Alternative Investment Fund Managers Directive

Name: Alternative Investment Fund Managers Directive
Brand: Kluwer Law International
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Dirk Zetzsche(Author)

Kluwer Law International (Publisher)

Published on 17. September 2020

1080 pages

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In the ten years since its coming into force, the Alternative Investment Fund Managers Directive (AIFMD), with almost EUR 7 trillion assets under management in its remit, has become an important piece of European regulation complementing the Undertakings for Collective Investment in Transferable Securities (UCITS) and the Markets in Financial Instruments (MiFI) frameworks. This third edition of the most comprehensive and in-depth analysis of the AIFMD and its related European investment fund legislation (including the European Venture Capital Fund Regulation, the European Social Entrepreneurship Fund Regulation, the European Long-Term Investment Fund Regulation and the European Money Market Fund Regulation among others) brings together fund industry experts, fund supervisors, consultants, lawyers and academics to discuss the content and system of the directive from every angle, including its relation not only to the UCITS and MiFI frameworks but also to pension funds, the Sustainable Finance Disclosure Regulation, the Securitization Regulation and the Cross Border Funds Distribution Directive and Regulation, as well as related pieces of tax regulation at the European level. Further, the third edition emphasizes the function of such factors in the financial services value chain as the following: the AIFMD's approach to robo-advisors; digital asset funds; infrastructure investments in the context of real estate and sustainable investments; risk management; transparency; and impact on alternative investment strategies. Five country reports, focusing on the European Union's five most important financial centres for alternative investment funds, deal with the potential interactions among the AIFMD and the relevant laws and regulations of France, Germany, Luxembourg, Ireland and The Netherlands. This thoroughly updated edition elaborates on potential difficulties encountered when applying the directive and provides potential solutions to the problems it raises. The book is sure to be warmly welcomed by fund lawyers and consultants, investors and their counsels, fund managers, depositaries, asset managers and administrators, as well as regulators and academics in the field.

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Content

Intro
Half-Title Page
Title Page
Copyright Page
Editor
Contributors
Summary of Contents
Table of Contents
Preface to the Third Edition
List of Abbreviations
List of Figures
List of Tables
Chapter 1 Introduction
§1.01 LEGISLATIVE HISTORY OF THE AIFMD
[A] Status Ex Ante AIFMD
[B] Expert Groups and Policy Options
[C] The Impact of the Crisis: Stakeholder Concerns and Leverage
[D] Depositary Rules: Lehmann and Madoff
[E] The Political Process Leading to the AIFMD
§1.02 REGULATORY TECHNIQUE
[A] Multi-level Regulation
[B] Supervisory Cooperation and ESMA Coordination
[C] Accompanying Legislation
§1.03 PRINCIPAL OBJECTIVES
§1.04 REGULATORY TOOLS
[A] Scope
[1] Hedge Funds
[2] Private Equity
[3] Real Estate and Infrastructure
[4] Special Funds (as Qualified Investor Funds)
[5] Others
[B] Investment Triangle
[C] Manager Regulation
[D] Risk Management
[E] Cross-Border Dimension
§1.05 THE AIFMD WITHIN THE EUROPEAN DIRECTIVES ON FINANCIAL LAW
[A] General Direction of European Financial Law
[B] Asset Management Directives
[C] The AIFMD as Pacesetter
[D] The AIFMD Cross-Border Marketing Rules (XBDD and XBDR)
§1.06 THIRD-COUNTRY PASSPORT AND PRIVATE PLACEMENT
[A] Implementation of the EU/EEA Passport
[B] Termination of the National Placement Regime
[C] Brexit
§1.07 AIFMD AND TAX REPORTING
§1.08 OUTLOOK FOR THE AIFMD II
Part I Scope
Chapter 2 Scope of the AIFMD
§2.01 INTRODUCTION
§2.02 AIF DEFINITION PURSUANT TO ARTICLE 4(1)(A) AIFMD
[A] Undertaking for Collective Investment
[1] Central Concept of European Law
[2] Pooling
[3] Third-Party Investment Management
[a] Third-Party Versus Investors' Investment Management
[b] In Particular: Joint Ventures
[c] In Particular: Crowdfunding
[B] Five Additional Criteria
[1] Raising of Capital
[a] 'Capital'
[b] 'Raising' of Capital: Commercial Communication?
[c] In Particular: Self-Used Investments
[d] In Particular: Family Offices
[e] In Particular: Other Pre-existing Groups
[2] Number of Investors
[3] Investment in Accordance with a Defined Investment Policy
[4] For the Benefit of These Investors
[5] No Authorization According to UCITSD
[C] Ascertainment
[1] Open-Ended and Closed-Ended Funds
[2] Irrelevance of the Legal Form
[3] Irrelevance of the AIFM's Legal Structure
[4] Insignificance of the Sales and Distribution Channels
[D] Sub-funds and Unit Classes
[1] Sub-funds
[2] Unit Classes
[3] The Directive's Extended Interpretation
§2.03 SAFE HARBOUR BASED ON BUSINESS ACTIVITY (ARTICLE 2(3) AIFMD)
[A] Four Rationales for Excluding Activities
[1] Holding Companies: Regulated Versus Non-regulated Business
[2] Social Security Institutions
[3] Pursuing the Public Interest
[4] Alternative Regulation
[B] In Particular: AIFM Versus Holding Companies
[1] Definition of the Directive
[2] Interpretation
[3] Exercising Control Versus Passive Pursuit of Investor's Interests
[4] Non-controlling Holdings
[C] In Particular: Other Undertakings for Collective Investments
[1] Venture Capital Funds and European Social Entrepreneurship Funds
[2] European Long-Term Investment Funds
[3] State Funds/Sovereign Wealth Funds
[4] The Basket Character of AIFMD?
§2.04 EXCLUSION BASED ON SIZE: SMALL' AIFM (ARTICLE 3(2)(4) AIFMD)
[A] Calculation of the Threshold Value
[B] Legislation Applicable to Small AIFMs
[C] Additional National Requirements
§2.05 NATIONAL JURISDICTION
[A] Types of Funds
[B] Legal Forms: Details
[C] National Laws Versus European Passport
§2.06 CONCLUSION
Chapter 3 Interplay Between the AIFMD and the UCITSD
§3.01 EU FUND INDUSTRY UNDER REGULATORY SCRUTINY
§3.02 DIFFERENCES BETWEEN THE AIFMD AND THE UCITSD
[A] Demarcation Between AIFs and UCITS
[B] Professional Versus Retail Investors: Tertium Non Datur?
[C] Manager Versus Product Regulation
[D] Third-Country Regulations
[E] The AIFMD's Reliance on Level 2 and Level 3
§3.03 INTERFACES AND OVERLAPS OF THE AIFMD AND THE UCITSD
[A] Manager Regulation
[B] 'Cross-Sectoral' Activities of AIFMs and UCITS Management Companies
[C] Delegation
§3.04 IMPACT ON FUND MANAGERS UNDER THE AIFMD AND/OR THE UCITSD
[A] The AIFM's Perspective: Should I Stay or Should I Go?
[B] UCITS Wrapper as an Alternative?
[C] Business as Usual for UCITS Management Companies?
