EVCA calls for ‘fairness and proportionality’ on AIFM

A two month long “call for evidence” over some of the Alternative Investment Fund Managers directive most hotly contested provisions ended earlier this month— with the European Private Equity and Venture Capital Association arguing for “fairness and proportionality” as the directive prepares to undergo  level II measures, which will flesh out the directive’s core mandates.

Europe’s largest private equity lobbying group stressed the new rules should recognise the various fund structures used by private equity. And that rules should be “appropriately tailored to meet specific risks – rather than lumping us in the same basket as other AIFs (like hedge funds) that carry very different risks”, said an EVCA spokesperson in an email exchange.

The directive, which is expected to be formally adopted this month,  imposes new rules on general partners’ pay, fund transparency, restrictions on asset stripping, but most notably, the rules will not bar non-EU firms from marketing their funds to the 27-member bloc, as had been proposed in earlier drafts.

There is, however, debate over how the directive should be implemented across the EU. In a 51-page response to the newly established European Securities and Markets Authority the EVCA argued EU member states should pass these new rules on funds and GPs through directives, which offer EU member states greater say in implementation, as opposed via EU regulation, which has immediate effect across the union. The ESMA launched the consultation period in early December, months ahead of its expected report in September which will provide technical advice to European lawmakers on how to best finalize follow-up rules to the directive.

For analysis on the advantages and disadvantages of implementation either through a regulation or directive, see February’s edition of Private Equity Manager Monthly.