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AIFMs based outside the European Union (“EU”),
including for these purposes the European
Economic Area states of Iceland, Liechtenstein
and Norway (“non-EU managers”), and who
wish to either manage or market their AIFs
(“funds”) inside the EU, will need to begin
planning and preparing as soon as possible for
the implementation of AIFMD on 22 July 2013.
This Checklist deals with the position of a non-EU
manager who intends to market a fund in the EU
and is managing a fund which is based either in
the EU (“EU fund”) or outside the EU (“non-EU
fund”). AIFMD distinguishes between AIFMs who
manage EU funds, or who intend to market funds
(whether EU or non-EU) which are managed
by them in the EU (who are, broadly speaking,
subject to virtually full compliance with AIFMD),
and those who manage non-EU funds outside
the EU (who must only comply with certain of
AIFMD’s provisions). This distinction is reflected
by parts (A) and (B) of this Checklist, below.
The first step is for non-EU managers to
talk to UK counsel to discuss their specific
structures and consider what actions need
to be taken. Initially, non-EU managers in
conjunction with their UK counsel should:
(A) If intending to manage
EU funds, or market funds
(EU or otherwise) which are
managed by them in the EU:
❏❏ consider appropriate “regulator of
reference”, having regard to factors
such as the jurisdiction of establishment
of the non-EU manager’s funds or of
any EU-based branch operations, or
the jurisdiction of residence of the
largest part of the fund investors;
❏❏ review current arrangements and establish
the identities of each fund and its manager
and review any delegation arrangements
(e.g. with investment advisors);
❏❏ review current arrangements for the
carrying out of risk management, internal
audit and compliance functions and
portfolio management and consider
how such arrangements should be
amended, if necessary, and put in
place necessary documentation;
❏❏ review investment policy and strategy
for each fund and consider requirements
which may attach to investments,
above any relevant control threshold
(see articles 26-30 AIFMD);
❏❏ review all potential passporting
arrangements, considering the location
of the manager and each fund and the
relevant rules applying to each;
❏❏ review calculations of AUM and leverage
and consider possible reporting required
to the regulator of reference;
❏❏ review additional own funds and/or
PI insurance requirements to ensure
adequate funds and/or cover are in place;
❏❏ review and negotiate administration and
depository agreements to meet directive
requirements (including depositary rules);
❏❏ review and update the offering
memorandum to take account of all changes
consequent on the AIFMD requirements and
to ensure that the offering memorandum
contains full details of any changes in
maximum leverage levels, risk profile and
risk management systems employed;
❏❏ review and update all marketing
documentation;
❏❏ review all internal and reporting procedures
and amend to comply with the AIFMD.
These include, for example, calculating
and monitoring AUM and leverage (as
per above), risk management, conflicts
of interest and requirements relating
to control over non-listed issues; and
AIFMD: Checklist for non-EU
Private Equity Managers.
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notification of principal assets with
sectoral and geographic breakdowns and
principal exposures or concentrations;
❏❏ review all procedures for reporting to
investors and regulators and amend
to comply with the AIFMD.
(B) If not managing any EU
funds, or managing any funds
(EU or otherwise) in the EU:
❏❏ check the continuing application of the
relevant “private placement” exemptions
for marketing funds in the EU countries
in which they market, or intend to
market, their funds (note that the private
placement exemptions may be revoked,
subject to ESMA advice, in 2018, but only
if passporting has by then been introduced
for non-EU funds, for which see below);
❏❏ check that no stricter requirements
have been introduced in the private
placement exemptions of any EU country
in which the non-EU funds are to be
marketed (as permitted by the AIFMD);
❏❏ check that co-operation agreements
are in place between the country (or
countries) of each fund’s and the manager’s
domicile and the EU countries in which
the non-EU funds are to be marketed;
❏❏ check that the country or countries of the
non-EU manager and non-EU fund are
not non-cooperative for FATF purposes;
❏❏ review and update the offering
memorandum and all marketing
documentation to reflect the need to
comply with the disclosure and transparency
requirements of the AIFMD and any local
private placement laws in any EU country in
which the non-EU fund is to be marketed;
❏❏ review all internal and external reporting
procedures and amend to comply with
the AIFMD requirements as regards
disclosure and transparency;
❏❏ from 2015 onwards, subject to ESMA advice,
non-EU funds may potentially benefit from
passporting arrangements. Non-EU managers
intending to use such arrangements should,
in advance of their introduction, review
(in conjunction with their UK counsel) the
applicability of all potential passporting
arrangements, including the existence of an
OECD model tax convention between the
country of each non-EU fund and each EU
country in which the non-EU fund is to be
marketed, the identification of a “Member
State of reference” and compliance with
the AIFMD generally (as per (A) above).
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This document is for general guidance only. It does not constitute advice
January 2013