§3.05 CONCLUSION
Chapter 4 AIFMD Versus MiFID/MiFIR: Similarities and Differences
§4.01 INTRODUCTION
§4.02 A PRIMER TO MIFID
[A] Significance and Scope of MiFID
[B] Know Your Customer
[C] Fitness and Properness
[D] Adequate Organization
§4.03 SIMILARITIES
[A] Manager Regulation
[B] Licence for Individual Portfolio Management
[C] Commitment to the Investors'/Clients' Best Interests
[D] Remuneration
[E] Prohibition of Letter-Box Entities/Shell Companies
[F] Cross-Border Dimension
§4.04 DIFFERENCES
[A] Policy Objectives
[B] Assets: Financial Instruments Versus Unlimited
[C] Risk Management: Operating Condition Versus Core Activity
[D] Rules on Distribution Versus Mandatory Disclosure
[E] Authorization and Operating Conditions
[1] Capital Requirements
[2] Organizational Requirements
[3] Individual Portfolio Management Versus Management of AIF
[F] Product Regulation
[G] Status of Investment Advisory Relationships
[H] Safekeeping of Assets
[I] Manager Liability
[J] Transparency and Disclosure
§4.05 CONCLUSION
Chapter 5 ELTIFR Versus AIFMD
§5.01 OBJECTIVE OF ELTIFR
§5.02 ELIGIBLE ASSETS (ARTICLES 1, 9-13 ELTIFR)
[A] QPC (Article 11 ELTIFR)
[1] Undertaking
[2] Neither CIU nor Financial Undertaking
[3] Location of the QPC
[4] Not Listed or Market Cap Below 500 Million
[5] Legal Form of Investments
[B] Real Assets (Article 10(e) ELTIFR)
[1] Binding Text
[2] Guidance from the Recitals and CIU Principles
[3] Direct and Indirect Holdings
[C] Certain Undertakings for Collective Investments (Article 10(d) ELTIFR)
[D] Prohibited Investment Techniques (Article 9(2) ELTIFR)
[E] Restricting Criteria
[1] Long-Term Objective
[2] Conflicted Investments
§5.03 MANAGER REGULATION
[A] Corresponding Application of AIFMD and ELTIFR
[B] Internal ELTIF-AIFM
[C] Liability for Infringements of ELTIFR (Article 7(3) ELTIFR)
§5.04 THE ELTIF'S DEPOSITARY (ARTICLE 29 AIFMD)
§5.05 PRODUCT REGULATION
[A] Authorization Requirement
[B] Portfolio Composition
[1] Seventy Percent Eligible Assets
[2] Diversification, Concentration and Borrowing
[a] Diversification (Articles 13, 14 ELTIFR)
[b] Concentration (Article 15 ELTIFR)
[c] Borrowing (Article 16 ELTIFR)
[3] Quota Calculation and Rectification
[a] Scope
[b] Capital Definition
[c] Treatment of Groups (Article 13(7) ELTIFR)
[d] Timing/Staging Rules (Article 17 ELTIFR)
[e] Rectification of Infringements
[C] The ELTIF's Share/Unit
[1] Limited Redemptions (Article 18 ELTIFR)
[a] Closed-Ended Fund or Qualified Open-Ended Fund
[b] Managing Liquidity
[c] Redemption in Cash or in Kind
[2] Furthering the Transferability of ELTIF Units (Article 19 ELTIFR)
[3] Capital Measures
[4] Dissolution
[5] Distribution of Proceeds and Capital During the ELTIF's Life (Article 22 ELTIFR)
[D] Cross-Border Notification
§5.06 SALES REGULATION
[A] UCITSD/AIFMD-Style Protection
[1] Investor Information
[2] Subscription and Payment Agent (Article 26 ELTIFR)
[3] AIFM: MiFID Side Service Licence (Article 30(2) ELTIFR)
[B] MiFID Style Requirements on the AIFM Only
[1] AIFM: Product Governance (Article 27(1) and (2) ELTIFR)
[2] AIFM: Mandatory Product Governance Information for Distributors (Article 27(3) ELTIFR)
[3] AIFM: Suitability Test (Article 28(1) ELTIFR)
[C] MiFID Style Requirements in AIFM and Distributors
[D] ELTIF Cap at 10% of Retail Portfolio (Article 30(3) ELTIFR)
§5.07 THIRD-COUNTRY RELATIONS
§5.08 ASSESSING ELTIFR
[A] Brand Building
[B] Remaining Member States' Discretion
[C] Tax as Investment Barrier
[D] Disrespecting Market Efficiency
[E] ELTIFR Reform?
§5.09 THE ELTIFR'S IMPACT ON COMPETITION
Chapter 6 Sustainable Finance, Responsible Investments, the AIFMD and SRD II
§6.01 INTRODUCTION
§6.02 FUNDAMENTALS OF SF
[A] Defining CSR, RI and SF
[B] RI Categories in the Investment Fund Context
[C] RI, Profitability and Economics
[1] Profit Perspective
[2] Cost Perspective
§6.03 FROM CSR TO SF IN EUROPEAN FINANCIAL LAW
[A] CSR in European Law
[1] The First Stage: 1993 Onwards
[2] The Second Stage: 2000 Onwards
[3] The Third Stage: 2010 Onwards
[4] The Fourth Stage: 2016 Onwards
[B] Impact on Financial Law
[1] The Rise of SRI
[2] The Impact of the Financial Crisis
[3] From Voluntary to Mandatory: SF as a New Policy Objective
§6.04 RI APPROACH IN THE AIFMD
[A] Institutional RI
[1] Remuneration
[2] Conflicts of Interest
[B] Investment RI
[1] Mandatory Disclosure
[2] The "Best Interest" Requirement
[3] Limits on Leverage
[C] Integrated RI
[1] Asset-Stripping Rules and Acquisition of Non-listed Firms
[2] Voting/Exercise of Shareholder Rights
§6.05 PRACTICAL IMPLICATIONS
[A] RI as a Guideline for Construing/Interpreting the AIFMD
[B] Indirect Effect
[C] Impact on Fund Governance of the AIFMD and AIFs
[1] Minimum Sustainable Finance Obligation
[2] Opting-in to RI: AIF Investment Policy Refers to Sustainable Finance Principles
[D] Impact on Corporate Governance of Portfolio Company
§6.06 TOWARD A NEW POLICY OBJECTIVE
Chapter 7 How to "Fix" the Venture Capital Model? Regulation Versus Disruption
§7.01 INTRODUCTION
§7.02 THE VC MODEL: CHALLENGES AND SOLUTIONS
§7.03 DISRUPTIVE VC MODELS
[A] Visibility
[B] Collaboration
[C] Constant Iteration and Learning
§7.04 CONCLUSION
Part II Regulation of the AIFM
Chapter 8 Appointment, Authorization and Organization of the AIFM
§8.01 INTRODUCTION
§8.02 CORE AND NON-CORE ACTIVITIES OF THE AIFM
[A] AIF Management as Core Activity
[1] Portfolio and Risk Management as 'Managing an AIF'
[2] Portfolio Management
[3] Risk Management
[B] Non-core Activities
[1] Non-core Services under Annex I No. 2 AIFMD
[a] Administration
[b] Marketing
[c] Asset-Related Services
[d] Separate Authorization?
