29 November 2023
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AIFMD II: What private fund managers need to know

To The Point
(9 min read)

In this briefing, we take a look at the main changes introduced by AIFMD II from 39,000ft. Member states will likely have until 2026 to implement AIFMD II. The briefing highlights the new regime for loan originating AIFs, the additional reporting and disclosure requirements for AIFMs, the amended delegation and substance requirements, the new rules for the fair treatment of investors and undue costs, and the conflicts of interest provision. Whilst not directly applicable to UK based private fund managers, AIFMD II will have a material indirect impact on those who raise capital in the EU and/or are party to delegation arrangements.

On 10 November 2023, the final text of the Amending Directive to the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD II) was published. A copy of the final (albeit unofficial) text is available here. We understand that the European Parliament is currently due to consider the text at its plenary session commencing on 5 February 2024. 

Assuming that the text is approved and published in the Official Journal without undue delay, we would expect AIFMD II to likely come into force in 2026 as Member States will have 24 months in which to implement it in their jurisdictions. There will be a grandfathering period in respect of some of the loan origination provisions, which will come into force one year later. 

AIFMD II will not of course, be directly applicable to UK AIFMs. Nonetheless, a number of the provisions of AIFMD II will be of relevance to UK based AIFMs whether they are acting as a delegate of an EU AIFM or are marketing cross-border into Member States. 

Whilst AIFMD II is not a complete overhaul of the AIFMD, it does, as expected, introduce a number of amendments that will be of interest to private fund managers. We have picked the top five that private fund managers need to know about: 

  • a new regime for alternative investment funds (AIFs) originating loans (including leverage limits and a potential lending passport);
  • additional reporting requirements to investors under article 23;
  • amended delegation and substance requirements;
  • new requirements for the fair treatment of investors and undue costs; and
  • conflicts of interest. 

We examine each of the main changes below.

Loan origination - what does this mean for European fund managers?
Additional reporting and disclosure requirements
Delegation arrangements - new disclosure and substance requirement
Conflicts of interest and white labelling
Fair treatment of customers and undue costs

Next steps

Please do get in touch with Richard Small, Jan Grüter, Ben Cocoracchio or your usual Private Funds contact if you would like to discuss the impact of AIFMD II or the steps that we are seeing fund managers take in advance of the new regime coming into force.

To the Point 

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