The European Alternative Investment Fund Manager Directive (AIFMD) lays down rules concerning the authorisation, the current operation, as well as the transparency of Alternative Investment Fund Managers.
The Directive significantly affects the structure and practical business organisation of alternative fund managers and the non-UCITS sector including hedge funds, private equity and real estate funds.
Alternative investment Fund Managers (AIFMs) will have to comply with the specific substance, conflict of interest, risk management and liquidity management requirements.
The purpose of the Directive is:
● To ensure that all Alternative Investment Fund Managers are subject to appropriate authorisation and regulatory requirements;
● To provide a structure to monitor prudential risks through periodic reporting obligations;
● To ensure the adequate monitoring and control of prudential risks;
● To provide a common approach to protect professional investors;
● To improve accountability of fund managers;
● To develop a single European market for Alternative Investment Funds (AIFs).
Implications For Alternative Investment Fund Managers
Managers who are indirectly appointed to make investment decisions or provide risk management services to AIFMs may be subject to the AIFM Directive.
The implementation of the AIFMD offers significant flexibility to alternative investment managers to choose the operating model that best suits their needs. The Directive focuses mainly on the regulation of the Manager.