[2] UCITS Management under Article 6(2) AIFMD
[3] Discretionary Portfolio Management under Article 6(4) AIFMD
[a] Individual Portfolio Management
[b] Investment Advice, Safekeeping and Technical Administration, Transmission of Orders
[c] Special Authorization
[4] Relationship to Other European Passports
§8.03 DELINEATION OF AIF' AND AIFM': INTERNAL AND EXTERNAL AIFMS
[A] External Legal Person
[B] Appointed as Manager by the Governing Body
[C] Issues
[1] Inability of Internal Management or Natural Persons to Be AIFMs
[2] Illegitimate Appointment Resolution
[3] Governing Body and Trust Companies as Directors
[4] Management Entity Behind Limited Partnership
§8.04 CONDITIONS FOR AUTHORIZATION
[A] Asset Management as Licensed Activity (Article 7(1) AIFMD)
[B] Limits on Authorization by Type of Investment Strategy (Article 8(4) AIFMD)
[C] Authorization Conditions (Articles 8 and 9 AIFMD)
[D] Authorization Procedure
[1] Jurisdiction
[2] Application Materials
[3] Review
[4] Changes to Authorization (Article 10 AIFMD)
[a] Notice Requirement
[b] Delegation
[5] Withdrawal of Authorization (Article 11 AIFMD)
§8.05 OPERATING CONDITIONS
[A] Overview
[1] Detailed Level 2 Regulation
[2] Principle of Proportionality
[B] General Conduct of Business Principles
[1] Duty of Loyalty
[a] Best Interest Rule and Best Execution
[b] Conflicts of Interest Organization
[c] Fair Dealing
[2] Duty of Care
[a] Adequate Organization
[b] Compliance
[c] Equal Treatment of Investors
[C] Valuation and NAV Calculation
[1] AIFM's Obligation and Liability
[2] Procedural Requirements
[a] Appropriate and Consistent Procedures
[b] Ensuring Compliance
[c] Ensuring the Frequency of Asset Valuation and NAV Calculation
[d] Disclosure
[3] Substantive Requirements on Valuation
[4] External Valuation
[a] External Valuation Versus Rules on Delegation (Article 20 AIFMD)
[b] Qualification of the External Valuer (Article 19(5) AIFMD)
[c] Prohibition of Sub-delegation (Article 19(6) AIFMD)
[d] Notification of External Valuation (Article 19(7) AIFMD)
[e] Liability for External Valuation (Article 19(10) AIFMD)
[5] Issues
[a] Valuation in Decentralized Settings
[b] Valuation with External Management
[c] Cross-Border Dimension
§8.06 CONCLUSION
Chapter 9 Delegation
§9.01 INTRODUCTION
§9.02 SCOPE
[A] Sources
[B] Delegation of "Core" Investment Management Functions ("Portfolio and Risk Management")
[C] Delegation of Other Management Functions
[1] ESMA/2011/379
[2] AIFMD (Commission) Regulation
[a] Exclusion of "Supporting Tasks"
[b] "Annex I.2. Services" Fully in Scope?
[D] Advisory Services
[E] Back Delegation
§9.03 GENERAL OPERATING CONDITIONS
[A] Justification and Due Diligence
[1] Justification
[2] Due Diligence
[B] The Delegate
[1] Human Resources and Technical Infrastructure
[2] Fitness
[3] Properness (Good Repute)
[4] Impact of Authorization
[C] General Features of the Delegation
[1] Supervision
[2] Policies and Compliance with AIFMD Rules
[3] Continuity of the Service
[4] Contractual Rights
[5] Letter-Box Entity
[6] Regulatory Supervision
[7] Prohibition of Double Delegation?
§9.04 DELEGATING CORE FUNCTIONS
[A] Delegation to Regulated Entities
[B] Delegation to a Third-Country Entity
[1] Authorization/Registration
[2] Cooperation of Competent Authorities
[C] No Delegation to the Depositary
[D] No Delegation to Any "Conflicted Entity"
§9.05 SUB-DELEGATION AND FURTHER SUB-DELEGATION
[A] Consent of the AIFM
[B] Notification to AIFM's Competent Authority
§9.06 CONCLUSION
Chapter 10 Robo-Advisors under AIFMD
§10.01 INTRODUCTION
[A] Benefits and Limitations of Robo-Advisors
[B] Robo-Advisors and Portfolio Management
[C] Robo-Advisors and Investment Funds
[D] Regulatory Perspectives
[E] Compliance with AIFMD
§10.02 ANATOMY OF ROBO-ADVISORS IN THE LIGHT OF THE AIFMD
[A] Degree of Automation
[B] Contractual Relationships
§10.03 AUTHORIZATION
[A] Authorization Versus Registration
[B] Authorization Conditions
[C] Authorization Perimeter
§10.04 OPERATING CONDITIONS
[A] Organizational Rules
[B] Conduct of Business Rules
[1] Duty of Loyalty
[2] Duty of Care
[3] Fair Treatment of Investors
§10.05 FUNCTIONS
[A] 'Core' Functions
[1] Portfolio Management
[2] Risk Management
[B] 'Non-core' Functions
[1] Fund Administration
[2] Marketing Versus Fund Distribution
[3] Asset Relating Services
[C] Delegation of Functions
§10.06 TRANSPARENCY REQUIREMENTS
[A] General Reporting and Disclosure Requirements
[B] Investors Information
§10.07 SUPERVISION
[A] Competent Authority
[B] Depositary
§10.08 LIABILITY
[A] EU Initiatives
[B] Liability Regimes and Alternative Liability Schemes
[1] Fault-Based Liability
[2] Strict Liability
[3] Robo-Advisor as a Person-Like
[4] Mandatory Insurance or Compensation Scheme
§10.09 CONCLUSION
Chapter 11 AIFM's Governance and Remuneration Committees
§11.01 INTRODUCTION
§11.02 TESTING THE NEED FOR LEGAL REFORM: THE EXPANSION OF SCOPE OF EU CORPORATE GOVERNANCE INTERVENTIONS
[A] Political Rather than Economic Reasons
[B] Legal Transplant Rather than Granular Approach
§11.03 TESTING THE SCOPE OF THE AIFMD
[A] Distinct Issues in One Box
[B] Proportionality as a Solution
§11.04 TESTING THE REGULATORY TONE OF THE AIFMD
[A] Dominance of Black-Letter Duties
[B] Voluntary Codes?
[1] Conflicts of Interest
[2] Organizational Requirements
§11.05 TESTING THE AIFMD'S ADEQUACY IN RELATION TO THE OVERALL CORPORATE GOVERNANCE SYSTEM: THE CASE OF THE REMUNERATION COMMITTEE
[A] European Rules on Remuneration Committees
[B] Basic Features of the Remuneration Committee
[1] One-Tier Board of Directors
[2] Two-Tier Board/Supervisory Board Committees
[3] Committees Established by the General Meeting of Shareholders
[C] Remuneration Committee in the Financial Sector and Directive 2010/76/EU (CRD III)
[D] Remuneration Committees under the AIFMD
§11.06 CONCLUSIONS: PROPORTIONALITY AS A GOVERNANCE TOOL
Chapter 12 Liquidity Management and Side Pockets
§12.01 LIQUIDITY AS INVESTOR PROTECTION
§12.02 SIDE POCKETS: A SUITABLE TOOL FOR LIQUIDITY MANAGEMENT?
[A] Economic Objectives of Side Pockets
[B] Legal Concept and Structures of Side Pockets
[C] Alternative Measures and Instruments for Liquidity Management
§12.03 SIDE POCKETS UNDER REGULATORY SCRUTINY
[A] IOSCO's Principles on Suspension of Redemptions
[B] U.S.
[C] Switzerland
§12.04 SIDE POCKETS UNDER AIFMD: A NEW EU FRAMEWORK?
[A] Liquidity Management via "Special Arrangements"
[B] Admissibility of Side Pockets under the Laws of EU Member States
[C] Cross-Border Marketing Issues of AIFs with Side Pockets
§12.05 ESMA GUIDELINES ON LIQUIDITY STRESS TESTING
§12.06 CONCLUSION
Chapter 13 Risk Management
§13.01 INTRODUCTION
§13.02 UNDERSTANDING RISK MANAGEMENT
[A] Three Dimensions of Risk Management
[1] Control
[2] Setting Boundaries for Optimizing Business Activity
[3] Governance
[B] Legal Categorization of Risk Management
[1] Risk Management Triangle
[a] Risk Organization (Institutional Risk Management)
[b] Risk Procedures (Operational Risk Management)
[c] Risk Measurement (Technical Risk Management)
[2] Delineation
[a] Compliance
[b] Internal Control System
[c] Internal Audit
§13.03 RISK MANAGEMENT AS THE AIFM'S CORE ACTIVITY
[A] Risk Management as Regulated Activity
[B] Delegation of Risk Management
[1] Risk Management Process and Regulatory Scope
[2] Delegation to Authorized Entity
[a] Entities Authorized under Article 20(1)(c) AIFMD and Article 78 AIFMD (Commission) Regulation
[b] Asset Management as Inclusive Expression
[c] Delegation of Risk Management to MiFID Firms with Respect to Non-financial Instruments?
