Release Of The Final Report On Draft Regulatory Technical Standards On Types Of AIFMs

The Draft

Within the framework of Directive 2011/61/EU of the European Parliament and of the Council of June 8th 2011 on alternative investment fund managers ("AIFMD"), the European Securities and Markets Authority ("ESMA") issued the Draft regulatory technical standards (the "RTS") on types of AIFMs on April 2nd 2013.

The RTS aims to clarify the concepts of "AIFM of open-ended AIF(s)" and of "AIFM of closed-ended AIF(s)", ("AIF" being an alternative investment fund within the meaning of the AIFMD).

The distinction between these two concepts has a huge impact on the application on the AIFMs of the liquidity management rules, the valuation procedures and the transitional provisions laid down in the AIFMD.

An AIFM of open-ended AIF(s) is an AIFM which manages at least one AIF, some or all of whose unitholders or shareholders have the right to redeem their units / shares (i) at least once a year, and (ii) in accordance with the fund documents, at a price which is close to the net asset value of the unit / share to be redeemed. For the purposes of the latter, it is considered that action taken by AIFMs in order to ensure that the price of units / shares on stock exchanges does not significantly differ from their net asset value is regarded as equivalent to the right to redeem shares. To the contrary, the existence of lockup periods and of restrictions on redemptions due to the illiquid nature of assets (e.g. side pocket investments) does not prevent the AIFM from qualifying as AIFM of open-ended AIF.

An AIFM of closed-ended AIF(s) is an AIFM managing an AIF which is not complying with the foregoing. Furthermore, when there is a change in the redemption policy that transforms an open-ended AIF into a closed-ended AIF, or vice-versa, the new rules become applicable upon such transformation.

The Final Report

Within the framework of Directive 2011/61/EU of the European Parliament and of the Council of June 8th 2011 on alternative investment fund managers ("AIFMD"), the European Securities and Markets Authority ("ESMA") issued on May 24th 2013 its final report on guidelines on key concepts of the AIFMD (the "Guidelines").

ESMA requires the national supervisory authorities to incorporate such Guidelines into their supervisory practices in order to ensure mainly the common, uniform and consistent application of the concepts that comprise the definition of alternative investment fund ("AIF") in Article 4(1)(a) of the AIFMD.

Pursuant to the AIFMD, all...

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