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AIFMD Countdown:

AIFMD Countdown:. Level Two Is Here. AIFMD Countdown:. Timetable Recap. AIFMD became EU law on 21 July 2011 Must be implemented by 22 July 2013 Transitional period until July 2014. Timetable Recap . Published on 19 December 2012 Have ‘direct effect’

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AIFMD Countdown:

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  1. AIFMD Countdown: Level Two Is Here

  2. AIFMD Countdown: Timetable Recap

  3. AIFMD became EU law on 21 July 2011 Must be implemented by 22 July 2013 Transitional period until July 2014 Timetable Recap

  4. Published on 19 December 2012 Have ‘direct effect’ Contain wide ranging implementing measures Level 2: Regulations

  5. AIFMD Countdown: Scope

  6. Scope and Authorisation • Do you manage AIFs? • Can you rely on any exemptions? • de minimis? • delegate only?

  7. AIFMD Countdown: Key Impact –Marketing Funds in Europe

  8. Timetable – Marketing Changes to national private placement regimes? Directive in force (P) 2011 2012 2013 2014 2015 2016 2017 2018 EU AIF marketed by EU AIFM obtain passport EU AIF managed by non-EU AIFM and Non-EU AIF obtain passport? No more private placements? IF ESMA make positive recommendation, and requisite implementing legislation is passed

  9. Marketing by Asian managers in Europe Non-EU AIFM marketing 2013-2015 • Member states may allow if: • The AIFM complies with the AIFMD’s disclosure, reporting and transparency requirements and with requirements on control of non-listed companies • Its home state meets the cooperation requirements • Member States may impose stricter rules...

  10. Marketing summary EU Funds with EU AIFMs Non-EU Funds or EU Funds with Asian AIFMs Implementation date. Passports made available to EU AIFMs for EU Funds. Private placement only Dual marketing system – EU passport or private placement Extension of passports to non-EU AIFMs and non-EU AIFs. Dual marketing system – EU passport or private placement ESMA to review the passport regime. Possible end of national private placement regime. Passport only ? Passport only ? 18794858_1.PPTX

  11. Transparency New disclosure requirements: • Impact on fund documents and IR? • Who will deliver compliance?

  12. AIFMD Countdown: Key Impact – Delegation

  13. Delegation • What is your current delegation structure? • Is it compliant? • e.g. “third country” issues • Delegation by EU AIFM to non-EU sub-manager • Delegation by non-EU AIFM to EU sub-manager • Letter box entities

  14. Delegation Primary Manager Fund Sub-manager ? or AIFM ?

  15. AIFMD Countdown: What EU AIFMs are facing over the short term, and Asian managers may face in the long term…

  16. AIFMD Countdown: Key Impact Areas –Organisational changes

  17. General Operating Principles (1) • What are “operating conditions”? • Derived from operating conditions for MiFID and UCITS managers – so reflect compliance policies, such as best execution and personal account dealing • Some obligations relate to the AIF itself, and not the AIFM

  18. General Operating Principles (2) • Quality and commitment of governing body/personnel • No “undue costs” charged to investors • Fair treatment of investors • Due diligence requirements • Appointment of prime brokers and counterparties

  19. Organisational Matters – Conflicts of Interest • AIFM/MiFID investment managers/UCITS management companies convergence – business as usual? • Key features of conflicts policy • Disclosure and internal reporting • Impact on personnel structures • AIF voting rights

  20. Organisational Matters – Risk Management • Tracks equivalent requirements for MiFID investment managers and UCITS management companies • What does “functional and hierarchical separation” mean?

  21. Organisational Matters – Liquidity Management • A new requirement under AIFMD • Match portfolio liquidity to redemption profile and counterparty commitments • Guidance on liquidity measurement arrangements, liquidity limits and use of redemption gates and other liquidity management tools • Guidance for funds of funds

  22. Organisational Matters – Internal Procedures and Valuation • Internal business arrangements • Data processing and record keeping • Permanent compliance/Internal audit functions • Personal transactions • Valuation/Calculation of NAV • Use of models/Frequency of valuation/Professional guarantees for external valuers

  23. AIFMD Countdown: Key Impact Areas –Depositary and Other Issues

  24. Immediate concerns for EU AIFMs – 2015 concern for Asian AIFMs • Depositary provisions • Transparency and disclosure requirements • Other

  25. Depositary • Who? • New prime broker model? • Impact on pricing? • Re-domicile onshore funds offshore?

  26. Other Issues • Remuneration • Private Equity Restrictions • Leveraged Funds ... and more!

  27. QUESTIONS? abigail.bell@dechert.com gus.black@dechert.com christopher.gardner@dechert.com • dechert.com • Almaty • Austin • Beijing • Boston • Brussels • Charlotte • Chicago • Dubai • Dublin • Frankfurt • Hartford Hong Kong • London • Los Angeles • Luxembourg • Moscow • Munich • New York • Orange County • Paris Philadelphia • Princeton • San Francisco • Silicon Valley • Tbilisi • Washington, D.C.

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