[3] Delegation to Non-supervised Entity
[a] Special Permission Requirement
[b] Extent of the Special Permission
[C] The "Risk Management AIFM"
§13.04 RISK MANAGEMENT PRINCIPLES
[A] Risk Management Organization
[1] Functional and Hierarchical Separation
[a] General Organizational Requirements
[b] Principle of Proportionality: Safeguards in Case of Incompatibility
[2] Risk Management Policy
[a] Minimum Requirements
[b] Review Period/Measurement Frequency
[c] Risk Limits
[d] Quantitative or Qualitative Limits?
[3] Permanent Risk Management Function/Chief Risk Officer (CRO)
[a] Organizational Requirements
[b] CRO Versus Governing Body/Senior Management
[c] Delegation
[4] Risk Management and Remuneration
[a] General Requirements
[b] Interaction with Risk Management
[c] Brief Overview on Potential Issues
[B] Risk Management Procedures
[1] Risk Transparency and Disclosure
[2] Due Diligence
[3] Liquidity Management Procedures
[a] General Requirements
[b] Interaction of Liquidity and Risk Management
[4] Stress Testing as a Procedural Element
[C] Risk Measurement
[1] Proportionate Risk Measurement
[a] Principle-Based Regulation
[b] Lack of Consensus, Standardization and Certainty
[2] Data Management and Processing
[a] The Issue
[b] Operational Risk
[3] Risk Measurement Techniques in Alternative Strategies
[a] Position-Based Risk System Versus Return-Based Risk System
[b] Advanced Measurement Techniques Versus Basic Strategy-Related Risk Measurement
[c] Scope and Limits of Risk Measurement in Alternative Strategies
[4] Risk Measurement and the Need for Prudential/Protective Regulation
§13.05 KEY RISKS IN THE AIFM'S RISK MANAGEMENT
[A] Risks Highlighted by AIFMD
[B] Financial Risks
[1] Investment Risk
[a] Initial Investment Risk
[b] Ongoing Investment Risk
[2] Leverage Risks
[3] Liquidity Risk
[4] NAV Instability Risk/Valuation Risk
[5] Risk of Overreliance on External Ratings
[C] Operational Risks
[1] Conflict of Interest Risks
[2] Legal/Regulatory Risks
§13.06 CONCLUSIONS
Chapter 14 Securitizations and SPVs under STSR and AIFMD
§14.01 INTRODUCTION
§14.02 SCOPE OF THE STSR
[A] Securitization
[1] Dependent upon Performance of Exposures to Financial Assets
[2] Subordinated Tranches
[3] Exclusion of Schemes Related to Physical Assets
[B] Sponsor
[C] Institutional Investors
[D] Dealing with Out-of-Scope Securitizations
§14.03 AIFMD VERSUS STSR
[A] Two Definitions of Securitizations
[B] The EC's Formal Approach: Debt Versus Ownership Interests
[C] Practice of Member States' Supervisory Authorities
[D] Critique
[E] The Three-Feature Test: A Substance over Form Approach
[1] First Element: Credit Institution or Investment Firm as Sponsor
[2] Second Element: No Tranching
[3] Third Element: Discretionary Management
§14.04 GENERAL STSR FRAMEWORK
[A] Credit-Granting Process of the Originator or Original Lender
[1] EU Credit Institutions and EU Investment Firms
[2] EU Originators and Original Lenders
[a] Criteria for Credit-Granting
[b] 'Fully Supported' ABCP Transaction
[3] Non-EU Originators and Original Lenders
[B] Risk Retention on the Part of the Securitizing Entity
[1] Operational Requirements and Calculation
[2] Most Optimal Alignment of Interests
[3] Private Sector Securitizations
[C] Organizational Prerequisites
[1] Monitoring Performance of Securitization Position/Underlying Exposures
[2] Stress Testing
[3] (Internal/External) Reporting and Record-Keeping Requirements
[4] Delegation
[D] Assessment of the Risk Associated with the Relevant Securitization
[E] Transparency Requirements
[1] Ongoing Transparency Obligations (Investor Disclosure/Reporting)
[2] Ad-Hoc Disclosure (Investor Disclosure/Reporting)
[3] Securitization Repository
§14.05 CONCLUSION
Chapter 15 Investor Information and Reporting
§15.01 INTRODUCTION
§15.02 TRANSPARENCY REQUIREMENTS OF AIFMD
[A] Initial Investor Information
[1] Disclosure Requirements
[2] Format and Publication, Accessibility and Frequency
[a] Format
[b] Privacy Versus Publication
[c] Accessibility
[d] Frequency
[3] Initial Investor Information in Product Distribution Chains
[4] Opt-Out Solution?
[5] Additional Initial Information under Other AIFMD Provisions
[B] Periodic Disclosure to Investors
[1] Disclosure Requirements for AIFs
[a] Annual Report
[b] Additional Periodic and Event-Related Disclosure
[2] Format and Accessibility
[a] Format
[b] Accessibility
[3] Interaction with the European Directives on Company Law
[a] Scope of the European Company Law Directives
[b] Applying the European Directives on Company Law on AIFMD
[4] Applicable Accounting Standards: National GAAP Versus IFRS
[5] Disclosure Requirements for AIFMs
[C] Reporting to Competent Authorities
[1] Reporting Requirements
[2] Format, Reporting Measures and Frequency
[a] Format
[b] Reporting Measures
[c] Frequency
[d] Reporting on Leveraged AIFs
[3] Justification and Legal Limits of Reporting
[4] Investor Information Versus Reporting Requirements
[D] Acquisition-Related Disclosure
[1] Additional Reporting to Competent Authorities
[2] Additional Periodic Disclosure
[3] Additional Disclosure to AIF's Investors
§15.03 AIFMD VERSUS EU-PROSPECTUSR AND TPD
[A] Prospectus Obligation
[1] The Definition of "Securities"
[a] Conflict of Disclosure Requirements Between EU-ProspectusR and AIFMD
[b] AIF: "Securities Definition" or Extra-Provision in EU-ProspectusR?
[2] "The Public" Versus "Professional Investors": Always Out of the Scope of EU-ProspectusR?
[a] Definition of "Professional Investor"
[b] Registration Requirement?
