The Alternative Investment Fund Managers Directive - Focus On Third Countries & Key Features

This brochure focuses on the impact of the Alternative Investment Fund Managers Directive ("AIFMD" or the "Directive") on third country funds and managers.

The first part illustrates through practical case studies, the implications of the Directive on managers established in non-European Union Member States which distribute alternative investment funds ("AIF") both inside and outside the European Union ("EU").

A note on the key features of the AIFMD is incorporated as the second part of the brochure.

FOCUS ON THIRD COUNTRIES

The AIFMD will have an impact on investment managers based in third countries ("non-EU AIFM" or "non-EU Manager") who (i) manage EU-based AIF and/or (ii) market, i.e. distribute, in the EU, EU-based and non-EU based AIF they manage in the EU.

This section aims at analysing in a practical manner the most frequently used structures to provide solutions on how to address the impact of the AIFMD. It is not a detailed analysis of the case studies described hereafter but it highlights the most relevant implications for each of the case studies described.

Case 1: non-EU Manager managing a Luxembourg AIF with marketing in the EU; Case 2: non-EU Manager managing a Cayman AIF with marketing in the EU; Case 3: non-EU Manager managing a Luxembourg AIF with no marketing in the EU; Case 4: Lux AIFM managing a Lux AIF and delegating investment management to a non-EU Manager with marketing in the EU; and Case 5: Lux AIFM managing a Lux AIF and delegating investment management to a non-EU Manager with no marketing in the EU. For the purpose of this analysis, it is assumed in each case study that (1) the investment fund involved qualifies as an AIF and falls within the scope of the AIFMD and (2) that its appointed AIFM does not benefit from or take benefit from the small manager exemption, all as described in the second part of this brochure "AIFMD Key Features".

Also, for the purpose of these analyses, the term "marketing" as referred to in these introductory paragraphs and the aforementioned case studies, is to be understood as meaning a direct or indirect offering or placement on the initiative of the AIFM or on behalf of the AIFM of units or shares of an AIF it manages to or with investors in the EU. So-called "reverse solicitation" would not be considered as marketing for the purpose of the AIFMD. It is expected that the concept of marketing will be clarified further by additional EU regulations or guidelines.

A table (the "Table") is inserted at the end of this section, which illustrates the different situations where the third country regime applies and also the scope of application of the AIFMD provisions to third country AIFM and AIF.

1. CASE 1: NON-EU MANAGER MANAGING A LUX AIF WITH MARKETING IN THE EU

   The EU nationality of the AIF and the marketing in the EU both entail that the AIFMD will be applicable.

   As shown in the Table, the scope of application of AIFMD provisions will evolve over the coming years.

   Three periods of time can be identified during which different options will be available to managers:

   2013-2015: Option A and Option B 2015-2018: Option A, Option B and Option C 2018-onwards: Option B and Option C 1.1 From July 2013 up to 2015:

   Option A and Option B:

   Option A:

   In July 2013, when the implementation period will end and when the Directive will be applicable, a non-EU Manager will be entitled to continue its management activities and market a Lux AIF in the EU using the national private placement rules ("NPPR") if the following AIFMD requirements1 are complied with:

   publication of an annual report by each AIF2, disclosure to investors3, reporting by the non-EU Manager to competent authorities in each of the EU Member States where the marketing takes place on the markets and...