On 25 November 2021, the European Commission proposed a number of legislative amendments to the Alternative Investment Funds Manager Directive (AIFMD), the UCITS Directive and the Regulation on European long term investment funds, namely the “AIFMD 2 Proposal”.
The AIFMD Proposal aims to improve the integration of asset management markets in Europe, while modernising the framework for key regulatory aspects. As such, it not only updates the AIFMD, but also the rules applicable to undertakings for the collective investment in transferable securities, the regulatory framework that allows for the sale of cross-Europe mutual funds.
The AIFMD Proposal has four main objectives:
- achieve further market integration for alternative investment funds and therefore a broader capital market integration;
- improve companies’ access to more diversified forms of financing;
- strengthen investor protection; and
- enhance the ability of fund managers to deal with liquidity pressure in stressed market conditions.
On 17 June 2022, the Council of the EU issued a press release stating that it had reached agreement on its general approach to the Commission’s proposal. Among other things the Council supports the creation, as proposed by the Commission, of an EU framework for loan-originating funds and seeks to clarify the rules for outsourcing and the delegation of certain functions by fund managers to third parties. The Council also proposes new reporting requirements on delegation arrangements for the purposes of improving monitoring and supervision. The Council feels that precise reporting obligations on outsourcing will reduce the possibilities for creating letterbox companies.