[3] Initial Investor Information Versus Prospectus under the EU-ProspectusR
[B] Continuing Reporting Requirements under TPD
§15.04 AIFMD VERSUS ELTIFR AND PRIIPSR
[A] Prospectus and KIID Obligation
[1] KIID Obligation under PRIIPsR
[2] Additional Prospectus Obligations under ELTIFR
[B] Periodical Reporting Requirements
§15.05 AIFMD AND TAX REPORTING
§15.06 CONCLUSION
Part III Regulation of the Depositary
Chapter 16 Depositary Regulation
§16.01 INTRODUCTION
§16.02 THE SCOPE OF THE AIFMD WITH REGARD TO DEPOSITARIES
[A] The Obligation to Appoint a Depositary under the AIFMD
[1] General Rule
[2] Exemptions from the Depositary Obligation
[3] Depositary-Lite Regime
[B] Entities Eligible as a Depositary and Its Organizational Requirements
[1] Credit Institutions
[2] Investment Firms
[3] Other Eligible Institutions
[4] Eligible Non-EEA Entities
[5] Option for Private Equity Funds, Venture Capital Funds and Real Estate AIFs
[C] The Location of the Depositary
[1] Location of the Depositary for EEA-AIFs
[2] Location of the Depositary for TC-AIFs
[a] EEA-AIFMs
[b] TC-AIFM
[3] A Quasi-Depositary Passport Regime for TC-AIFs
[D] EEA Depositaries: General Requirements
[1] Duty of Loyalty
[2] Conflicts of Interest
[E] Third-Country Depositaries
[1] Additional Requirements for Third-Country Depositaries
[2] The Third-Country Depositary and 'Effective Prudential Regulation'
[a] Effectively Enforced Prudential Regulation
[b] 'Supervision Equivalent' to That Applicable under EEA Law
§16.03 THE DEPOSITARY AND ITS FUNCTIONS
[A] The Particulars of the Written Contract
[1] Eligible Assets
[2] Flow of Information
[3] Escalation Procedure
[4] Third Parties
[5] Termination of the Contract
[B] Safekeeping
[1] Financial Instruments That Should Be Held in Custody
[2] Safekeeping Duties with Regard to Assets Held in Custody
[3] 'Other Assets'
[4] Safekeeping Duties Regarding Ownership Verification and Record Keeping
[5] Safekeeping Duties and Crypto-Assets
[C] Control
[1] Oversight Duties: General Requirements
[a] Ex Ante Verification
[b] Ex Post Controls
[2] Subscriptions/Redemptions
[3] Valuation of Shares/Units
[4] AIFM's Instructions
[5] The Timely Settlement of Transactions
[6] AIF's Income Distribution
[7] Monitoring of the AIF's Cash Flows
[a] Cash Monitoring: General Requirements
[b] Proper Monitoring of All AIF's Cash Flows
§16.04 DELEGATION IN THE DEPOSITARY CHAIN
[A] Avoiding Requirements
[B] Objective Reason
[C] Due Diligence
[1] Due Diligence upon Appointment of the Sub-custodian
[2] Ongoing Monitoring Diligence Sub-custodian
[3] Adequate Structures and Expertise
[4] Effective Prudential Regulation
[5] Segregation of Assets
[6] Insolvency Protection AIF Assets
[6] Re-hypothecation
[7] General Obligations
[8] Ongoing Monitoring and Periodic Review
§16.05 CONCLUSION
Chapter 17 The AIF Depositary's Liability for Lost Assets
§17.01 INTRODUCTION
§17.02 DEPOSITARY'S OBLIGATION TO SAFE KEEP AND RETURN ENTRUSTED ASSETS
[A] Safekeeping Obligation
[B] Obligation to Return Assets
§17.03 DELEGATION
[A] Scope
[B] Consequences of the Obligation to Return
§17.04 DEPOSITARY'S LIABILITY FOR LOST ASSETS
[A] Loss
[B] AIFMD Exemptions
§17.05 CONCLUSIONS
Chapter 18 Depositaries: Still a Bit of a Mess
§18.01 HOW DID WE GET HERE?
§18.02 CROSS-SECTOR COHERENCE?: OTHER DEVELOPMENTS RELEVANT TO DEPOSITARIES
[A] The Giovannini Working Group
[B] The Nucleus: Insolvency
§18.03 IMPRECATIONS AND IMPLICATIONS
[A] Increased Risks, Costs and Capital: CRD IV
[B] The Level 2 Dialogue
§18.04 THE RELEVANT PROVISIONS OF THE AIFMD
[A] Assets to Be Held in Custody Versus 'Other Assets'
[B] Restitution of Lost Held-in-Custody Financial Instruments
[C] Sub-custodians and Scope of 'Delegation'
[1] Delegation and Collateral Held with Third Parties
[2] Investor CSDs as 'Delegates'
[D] Avoiding Liability?
[E] Duties of Depositary and Sub-custodians with Respect to Held-in-Custody Financial Instruments
[F] Non-EU AIFs
[G] Net Effect: The Depositary as Guarantor
§18.05 DEVELOPMENTS SUBSEQUENT TO THE AIFMD (COMMISSION) REGULATION
[A] The ESMA Segregation Consultation and Opinion
[1] Segregation in Law and in Practice
[2] The ESMA Segregation Consultation and Opinion
[B] The 2018 Delegated Regulation
[1] Reliance Model as Concern
[2] Taking MiFID into Account
§18.06 A SPECIAL CONCERN: COLLATERAL DAMAGE
[A] Background on Use of Collateral
[B] Collateral under the Law
[C] Implications of an Unresolved Inconsistency
§18.07 A WAY OUT?
[A] Basic Concepts
[B] Rules That Would Make Sense
[C] Application to the AIFMD
§18.08 CONCLUSION
Chapter 19 (Prime) Brokerage
§19.01 INTRODUCTION
§19.02 A PRIMER ON PRIME BROKERAGE, MARGIN AND COLLATERAL
[A] Derivatives and Margin
[B] Initial Margin
[C] Operating or Variation Margin
[D] Assets to Be Provided as Collateral
[E] Collateral in the Prime Broker's Insolvency
[F] Defining Prime Broker Management
§19.03 WIDE SCOPE OF THE AIFMD'S PRIME BROKER RULES: ALL BROKERS
§19.04 THE BROKER'S THREE FUNCTIONS
[A] Counterparty to AIFM
[1] Scope
[2] Conflicts of Interest Rules
[3] AIFM in Charge of Prime Broker Management
[4] Best Execution Rule
[5] The Depositary's Oversight Role
[B] Sub-depositary
[1] Scope: Financial Instruments That Can Be Held in Custody
[2] The Depositary's Obligations: The Three Asset "Buckets"
[3] Injunctive, Not Performance-Related Right of Action
[C] Prime Broker as Depositary?
[D] The Resulting Situation
§19.05 ORGANIZATIONAL REQUIREMENTS
[A] Risk Management
[B] Compliance
[C] Information Flow: Reporting and Disclosure
[1] Depositary
[2] Investors
[3] Competent Authorities
[D] Prime Brokers Versus Delegation
[1] Distinction Between Counterparty and Sub-depositary
[2] Delegation by AIFM?
[3] AIFM: Prime Broker and Collateral Management as Asset Management?
[E] Asset Segregation
§19.06 ANALYSIS
[A] Modified Hybrid/Depositary Model
[B] Entering into a Brokerage Agreement
[1] Collateral Management at the Cross-Section of the AIFM's and the Depositary's Obligations
[2] Disagreement Between AIFM and Depositary
[C] Allocating Liability
[1] Each Party for Its Obligations
[2] Liability of the AIF?
[D] Member States' Discretion to Impose Additional Requirements?
§19.07 PRIME BROKER MODELS UNDER AIFMD
[A] Sub-depositary with or Without Indemnity Clause
[B] Prime Only
[C] Depositary Prime
[D] Prime Custody
[E] Prime Depositary
[F] Multi-prime
[G] Discharge Model
[H] Depositary Lite or Open-Architecture Model with TC-AIF
[I] Master AIFM with Prime Brokers
§19.08 CONCLUSION
Chapter 20 The Rationale for a Depositary Passport
§20.01 INTRODUCTION
§20.02 ADVANTAGES OF A DEPOSITARY PASSPORT
[A] Efficiency Gains
[B] Cost Benefits
[C] Financial Stability
§20.03 THE INTERNAL MARKET FOR INVESTMENT FUNDS
[A] UCITS II Proposal
[B] UCITS III
[C] Lamfalussy Report
[D] AIFMD and UCITS V
§20.04 STAKEHOLDER VIEWS
[A] Green Paper (2005)
[B] Expert Group (2006)
[C] UCITS V (2009)
[D] UCITS V Consultations 2010/2012
§20.05 A PROPOSED SOLUTION TO THE SUPERVISION CONUNDRUM
[A] Reflexive Governance
[B] Supervisory Colleges?
