On March 26, the European Securities and Markets Authority (ESMA) published an updated questions and answers (Updated Q&A) of the application on the Alternative Investment Fund Managers Directive (AIFMD). The Updated Q&A includes updated and new questions and answers on reporting, notification, additional own funds and scope as discussed below.

Regarding reporting, the Updated Q&A clarifies that Alternative Investment Fund Managers (AIFMs) should take into account all the EU Alternative Investment Funds (AIFs) they both manage and market in the European Union to calculate their reporting frequency and apply the same reporting frequency to all member states where they market AIFs.

The Updated Q&A states that an AIFM that is already managing AIFs in a host member state under Article 33 of the AIFMD is not required to undertake a new notification under Article 33(2) if it wishes to manage a new AIF in that host member state. The AIFM should, however, send an update in accordance with Article 33(6) to identify each new AIF to be managed under the original Article 33(2) notification and note whether such new AIF(s) are of a different type.

On the issue of additional own funds, the Updated Q&A notes that AIFMs should exclude investment by AIFs in other AIFs they manage in the general calculation of additional own funds under Article 9(3) of the AIFMD, but should include them for the calculation of additional own funds to cover potential liability risks arising from professional negligence under Article 9(7) of the AIMFD. Investment in other AIFs managed by the same AIFM is viewed as increasing operational risk.

The Updated Q&A also clarifies the scope of the AIFMD as it applies to an EU AIFM marketing to professional investors in a particular member state the shares of EU feeder AIFs that have a non-EU master AIF managed by a non-EU AIFM if the EU AIFM complies with the conditions set out in Article 36(1) (a) to (c) of the AIFMD. Whether or not such non-EU AIFM managing the non-EU master also has to be authorized under the AIFMD is a matter of national law of the member state transposing Article 36 of the AIFMD, as the AIFMD permits member states to impose stricter rules on the AIFM regarding the application of Article 36.

A copy of the Updated Q&A on the application of the AIFMD can be found here.