Guernsey was well prepared for the introduction of AIFMD and the marketing of Guernsey investment funds in the EEA after 22 July 2013. The required supervisory cooperation agreements are in place with the vast majority of regulators in EEA countries.
The Alternative Investment Fund Managers Directive (AIFMD) applies to Alternative Investment Fund Managers (AIFM) established in EEA Member States, but also to non-EEA AIFMs that manage or market AIFs in the EEA, subject to a number of conditions. Guernsey is not a member of the European Union and for the purposes of AIFMD is regarded as a Third Country.
Following Brexit, the United Kingdom is also treated as Third Country for the purposes of AIFMD. The provisions of AIFMD as historically applied in the UK by virtue of its membership of the EU have been transposed into UK law and regulation.
Guernsey was well prepared for the introduction of AIFMD and the marketing of Guernsey investment funds in the EEA after 22 July 2013. The required supervisory cooperation agreements are in place with the vast majority of regulators in EEA countries. The co-operation arrangements include the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of respective supervisory laws. This co-operation also applies to Guernsey fund managers that manage or market AIFs in the EEA and to EEA AIFMs that manage or market AIFs in Guernsey. The arrangements also cover co-operation in the cross border supervision of depositaries and AIFMs’ delegates.
The GFSC has issued The AIFMD (Marketing) Rules, 2013 (see further below) to help ensure compliance by Guernsey investment funds and their managers with the AIFMD NPPR conditions. Optional AIFMD Rules have also been introduced which allow Guernsey fund managers and depositaries to opt in to a set of Guernsey rules which are aimed at achieving compliance with AIFMD, should they wish to do so. Therefore, Guernsey is able to offer its existing funds regime and an AIFMD-compliant regime. In practise, it is very unlikely to be desirable to opt-in to the AIFMD Rules unless the marketing passport is made available to Third Countries.
Marketing and NPPR
Under AIFMD, the National Private Placement Regime (NPPR) applies until such time as a marketing passport for Third Countries is made available. NPPR permits the marketing of non-European Economic Area (EEA) alternative investment funds in the EEA, subject to national law and regulation. NPPR requires compliance with AIMFD Article 42 which, broadly, requires that the manager produce annual reports, pre-investment disclosure and regulatory reporting on liquidity, risk management arrangements and leverage. In addition, AIFMD requires that a supervisory cooperation agreement has been entered into between the GFSC and the regulators in the relevant EEA countries in which the marketing is to take place.
As a general rule, specific advice should be taken in respect of the NPPR approach taken in each of the EEA areas.
The GFSC has issued the AIFMD Marketing Rules which only apply full scope AIFMs. Notification (under Form AIFM) of marketing under these rules is not required for Guernsey AIFMs which are sub-threshold or non-Guernsey AIFMs.