On 22 October, the European Commission launched a public consultation on the review of the Alternative Investment Fund Managers Directive (AIFMD).

While the consultation does not constitute a final policy position taken by the Commission, the views reflected in the consultation paper provide an indication on the approach the Commission may take. 

Interested parties have until 29 January 2021 to respond.

This blog gives an overview of the topics covered by the consultation questionnaire.

Authorisation and scope

The section focuses on the general functioning of the AIFMD licence and passport procedures. It also raises questions about:

  • the scope of services covered by an AIFMD licence and questions about permitted activities (eg AIFMs investing on own account); and
  •  the effective exclusion of certain structures from the scope of the AIFMD, like securitisation vehicles and employee saving schemes. 

Finally, the section contains questions about the sub-threshold regime (briefly, the regime applicable to AIFMs whose assets under management do not exceed €500m or €100m where leverage is employed), which currently provides for neither a marketing nor a management passport. 

Investor protection

Questions in this section cover the topics of investor categorisation referencing to MiFID II, a potential extension of the marketing passport to allow marketing to retail investors and suitability of mandatory investor disclosure.

The section also touches upon depositary-related questions like the interaction of third-party collateral managers and prime brokers with depositaries and the need for a depositary passport. 

Finally, a considerable number of questions concern the appropriateness of the current valuation rules under the AIFMD.

International issues

This part of the questionnaire addresses competitiveness of the European AIF market and the access for third-country firms.

It also includes a number of questions about the current delegation regime, eg whether it effectively prevents the establishment of letter-box entities. 

Financial stability

Under this title, the questionnaire covers, among other issues:

  • the reporting regime under the AIFMD and potential improvements to the monitoring of matters related to financial stability;
  • the methods for calculating the degree of leverage; and
  • the harmonisation of the rules on loan-originating funds, a topic that has been on the agenda for almost five years now. 

The specific aspects that the questionnaire covers in the context of loan-originating funds may sound familiar to many readers: 

  • limiting the interconnectedness with other financial intermediaries;
  • imposing leverage limits and additional organisational requirements for AIFMs managing loan-originating funds;
  • allowing only closed-ended AIFs to originate loans;
  • providing for certain borrower safeguards;
  • permitting marketing of loan-originating funds to professional investors only; and 
  • imposing diversification and concentrations requirements. 

Finally, the section queries the effectiveness of the AIFMD asset-stripping rules that apply where AIFs acquire control over non-listed companies and issuers. 

Sustainability

This part of the questionnaire seeks to gather input on the appropriateness of the AIFMD rules in assessing the sustainability risks and the consideration of sustainability and social impacts on investment decisions.