[C] ECB Supervision
§20.06 CONCLUSION
Part IV Investment Strategies
Chapter 21 Hedge Funds and Systemic Risk Reporting
§21.01 INTRODUCTION AND OVERVIEW
§21.02 THE EU HEDGE FUND MARKET
§21.03 DEFINITION AND METHODS FOR CALCULATION OF LEVERAGE
[A] AIFMD
[B] AIFMD (Commission) Regulation 231/2013 and ESMA Advice 2011/379
[1] Gross Method (Article 7 AIFMD (Commission) Regulation)
[2] Commitment Method (Article 8 AIFMD (Commission) Regulation)
[C] ESMA Q&A Related to Calculation of Leverage
§21.04 SPECIFIC REQUIREMENTS OF LEVERAGED AIFS WITHIN THE AUTHORIZATION PROCEDURE
[A] Information Requirements
[B] Internal Leverage Limit
§21.05 REPORTING OBLIGATIONS WITH REGARD TO LEVERAGE
[A] AIFMD
[B] AIFMD (Commission) Regulation and ESMA/2011/379
§21.06 USE OF INFORMATION BY COMPETENT AUTHORITIES, SUPERVISORY COOPERATION AND LIMITS TO LEVERAGE
[A] AIFMD
[1] Assessment of Information
[2] Information Exchange
[3] Limits to Leverage by Competent Authorities
[B] AIFMD (Commission) Regulation and ESMA/2011/379
[C] Potential Countermeasures
[D] Disclosure
§21.07 CONCLUSION
Chapter 22 Digital Asset Funds
§22.01 INTRODUCTION
§22.02 DEFINITIONS
§22.03 MARKET OVERVIEW
[A] Crypto Hedge Funds
[1] Governance
[2] Remuneration and Performance Fees
[3] Top Five CHFs
[B] CCEs and Wallets
[C] Cryptocurrency Index Funds and ETFs
§22.04 FUND TYPES
[A] UCITS
[B] AIFs
§22.05 LEGAL ISSUES
[A] Safekeeping and Custody
[B] Valuation
[C] Qualification of Service Providers
[D] Tech Entrepreneurs Versus Depositaries
§22.06 SUMMARY
Chapter 23 AIFMD and Private Equity
§23.01 INTRODUCTION
§23.02 TYPICAL PRIVATE EQUITY STRUCTURE
[A] Tax-Driven Variety
[B] Basic Features
[C] Industry Divergence
§23.03 IMPACT OF THE AIFMD ON PRIVATE EQUITY FUNDS
[A] Registration as AIFM/Scope and Calculation of Assets under Management (AuM)
[B] Marketing of Private Equity Funds
[C] Identifying the AIFM: Delegation
[D] Depositary
[E] Transparency Requirements
[F] Asset Stripping Provisions
[G] Risk Management Functions
[H] Remuneration Guidelines and Disclosure
§23.04 CONCLUSION
Chapter 24 The AIFM's Duties upon the Acquisition of Non-listed Firms
§24.01 SCOPE, DEFINITIONS AND GENERAL PRINCIPLES
[A] Exempt Companies
[1] Real Estate Special Purpose Vehicles
[2] SMEs
[B] Definition of Control
[C] Confidentiality Obligations
[D] Gold-Plating
§24.02 DISCLOSURE
[A] Requirements When Certain Thresholds Are Crossed
[B] Requirements upon Acquisition of Control
§24.03 ASSET STRIPPING
[A] Original Views
[B] Adopted Rules
[C] Policy Rationale
§24.04 CONCLUSION
Chapter 25 Art Investment Vehicles
§25.01 INTRODUCTION
§25.02 ASSET CLASS-RELATED AND OPERATIONAL ENVIRONMENT
[A] Art and the Private Equity Fund Model
[B] Active Management of an Art Portfolio
[C] Art Fund Structure, Process and Management
§25.03 INVESTOR CONCERNS AND IMPACT OF REGULATION
[A] AIFMD Scope
[B] AIFMD-Compliant Art Fund Managers
§25.04 CURRENT ART INVESTMENT VEHICLE TRENDS
[A] Family Offices
[B] Managed Art Accounts
§25.05 CONCLUSION
Chapter 26 Infrastructure Investments
§26.01 INTRODUCTION
§26.02 CATEGORIES
[A] Economic Versus Social
[B] Equity Versus Debt
[C] Risk and Return
§26.03 INFRASTRUCTURE AS A RISK MANAGEMENT TOOL
§26.04 MARKET OVERVIEW
§26.05 SET-UP OF INFRASTRUCTURE AIFS
[A] Closed-Ended and Open-Ended AIFs
[B] Professional or Retail AIFs
[C] Fund Vehicles
[D] Note on Taxes
§26.06 OUTLOOK
Chapter 27 The AIFMD and (Dutch) Real Estate Funds
§27.01 INTRODUCTION
§27.02 TYPICAL STRUCTURE OF A REAL ESTATE FUND
§27.03 AIFM AUTHORIZATION
[A] Licence Versus Registration
[B] Licensing Requirements for RE-AIFM
[C] Implementation in the Netherlands: Split Supervision by the DNB and the AFM
§27.04 DEPOSITARY AND CUSTODIAN
§27.05 LEVERAGE
[A] AIFMD Rules
[B] Implementation in the Netherlands: Leverage Monitoring by the DNB
§27.06 VALUATION
[A] Revaluation under AIFMD
[B] External Valuer
[C] Liability in Connection with a Valuation
[D] Supervision
§27.07 FINANCIAL IMPLICATIONS FOR REAL ESTATE FUNDS
§27.08 CONCLUSION
Chapter 28 Loan-Originating (Debt) Funds
§28.01 INTRODUCTION
§28.02 LOAN FUNDS AS ALTERNATIVE FINANCE: LOAN-ORIGINATING FUNDS VERSUS LOAN-PARTICIPATING FUNDS
§28.03 BANKING LAW RESTRICTIONS FOR LOAN-ORIGINATING FUNDS
§28.04 LOAN-ORIGINATING FUNDS VERSUS BANKS
[A] Investor Protection Versus Depositor Protection
[1] Depositor Protection
[2] Investor Protection
[B] Systemic Risk
[1] Substitutability
[2] Size
[3] Interconnectedness
[C] Conclusion
§28.05 THE FRAGMENTED LOAN-ORIGINATING FUND FRAMEWORK IN EUROPE
[A] The European Legal Framework for Loan-Originating Funds
[1] UCITSD
[2] ELTIFR
[3] EuVECAR/EuSEFR
[B] National Level: A Fragmented Regulatory Landscape
[1] 'Manager Regulation' Versus 'Product Regulation Approach'
[2] Intermediary Regulation: AIFMs
[a] Authorized Versus Sub-threshold AIFMs
[b] Organizational Requirements for AIFMs
[3] Product Regulation
[a] Authorized Versus Registered AIFs
[b] Qualifying Investors
[c] Leverage
[d] Portfolio Composition and Anti-concentration Rules
[e] Open-Ended Versus Closed-Ended
[4] Types of Investors
[5] Types of Borrowers
[6] Investors' Disclosure and Reporting Obligations
§28.06 TOWARDS A EUROPEAN LEGAL FRAMEWORK FOR LOAN-ORIGINATING FUNDS
[A] Authorized Versus Sub-threshold AIFMs
[B] Organizational Requirements for AIFMs
[C] Eligible Borrowers
[D] Authorized Versus Registered AIFs Depending on Investors
[E] Leverage
[F] Open-Ended Versus Closed-Ended
[G] Investor Disclosure/Reporting Obligations
§28.07 CONCLUSION
Chapter 29 Cooperation of AIFMs with Pension Vehicles
§29.01 AIFM AND PENSION FUNDS AS ASSET MANAGERS
[A] Portfolio Management with Own Asset Expertise (Group-AIFM)
