The AIFMD, or Directive 2011/61/EU, came into force in July 2011 and was transposed into national law by EU Member States by 2013. The AIFMD regulates the management, administration and marketing of alternative investment funds (AIFs) in the European Union. An AIF is a collective investment undertaking that is not subject to the UCITS regime. This includes hedge funds, private equity funds, retail investment funds, investment companies and real estate funds
With the implementation of the AIFMD, the EU recognises an Alternative Investment Fund (AIF) as those “collective investment undertakings including investment compartments thereof, which: raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and do require authorisation as a UCITS.”
Therefore, any Alternative Investment Fund Manager (AIFM) who manages collective investment undertakings whose assets are valued above certain thresholds, irrespective of whether these funds are established in the EU or not, are obliged to obtain the relevant AIFM licence from their home Competent Authorities, thus allowing the close monitoring of Fund activities in the EU and ensuring market integrity and stability.
Moreover, the AIFMD established an “EU-passport” similar to that of the MiFID Directive. An EU AIFM who manages an EU Alternative Investment Fund (AIF) or a third-country AIF (under certain conditions) may market the AIF units/shares in the EU on a cross-border basis to clients categorised as professional clients.