On 30 September 2016, the EEA Joint Committee adopted a decision incorporating the Alternative Investment Fund Managers (‘AIFM’) Directive and the Commission Delegated Regulations and Commission Implementing Regulations into the European Economic Area (‘EEA’) Agreement.
In summary, the incorporation of the AIFM Directive into the EEA Agreement extends the passporting rights of AIFMs and AIFs under the AIFM Directive to the whole of the EEA from 1 October 2016.
Introduction
Under the AIFM Directive, authorised EU AIFMs are permitted to market the EU AIFs they manage to professional investors in any EU Member State following submission of a notification to their host Member State competent authority.
Before exercising this right, the authorised AIFM is required to submit a notification of its intention to market the AIF it manages in a host Member State to its home Member State competent authority. Following submission of the notification, the AIFM is required to await confirmation of communication by its home Member State competent authority to the host Member State competent authority, or await up to 20 days.
The incorporation of the AIFM Directive into the EEA Agreement formalises the rights of authorised EU, Icelandic, Liechtenstein and Norwegian AIFMs to market the AIFs they manage to professional investors across the whole EEA.
The incorporation of the AIFM Directive into the EEA Agreement does not impact the marketing of AIFs to retail investors. There is no passport for the marketing of AIFs to retail investors2. The marketing of AIFs to retail investors is subject to the national regime of each EEA Member State.
Implications for EU AIFMs: marketing in EEA jurisdictions
The incorporation of the AIFM Directive into the EEA Agreement formallypermits EU AIFMs to market the AIFs they manage to professional investors in Iceland, Liechtenstein and Norway.
EU AIFMs are therefore not subject to any restrictions on the marketing of the AIFs they manage to professional investors in Iceland, Liechtenstein and Norway following submission of a notification to their home Member State competent authority.
The incorporation of the AIFM Directive into the EEA Agreement also formallypermits EU AIFMs to manage AIFs in Iceland, Liechtenstein and Norway.
Iceland – specific case
The AIFM Directive has not yet been transposed in Iceland.
The European Securities and Markets Authority’s (‘ESMA’) guidance on late transposition of the AIFM Directive should apply in this case. Neither the Financial Supervisory Authority of Iceland nor the competent authority of the home Member State of the AIFM should refuse a valid notification under the Directive on the ground that the AIFM Directive has not yet been transposed in Iceland.
Thus, EU AIFMs are permitted to market the AIFs they manage to professional investors in Iceland following submission of a notification to their home Member State competent authority. The Financial Supervisory Authority of Iceland should not refuse the notification from an EEA AIFM to market an EEA AIF to professional investors in Iceland.
Implications for EEA AIFMs: marketing in the EU
In practice, a number of Member States already permitted EEA AIFMs to market the EEA AIFs they manage to professional investors in the EU with a passport.
Denmark, Finland, and the UK, for example, already permitted the marketing in their territory of EEA AIFs to professional investors by EEA AIFMs before the incorporation of the AIFM Directive into the EEA Agreement – for example, marketing to professional investors of:
- Liechtenstein and Norwegian AIFs managed by EEA AIFMs
- EEA AIFs managed by Liechtenstein and Norwegian AIFMs
Certain Member States, such as Spain, had not formally recognised the application of the marketing passport to EEA countries.
The incorporation of the AIFM Directive into the EEA Agreement formalises the rights of Icelandic, Liechtenstein and Norwegian AIFMs to market the AIFs they manage to professional investors in any EU Member State.
Icelandic, Liechtenstein and Norwegian AIFMs are therefore not subject to any restrictions on the marketing of the AIFs they manage to professional investors in any EEA Member State, following submission of a notification to their home Member State competent authority.
The incorporation of the AIFM Directive into the EEA Agreement also formalises the rights of EEA AIFMs to manage AIFs in the EU.
Implications for non-EEA AIFMs: marketing in EEA jurisdictions
At the time of writing, the incorporation of the AIFM Directive into the EEA Agreement does not have any impact on non-EEA AIFMs.
However, ESMA has already issued its opinion on the extension of the passport under the AIFM Directive to a number of non-EEA jurisdictions (refer to FundGlobam alert entitled ESMA advice to the European Commission on the extension of the AIFMD / AIF passport to 12 non-EU/EEA countries). The European Commission is expected to adopt a delegated act extending the AIFM Directive passport to selected non-EEA jurisdictions, such as, for example, Jersey, Guernsey and Switzerland.
If the European Commission adopts a delegated act extending the AIFM Directive passport to selected non-EEA jurisdictions, then non-EEA AIFMs in those jurisdictions will also be permitted to market the AIFs they manage with a passport to professional investors in Iceland, Liechtenstein and Norway including EEA AIFs and AIFs domiciled in the selected jurisdictions.