The European Commission proposes a review of the Alternative Investment Fund Managers Directive (AIFMD)

The European Commission has published Q&As on the 2021 Capital Markets Union Package from November 25th, 2021, including the legislative proposal to review the Alternative Investment Fund Managers Directive (AIFMD) (Directive 2011/61/EU).

While AIFMD so far has largely achieved its objectives of establishing an effective supervisory framework for AIFMs, AIFMD II proposes several target areas for improvement. These changes are part of the 2021 Capital Markets Union package. The main problem themes identified are:

1. Difficulties in monitoring and managing financial stability risks (including regulatory fragmentation in the loan origination sector);
2. Inefficiencies in managing investment funds (eg lack of streamlined supervisory reporting and lack of depositary services in smaller markets);
3. Inadequate protection of fund investors due to member states’ differing interpretations of delegation rules.

In term of the timeline: a review and debate at both national level and by the Council and the European Parliament are still outstanding. It is anticipated that an agreement will be reached by mid to end 2022. This will lead to publication of the final directive in the official journal of the EU in early 2023, with Member States having 24 months to implement the changes. This means the Proposals, if adopted, are likely to start applying from the end of 2024 or early 2025. It should be noted that, as several issues highlighted in the AIFMD review were equally relevant for UCITS, the European Commission is now also reviewing the UCITS Directive.

We are closely monitoring the updates on AIFMD II and their impact on the AIFMD Reporting and how this affects our AIFM Reporting service. We will continue to update you once more information from the regulators is published.