While still one of the strictest interpreters of the EU Alternative Investment Fund Managers Directive (AIFMD), France will no longer require authorized GPs to hire a local paying agent to facilitate their marketing activity in the country.
When France first transposed the AIFMD in July 2013, they required EU managers to have a local facilitation agent to access French LPs. The agent would need a French address where the local regulator could request documentation and the names and contact details of that branch’s directors. But last month, according to multiple market sources, French authorities dropped that requirement.
Nonetheless, lawyers and market participants tell pfm France is still one of the toughest countries in which to use a pan-EU marketing passport awarded to GPs for complying with the directive.
France imposes a steep €2,000 annual marketing fee per authorized fund, which includes feeder funds, as the master/feeder structure is not recognized as a single vehicle. In addition, when applying for a passport in their home country, for that passport to be valid in France, the fund manager needs to include: a program of activity detailing the service or services that they wish to provide, and identifying the funds that they plan to manage; the organizational structure of the branch; and the standard statement indicating that their home state has authorized them under AIFMD.
France is not alone in its decision to “gold plate” the AIFMD. For countries that have fully transposed the directive into local law, some have decided to add extra fees and bureaucratic hurdles, which made it harder to navigate given the nature of private equity fundraising.
“It is a difficult decision to commit the fees and effort of marketing into that country without being able to gauge investor appetite there first,” said Mike Newell of the law firm Norton Rose Fulbright.
For a country-by-country breakdown of how EU sovereigns have gold-plated the directive, see the July issue of pfm, out soon.