[B] Portfolio Management for the Investor (Platform-AIFM)
[C] Portfolio Management for Another Manager ('White-Label Managers')
§29.02 CONFLICT OF OBJECTIVES
[A] Regulatory Conflicts
[B] Permanent Establishment
§29.03 MOTIVATIONS FOR ENGAGING WITH AN AIFM
[A] Group-AIFM
[B] Platform-AIFM
[C] White-Label Managers
§29.04 SELECTION OF THE AIFM BY A PENSION FUND
[A] Indicative Offers
[B] Analysis of Indicative Offers
[C] Recall Level
[D] AIFM Agreement
§29.05 DEDICATED STRUCTURING
§29.06 CONCLUSION
Chapter 30 Money Market Funds Regulation
§30.01 INTRODUCTION
§30.02 SCOPE OF MMFR
[A] UCITS or AIF
[B] Short-Term Assets (Objective)
[C] Returns in Line with Money Market Rates or Value Preservation
[D] MMF Typology
[1] Three Sub-categories of MMF
[2] Short-Term and Standard MMFs
[E] MMF Authorization
§30.03 MANAGER REGULATION
[A] Credit Quality of Money Market Instruments, Securitisations and ABCPs
[B] MMF Liquidity Risk Management Measures
[1] MMF Credit Ratings
[2] 'Know Your Customer' Policy
[3] Stress Testing
[4] Specific Liquidity and Redemption Gates for Public Debt CNAV and LVNAV MMFs
[C] Valuation of MMFs
[1] Valuation of MMFs
[a] Mark-to-Market and Mark-to-Model Accounting Method
[b] Cost Amortization Method
[2] Calculation of NAV per Unit/Share
[D] External Support
§30.04 DEPOSITARY REGULATION
§30.05 MMF PRODUCT REGULATION
[A] Eligible Assets and Investment Restrictions
[B] Provisions on Investment Policies
[1] Diversification Rules
[2] Concentration Rules
[C] Portfolio Rules
[1] Short-Term MMFs
[2] Standard MMFs
§30.06 TRANSPARENCY REQUIREMENTS
[A] Investor Disclosure
[B] Reporting Requirements
§30.07 CONCLUSION
Chapter 31 Subscription Credit Lines under AIFMD
§31.01 INTRODUCTION
§31.02 DIFFERENT PERSPECTIVES ON SCLS
[A] AIFMs
[B] Investors
[C] Lenders
§31.03 DEBT FINANCING AND THE LEVERAGE NOTION
[A] SCLs Not Qualifying as Leverage
[1] "Temporary in Nature" Notion
[a] Luxembourg and German Regulators' General Position
[b] CSSF's View on "Revolving Credit Facilities"
[2] "Fully Covered by Contractual Capital Commitments from Investors in the AIF" Notion
[B] Leverage and "Portfolio Financings"
[C] Shareholder Loans and Leverage: FSMA Interpretation
§31.04 SCLS AND THE ENTITY AUTHORIZED TO ACT
[A] SCLs and the "Portfolio Management" Notion
[B] Applicable Legal Provisions to AIFMs and SCLs
[C] SCLs and the Board's Supervisory Role
[1] Board's Ex Ante Supervisory Function
[2] Board's Ex Post Supervisory Functions
[D] SCLs and the Board's Execution Role
[E] SCLs and Umbrella AIFs
§31.05 SECURITY TAKEN IN THE FRAMEWORK OF AN SCL
[A] SCLs and AIF Constitutive Documents
[B] SCLs and Collateral Together with Drawdown Right
[C] SCLs and Notification Obligation
[D] SCLs and Drawdown Right
§31.06 SYNTHESIS AND CONCLUSION
Part V The AIFMD's Cross-Border Dimension
Chapter 32 The AIFMD's Cross-Border Dimension in Light of the Cross-Border Distribution Directive and Regulation
§32.01 INTRODUCTION
§32.02 EUROPEAN PASSPORT
[A] Marketing or Management Passport
[B] Entities Entitled to Pre-marketing
[C] Direct Cross-Border Activity or Activity Through a Branch
[D] Split Supervision and Escalation to the ESMA
§32.03 NOTIFICATION
§32.04 REQUIREMENTS FOR CROSS-BORDER ACTIVITY
[A] Pre-marketing
[B] Marketing
[1] Content of Marketing Materials
[2] Applicable Laws of Member States
[3] Minimum Facilities
[4] De-notification
[5] Split Supervision and Ex-ante Verification
[C] Branch Requirements
§32.05 MANAGEMENT, PRE-MARKETING AND MARKETING
[A] Management Versus Administration
[B] Pre-marketing as Defined by the XBDD
[C] Marketing of AIF Units
[1] Understanding Marketing: The Supervisory View
[2] EU Financial Law Perspective
[D] Marketing Versus Pre-marketing
[1] Direct Offering or Placement
[2] Indirect Offering or Placement
§32.06 CROSS-BORDER INFORMATION EXCHANGE IN TAX MATTERS
§32.07 CONCLUSION
Chapter 33 The AIFMD's Third-Country Rules and the Equivalence Concept
§33.01 INTRODUCTION
§33.02 DEFINING EEA AND THIRD-COUNTRY ENTITIES
[A] The Location of the Manager
[1] Registered Office as a Basic Criterion
[2] The Member State of Reference as a Potential Solution?
[3] A Systems Approach to Defining TC-AIFMs
[a] Place of Effective Management
[b] The Real Seat Theory
[c] AIFMD Principles
[d] Principles of European Financial Law
[e] The AIFM's Head Office
[4] Defining the Core Investment Activities
[B] The Location of the Fund
[1] EC and Competent Authorities' View: The Registered Office
[2] Reconsidering the Authorities' View on AIF Location
§33.03 NATIONAL PLACEMENT REGIME (NPR): A TWO-PILLAR SYSTEM
[A] General Requirements
[B] The Two Third-Country Pillars
[1] Pillar I: Cooperation Agreements on Information Exchange Between Supervisory Authorities
[a] Parties
[b] Contents
[c] Limits on Information Exchange and Confidentiality
[d] Impact of the GDPR
[2] Pillar II: FATF Compliance
[C] Marketing of AIF Units to Professional and Retail Investors
[D] Additional Requirements by Member States
§33.04 THE EUROPEAN THIRD-COUNTRY PASSPORT: A FOUR-PILLAR SYSTEM
[A] The Role Model: The European Passport for EEA Entities
[B] The Four Regulatory Pillars
[1] Pillar I: Cooperation Agreements on Information Exchange Between Regulatory Bodies
[2] Pillar II: FATF Compliance
[3] Pillar III: Tax Information Exchange Between States
[a] Parties
[b] Content
[c] Limits
[d] No Double Taxation Agreement
[4] Pillar IV: Supervision by a Member State
[a] Supervision of TC-AIFMs: The Member State of Reference
[i] General MSR Authorization Requirements
[ii] Determination of the MSR
[iii] Procedures
[iv] Changes
[v] Who Will Benefit?
