The Alternative Investment Fund Managers Directive (AIFMD) requires fund managers whose regular business is managing an AIF to be authorised or registered as an AIFM.
A regulated firm, that is currently operating as a fund manager in the UK and managing one or more AIFs with total assets below certain thresholds, is regarded as a ‘small UK AIFM’ and is required to apply to the FCA to obtain the appropriate AIFMD authorisation or registration.
Some fund managers in the UK are under the impression that there is no obligation to be authorised or registered under AIFMD at all, simply because the assets they have under management fall below the thresholds introduced by the Alternative Investment Fund Managers Regulation (AIFMR) as implemented in the UK.
However, this is a common misconception, which sub-threshold fund managers must address now, as they are still required to apply to the FCA for a Variation of Permission (VoP) to become a small authorised UK AIFM or to register as a small registered UK AIFM by 22 July 2014.
A firm is considered as a small AIFM if the total amount of assets under management in one or more AIFs:
- does not exceed EUR100 million in total, including any assets acquired through the use of leverage; or
- does not exceed EUR500 million in total in cases where the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of five years following the date of initial investment in each AIF.
If you are a small UK AIFM then you are not subject to the full operational requirements imposed by the AIFMD, however, you must still take action before 22 July 2014 to become either a small authorised UK AIFM or register as a small registered UK AIFM.
Beyond this date a firm is at risk of breaching its regulatory permissions and obligations, which may result in enforcement action from the FCA.
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