (ESMA) to issue an opinion to the European Commission by 22 July 2015 on the functioning of the passport for EU AIFMs and on the functioning of the national private placement regimes. It must also issue an opinion on the extension of the marketing passport to non-EU AIFMs and AIFs.
Within three months of receipt of positive advice and an opinion from ESMA, the Commission is required to adopt a delegated act specifying the date when the passport should be extended to non-EU AIFMs and AIFs and become applicable in all Member States.
In order to produce this opinion and positive advice, ESMA should be convinced that “no significant obstacles regarding investor protection, market disruption, competition and the monitoring of systemic risk will impede the extension of the passport.
ESMA has issued a “Call for Evidence” in order to inform its review of the extension of the passport.
Many in the industry remain sceptical that the passport will be extended to non-EU AIFMs and AIFs and believe that ESMA or the Commission will find excuses to defer implementation. Some suggest because there has not yet been widespread use of the passport by EU AIFs since 22 July 2013 (the original introduction date of AIFMD), ESMA will have insufficient evidence or experience on which to issue a positive opinion and may simply request more time.
We have also seen ‘gold plating’ of the Article 42 requirements for non-EU AIFMs to market into certain countries such as Germany, France and Denmark, resulting in managers needing to appoint AIFMD depositary providers to market their funds. This gold plating could suggest some core, influential EU countries will take some convincing to support the extension of the passport to non-EU managers and funds.