[b] Supervision of TC-AIFs Marketed by EEA-AIFMs
[C] Additional European Passport Requirements for TC-AIFMs
[1] Marketing of AIF Units to Professional Investors
[2] Appointment of a Legal Representative
[3] Compliance with the AIFMD or Equivalent Third-Country Rules
[a] The Equivalence Principle
[b] The Future of Global Financial Regulation?
[i] Between Competition and Harmonization
[ii] Between Convergence and Diversity
[c] Equivalence and Risk Symmetry
[d] Equivalence in European Banking and Financial Law
[D] Cross-Border Management by TC-AIFMs in Detail
§33.05 APPLICABILITY OF THIRD-COUNTRY RULES AND BREXIT
[A] The ESMA's Equivalence Assessments
[B] Critique
[C] The European Commission's Delegated Act
[D] XBDD and AIFMD II
§33.06 CONCLUSION
Part VI The AIFMD's Transposition
Chapter 34 Regulation of AIFMs and AIFs in Germany
§34.01 MARKET OVERVIEW
[A] Data
[B] Framework Prior to AIFMD
[C] Supervisory Perspective
§34.02 SCOPE AND ORGANIZATION: DEFINITIONS AND JURISDICTIONAL SPECIFICS
[A] KAGB Framework
[B] Core Definitions
[C] Particularities
[1] Small AIFMs
[2] MiFID Services
[3] Semi-professional Investors
[4] Retail AIF
§34.03 REGULATION OF MANAGEMENT COMPANIES AND DEPOSITARIES
[A] Authorization
[B] Depositary
§34.04 PRODUCT REGULATION
[A] Retail AIFs
[1] Open-Ended Retail AIFs
[2] Closed-Ended AIF
[B] Special-AIFs
§34.05 REGULATION OF PROMOTION, DISTRIBUTION AND MARKETING OF AIFS
[A] Definition of Marketing
[B] Marketing Measures
[C] Marketing of Domestic AIF, EU AIF and Non-EU AIF
[1] Retail Investors
[2] (Semi-)Professional Investors
[a] Incoming Scenario
[b] Outgoing Scenario
§34.06 CONCLUSION AND OUTLOOK
Chapter 35 Regulation of AIFMs and AIFs in France
§35.01 INTRODUCTION
[A] Legal Framework for French Investment Funds
[B] Implementing the AIFMD
[C] Terminology
[D] Market Overview
§35.02 AIFMS
[A] Status
[1] Prior to the Implementation of the AIFMD
[2] Since the Implementation of the AIFMD
[B] Creation, Organization and Functioning
§35.03 DEPOSITARY
§35.04 PRODUCTS
[A] AIFs by Nature
[1] AIFs Open to Non-professional Investors
[2] AIFs Open to Professional Investors
[a] Types of AIFs
[b] Notion of Professional Investors
[3] Employee Investment Undertakings
[4] Securitization Vehicles
[B] "Other AIFs"
[C] AIFs in the French Taxonomy of Collective Investments
[1] Collective Investments (Placements Collectifs-PC)
[2] Collective Investment Undertakings (Organismes de placement collectif-OPC)
§35.05 MARKETING
[A] Definition of Marketing
[B] Marketing of AIFs to Retail Investors in France
[C] Transparency Requirements
Chapter 36 Regulation of AIFMs and AIFs in the Netherlands
§36.01 INTRODUCTION
§36.02 THE DUTCH AIFMD LEGISLATION AND OTHER REGULATORY SOURCES
§36.03 THE SCOPE OF THE AIFMD UNDER DUTCH LAW: THE AIF-DEFINITION
§36.04 INTERMEDIARY REGULATION
[A] AIFMs
[1] Full-AIFMs Versus 'Third-Party AIFMs'
[2] Ancillary MiFID II Investment Management Services
[3] Sub-threshold (Small) AIFMs
[B] Depositaries
[1] Continuation of the Pre-AIFMD 'Depositary' Regime: The 'Legal Title Entity'
[2] PE Depositary
§36.05 LEGAL FORMS OF AIFS IN THE NETHERLANDS (PRODUCT REGULATION)
[A] Corporate Entities (Beleggingsmaatschappij)
[1] Companies (NV or BV)
[2] Cooperative (Coöperatie)
[B] Non-corporate Entities (Beleggingsfonds)
[1] Limited Partnership (Commanditaire Vennootschap, CV)
[2] Fund for Joint Account (Fonds voor gemene rekening, FGR)
§36.06 MARKETING REGULATION
[A] Registration/Authorization (Retail) AIFs
[B] Investor Qualification
[C] Investor Information
§36.07 PRIVATE PLACEMENT
[A] TC-AIFs Managed by an (EEA-)AIFM (Article 36 AIFMD)
[B] AIFs Managed by a Non-EEA AIFM (Article 42 AIFMD)
[C] Cross-Border Management of Dutch AIFs by a Non-EEA AIFM (Article 42 AIFMD)
[D] Absence Level Playing Field: AIFs Managed by a Small EEA-AIFMs
§36.08 CONCLUSION
Chapter 37 Regulation of AIFMs and AIFs in Luxembourg
§37.01 GENERAL CONSIDERATIONS
§37.02 LEGAL FRAMEWORK
§37.03 MODIFICATIONS OF THE MANAGEMENT COMPANY REGIME
§37.04 MODERNIZATION OF THE AIF REGULATION
[A] SIFs
[B] SICARs
[C] Part II UCIs
[D] RAIFs
§37.05 PRACTICAL ISSUES
[A] Scope of CSSF's Approval
[B] Delegation and Substance
[C] Policies Review
[D] Cross-Border Asset Management
[E] Marketing Rules
[1] Marketing in the EEA of EEA AIFs (Including Luxembourg AIFs) by Luxembourg Authorized AIFMs
[2] Marketing in Luxembourg of Non-EEA AIFs by EEA AIFMs
[3] Marketing in Luxembourg of AIFs by Non-EEA AIFMs
[4] Private Placement
§37.06 CONCLUSION
Chapter 38 Regulation of AIFMs and AIFs in Ireland
§38.01 METHOD OF IMPLEMENTATION OF THE AIFMD
§38.02 PRODUCT (AND SALES) REGULATION
[A] Legal Forms
[B] Eligible Investors
[C] QIAIFs
[D] Additional Rules for RIAIFs
§38.03 MANAGER REGULATION
[A] Capital Requirements
[B] Licensed Activities
[C] Organizational Requirements
[D] Key Executives and AIFM Governance
§38.04 DETAILS ON SUB-THRESHOLD/DE MINIMIS AIFM UNDER IRISH LAW
§38.05 DEPOSITARY REGULATION
[A] Depositary for Real Assets
[B] Depositary for RIAIF and QIAIF
§38.06 NPPR
§38.07 THE IMPACT OF BREXIT ON DELEGATION OF PORTFOLIO MANAGEMENT FUNCTIONS
§38.08 CONCLUSION
Part VII The AIFMD as Part of EU Asset Management Law
Chapter 39 Joint Principles of European Asset Management Law: Towards Cross-Sectoral Consistency
§39.01 THE JOINT PRINCIPLES OF EUROPEAN ASSET MANAGEMENT
§39.02 EVIDENCE FROM THE AIFMD
[A] Scope
[B] Manager Regulation
[1] Licensing Requirements
[2] Business Organization
[3] Risk Management
[4] Securitization
[C] Depositary Regulation
[D] Disclosure
[E] Supervision
[F] Cross-Border Dimension
[1] European Passport
[2] Third-Country Rules
§39.03 POLICY OBJECTIVES
§39.04 TOWARDS ASSET MANAGEMENT CENTRES
Bibliography
Table of Legislation
Index
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