Neelesh Gupta, Associate Consultant, TCS Financial Solutions

Post the 2008 Global Financial crisis, primary regulatory bodies including the European Union came up with a comprehensive plan to re-visit the alternative investment funds (AIF) industry, which resulted in the Alternative Investment Fund Managers Directive (AIFMD) in 2011. Articulated with the main objective of addressing any regulatory gaps and risks existing therein, this directive became an imperative, especially, when viewed against the backdrop of the financial crises and the lack of any such preexisting regulation in the industry. The idea behind the plan was the harmonization of law within the EU related to appointment, role and liability of a depository credit institution marketing or conducting AIF business.

As per the Alternative Investment Management Association (AIMA), AIFMD will affect alternative investment fund managers (‘AIFMs’) who are either

  • Established within the EU(European Union) and who manage alternative investment funds (‘AIFs’), whether or not those AIFs are marketed within the EU; or
  • Established outside the EU, but who manage AIFs within the EU or market AIFs within or into Member States, which have opted to maintain or introduce a private placement regime for third-country funds and managers

The scope of AIFMD is broad and applicable to managers of all varieties of collective investment undertakings. It covers all securities funds and illiquid assets – for example, real estate, private equity, infrastructure or goods such as wine or art. All possible investment strategies, irrespective of the legal form or structure of the collective investment undertaking, whether open-ended or closed-ended, or whether formed under contract fold under the AIFMD guidelines.

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