Distributing Alternative Investment Funds In Europe

The Alternative Investment Fund Managers Directive ("AIFMD") entered into force in the European Union in 2011, with member states required to implement it by July 2013. The Directive covers managers of alternative investment funds ("AIFs") who distribute or domicile their products within the European Union.

Does the Directive affect US managers?

If a US fund manager sets up a new EU domiciled AIF it must be compliant with the Directive immediately from launch. If you have a Cayman Islands fund currently distributed in Europe or are planning to distribute a Cayman Islands fund in Europe, it will likely be impacted from 2015 and may already be impacted. Managers of Cayman Islands funds can currently make use of the private placement and / or reverse solicitation regimes, but likely not for much longer.

Do I have any options other than to rely on private placements and reverse solicitation?

Yes. The AIFMD lets managers of AIFs make use of similar passporting privileges to UCITS within the EU.

If you want to make immediate use of the AIFMD's passporting provisions and not be compelled to rely on private placements and reverse solicitation, you can either use an EU management company (a "Manco", a company set up to meet regulatory substance requirements) or an EU domiciled self-managed AIF. In either case these can be authorized under the AIFMD to passport your fund:

Fund managers have the following options:

Establish a self-managed AIF Set up your own EU Management Company Use one of Carne's Management Companies in Ireland or Luxembourg Carne's management companies can be used by fund managers for a speedy and effective launch, which allows you to meet the substance requirements laid down by the AIFMD without the costs of a bricks and mortar presence in the EU.

Our solution is particularly suitable for US managers seeking to distribute funds in Europe under the AIFMD passport who do not wish to open an office there. The Carne Manco also acts as a conduit to ensure, as required by the AIFMD, a functional and hierarchical independent risk function is established.

Regardless of which option a manager selects, Carne can assist with the launch using our fully documented risk management, oversight and ongoing monitoring services, all designed to meet the requirements of the Directive. We can also put in place the board-level reporting processes the AIF is required to have.

How long does it take to set up?

If a manager elects to use Carne's management...