During negotiations on the Alternative Investment Funds Managers Directive (AIFMD) back in 2010, one of the most contentious topics was whether, and to what extent, third country (non-EU) based alternative investment funds (AIF) managers would be allowed to access the passporting provisions of the AIFMD and whether national private placement regimes (NPPRs) would be allowed to continue.
The Belgian Presidency at the time proposed a compromise so as to break the deadlock in talks: the introduction of the passport after two years of implementation of the AIFM directive, followed by a potential phasing out of national private placement regimes after 2018.
Following this agreement, and as foreseen in Article 67 of the AIFMD, the European Securities and Markets Authority (ESMA) – on 30 July 2015 – issued advice to the European Parliament, European Council and the European Commission on the application passporting rights to non-EU fund managers, along with an Opinion on the functioning of the EU-AIFMD passport and NPPRs.
To recall, under the current framework, the AIFMD passport is only available to EU entities, while non-EU AIFMs and AIFs are subject to NPPRs prevailing in the EU Member States where they are marketed or managed.
Back to ESMA however, it has assessed six non-EU jurisdictions – Guernsey, Jersey, Hong Kong, Singapore, Switzerland and the USA. However, a definitive view has been produced only on three of them: Guernsey, Jersey, and Switzerland. These assessment have raised as many questions as answers regarding further legislative steps.
In any event, the review of AIFMD is approaching in 2017. It is foreseen that during the revision of the AIFMD the experience of its application will be analysed alongside the impact on investors and AIF or AIFMs in the EU and in third countries. Significant clarity may only be forthcoming at that time therefore.