The regulatory framework in the European Union governing the marketing of Alternative Investment Funds (“AIF”) is the Alternative Investment Fund Managers Directive (“AIFMD”). The AIFMD allows EU member states (and for now the same rules apply in the UK) the ability to permit the marketing of non-EU funds in their territory, subject to the fund and its manager complying with a subset of AIFMD’s requirements set out in Art. 42 of the AIFMD. The rules implemented by each EU member state under Art. 42 of the AIFMD are known as National Private Placement Regimes (“NPPRs”), and these rules allow US sponsors to register US funds for marketing in most EU member states (without forming an EU fund or appointing an EU manager).
The AIFMD mandates a minimum standard that US sponsors must meet to market a non-EU fund directly to EU professional investors. However, individual member states may impose further restrictions or conditions on non-EEA funds and their managers. Generally, the AIFMD requirements can largely be split into:
- a registration or notification process in each jurisdiction; and
- ongoing compliance with AIFMD throughout the life of the fund.
Compared to establishing a European fund structure, most NPPRs are significantly more cost-effective and allow US managers to admit EU-domiciled investors directly into established US fund structures, making the NPPRs a more efficient way of raising capital in the EU. Some EU jurisdictions have not implemented an NPPR under AIFMD, and therefore, it is not possible to register a non-EU fund for marketing in all EU member states. However, the majority of key EU jurisdictions have implemented a navigable path to marketing registration for US sponsors and US funds.
Over the next few weeks, our team and Zachary Milloy, a partner at Paul Hastings Investment Funds & Private Capital, will release a series of articles focused on the EU NPPRs and country-specific requirements for US sponsors to register a fund for marketing in a number of key EEA jurisdictions.
How can we help?
We have extensive experience supporting US and other non-EU fund managers in navigating the complexity of NPPR rules and related AIFMD filings (e.g., Annex IV), as well as ongoing depositary requirements. Our teams operate across all the key reporting jurisdictions, including the United Kingdom, Luxembourg, Ireland, the Channel Islands, the Netherlands, and Denmark. Additionally, our team in the USA is also available to assist.
For further information, get in touch with our AIFMD reporting team.
