The Alternative Investment Fund Management Directive (AIFMD) is now in effect, but a significant gap remains between how ready different member states are and how many have actually transposed it into local law. Some countries still have not even implemented the directive in full. The big question that arises is whether this situation is leading to some alternative investment fund managers (AIFMs) outside of the EU being reticent to raise capital from European investors. There are two different options allowed for AIFMs outside of the EU hoping to market their funds under the AIFMD. First, some jurisdictions only tolerate ‘reverse solicitation’. This is a passive policy regarding marketing, where the AIFM is only allowed to market funds to investors once the manager has been approached by an interested party. The manager cannot directly or indirectly solicit investors. Second, a number of jurisdictions are offering private placement regimes. This allows non-EU AIFMs to market directly with investors in member states under the Directive; however, doing so requires adherence to a number of different transparency and reporting conditions. The fact that some jurisdictions allow private placement, whereas others have restricted or abolished solicitation, means that non-EU AIFMs must be very careful and fully understand what the local laws dictate. Otherwise, fund managers face the risk of opening themselves up to unexpected penalties.
By Lee Godfrey