On 3 April 2020, the European Securities and Markets Authority (ESMA) published final guidance on performance fees in investment funds – applicable to undertakings for the collective investment in transferable securities (UCITS) and certain types of alternative investment funds (AIFs).

In respect of UCITS, the guidance applies primarily in relation to Article 14 of the UCITS Directive as further specified by Article 22 of the UCITS Level 2 Directive. It also applies in relation to Article 78 of the UCITS Directive as further specified by Articles 10, 12 and 14 of the UCITS Level 2 Regulation and in relation to Article 69 of the UCITS Directive. In respect of AIFs, the guidance applies in relation to Articles 43 and 43a of the Alternative Investment Fund Managers Directive.

The guidelines will be translated into the official EU languages and published on ESMA’s website. The publication of the translations will trigger a two-month period during which NCAs must notify ESMA whether they comply or intend to comply with the guidelines. The guidelines will apply from the end of this two month period.