Post-translation, AIFM D-Day looms

More than two years in the making, the Alternative Investment Fund Managers Directive has finally reached the light at the end of the tunnel and will likely come into force by the end of June, PEM has learned. Member states will then have two years to work the Directive’s provisions into their own legislation.

The industry had expected this move to come at some point in the summer, but PEM can exclusively reveal on 27 May the European Council will formally adopt the revised copy of the directive’s text without discussion, an EU official close to the legislative process said.

A week or so later the Directive will be signed by EU Parliament President Jerzy Buzek and EU Council President Herman Van Rompuy, a process the source said was a formality.

Subsequent to its signing, typically after a few days, the Directive enters the EU’s official journal, which starts a 20 day clock before it goes into effect.

While a heated political process determining the directive’s core provisionsended last November, translating the law’s text into the 23 different official EU languages delayed the bill’s passage until now.

The translated directive carries a number of mark-ups which may potentially alter the effect of some AIFM provisions, said private equity lawyer Gus Black of Dechert. “The jurist linguist process is essentially a tidying up and translation exercise.  However, even small changes to phrasing can alter the meaning of a document, and there have been a lot of them.  So it shouldn't be assumed that everything is exactly as it was.”

The long anticipated directive will impose new rules on general partners’ pay, fund transparency, restrictions on asset stripping, but most notably, the rules preserve non-EU funds marketing access to the 27-member bloc.