ESMA provides AIFMD marketing clarity

AIFMD-authorized fund managers can solicit LPs in EU countries that have not yet transposed the directive.

Earlier this month the European Securities and Markets Authority (ESMA) said GPs authorized under the Alternative Investment Fund Managers Directive (AIFMD) are allowed to solicit investors in EU countries that have not yet transposed the directive into national law. 

ESMA is the pan-EU regulator tasked with overseeing how EU member state regulators implement the directive, which went into effect July 22. 

Some major EU private equity houses have already become authorized under the directive, including UK-based firm Doughty Hanson and peer fund of funds firm SL Capital. 

ESMA said these firms and others who become AIFMD-authorized “may have difficulties” notifying regulators of member states that have not yet transposed the directive about their marketing activities. 

“ESMA is trying to preempt the problem and give the regulators some sort of mandate for permitting marketing; otherwise the risk is the regulator says we would let you market here, but there is no basis for us to do so,” said one EU-based funds lawyer. 

A total of 10 member states – Spain, Portugal, Poland, Lithuania, Estonia, Greece, Finland, Hungary, Slovenia, and Belgium – have either not finished preparing their draft legislation or even begun. And a further five – Italy, Romania, Bulgaria, Austria and Latvia – have written draft AIFMD bills that are still waiting parliamentary approval. 

Fund managers in these jurisdictions may be at a marketing disadvantage, according to one UK-based regulatory lawyer, who said they are denied access to a pan-EU marketing passport until their local governments finish implementing the directive into law.