Last week ESMA published an update of the AIFMD Q&A which contains a new section called XVI “Exemptions”.
This section is related to Article 3 in the AIFMD regulation which clarifies which AIFMs do not fall under the AIFMD regime. Article 3 (2) describes the well-known thresholds of EUR 100 million and EUR 500 million. This means that an AIFM is exempted from AIFMD if the overall AUM of their managed AIFs does not exceed the threshold of EUR 100 million (Article 3 (2) a) or EUR 500 million (Article 3 (2) b) if all AIFs of the relevant AIFM are unleveraged and do not offer any redemption rights for 5 years upon initial investment.
Article 3 (2) addresses “AIFMs which either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs…”. Yet, it was not clear how a “substantive direct or indirect holding” is defined and if there are any hard criteria such as quantitative thresholds. According to ESMA, this is true if an AIFM has “de facto the power to impose decisions on the AIF portfolio composition, its asset allocation or its risk management”. As there are no quantitative thresholds defined in the regulation, “the notion of substantive direct or indirect holding shall be assessed on a case-by-case basis by AIFMs supervisors.”
It is also worth mentioning that although an exemption is true for an AIFM, they nevertheless need to provide Annex IV reporting to the relevant authorities as defined in Article 3 (3) c and d. In other words: there is no Annex IV reporting exemption for an AIFM.
We support our clients with all relevant alternative investment reporting such as AIFMD, Form PF, or OP reporting. If you have any questions on alternative investment reporting, please feel free to contact our team at any time.
