[ParlTrack]

Proposal for a directive
Title

on Alternative Investment Funds and Alternative Investment Fund Managers and amending Directives 2004/39/EC and 2009/…/EC

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 1

(1) MAlternative investment funds (AIF) and managers of alternative investment funds (AIFM) are responsible for ~~the management of~~ a significant amount of invested assets in Europe, account for significant amounts of trading in markets for financial instruments, and can exercise an important influence on markets and companies in which they invest;.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 2

(2) ~~The impact of AIFM on the markets in which they operate is largely beneficial, but r~~Recent financial difficulties have underlined how activities of alternative investment funds (AIF) and AIFM may ~~also~~ serve to spread or amplify risks through the financial system. Uncoordinated national responses to these risks make the efficient management of these risks difficult. This Directive therefore aims at establishing common requirements governing the authorisation and supervision of AIF and AIFM in order to provide a coherent approach to the related risks and their impact on investors and markets in the ~~Community~~Union.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 3

(3) Recent difficulties in financial markets have underlined that many AIFM strategies are vulnerable to some or several important risks in relation to investors, other market participants and markets. In order to provide comprehensive and common arrangements for supervision, it is necessary to establish a framework capable of addressing those risks taking into account the diverse range of investment strategies and techniques employed by AIFM. Consequently, this Directive should apply to AIF~~M managing and marketing all types of funds~~ and AIFM which are not covered by Directive 2009/…/EC on the coordination of laws, regulations and administrative provisions relating to the undertakings for collective investment in transferable securities (UCITS) (recast), irrespective of the legal or contractual manner in which the AIFM is entrusted with this responsibility. AIFM should not be entitled to manage UCITS within the meaning of Directive 2009/…/EC on the basis of authorisation under this Directive.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 4

(4) Theis Directive lays down requirements regarding the way in which AIFM should manage alternative investment funds (AIF) under their responsibility. It would be disproportionate to regulate the structure or composition of the portfolios of the AIF managed by AIFM and it would be difficult to provide for such extensive harmonisation due to the very diverse types of AIF managed by AIFM and the way in which AIF should act in financial markets and companies in which they invest.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 5

(5) The scope of this Directive should be confined to ~~the management of~~ collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy ~~on the principle of risk-spreading~~ for the benefit of those investors. This Directive should not apply to ~~the management of pension funds or managers of~~ non-pooled investments such as endowments, sovereign wealth funds or assets hoeld on own account by credit institutions, insurance or reinsurance undertakings, and pension funds. This Directive should neither apply to actively managed investments in the form of securities, such as certificates, managed futures, or index-linked bonds. It should, however, cover ~~managers of~~ all collective investment undertakings which are not required to be authorised as UCITS. Investment firms authorised under Directive 2004/39/EC on Markets in Financial Instruments10 should not be required to obtain an authorisation under this Directive in order to provide investment services in respect of AIF. Investment firms can however only provide investment services in respect of AIF, if and to the extent the units or shares thereof can be marketed in accordance with this Directive.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 6

(6) In order to avoid imposing excessive or disproportionate requirements, this Directive provides for an exemption for AIFM where the cumulative AIF under management fall below a threshold of EUR 100 million. The activities of the AIFM concerned are unlikely to have significant consequences for financial stability or market efficiency. For AIFM which only manage unleveraged AIF and do not grant investors redemption rights during a period of five years a specific threshold of EUR 500 million applies. This specific threshold is justified by the fact that managers of unleveraged funds, specialised in long term investments, are even less likely to cause systemic risks. Furthermore, the five years lock-up of investors eliminates liquidity risks. AIFM which are exempt from this Directive should continue to be subject to any relevant national legislation. They should however be allowed to be treated as AIFM subject to the opt-in procedure foreseen by this Directive.deleted

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 7

(7) This Directive aims at providing a harmonised and stringent regulatory and supervisory framework for the activities of AIF and AIFM. Authorisation in accordance with this Directive should cover ~~the services of management and administration of AIF~~all AIF available to the investors of the European Union or operating on financial markets throughout the ~~Community~~Union. In addition, authorised AIFM should be entitled to be market ~~AIF~~ed in the ~~Community~~Union to professional investors, subject to a notification procedure.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 8

(8) This Directive does not regulate AIF and therefore does not prevent Member States from adopting or from continuing to apply additional requirements in respect of AIF established on their territory. The fact that a Member State may impose additional requirements on AIF domiciled on its territory should not prevent the exercise of rights of AIFM authorised in other Member States in accordance with this Directive to market to professional investors AIF domiciled outside the Member State imposing additional requirements and which are therefore not subject to and do not need to comply with those additional requirements.deleted

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 12 a (new)

(12a) In order to address the potentially detrimental effect of poorly designed remuneration structures on the sound management of risk and control of risk- taking behaviour by individuals, there should be an express obligation for AIFM to establish and maintain, for those categories of staff whose professional activities have a material impact on the risk profiles of AIF they manage, remuneration policies and practices that are consistent with sound and effective risk management. Those categories of staff should at least include senior management, risk takers and control functions. In order to promote supervisory convergences in the assessment of remuneration policies and practices, the European Securities and Market Authority (ESMA) should ensure the existence of guidelines on sound remuneration policies in the AIFM sector.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 15

(15) Given that AIFM employing ~~high levels of leverage in their investment strategies~~leverage may, under certain conditions, contribute to the build up of systemic risk or disorderly markets, special requirements should be imposed on AIFM using certain techniques giving rise to particular risks. The information needed to detect, monitor and respond to those risks has not been collected in a consistent way throughout the ~~Community~~Union, and shared across Member States so as to identify potential sources of risk to the stability of financial markets in the ~~Community~~Union. To remedy this situation, special requirements should apply to AIFM, which consistently use high levels of leverage in their investment strategies. Those AIFM should be obliged to disclose information regarding their use and sources of leverage. That information should be aggregated and shared with other authorities in the ~~Community~~Union, so as to facilitate a collective analysis of the impact of the leverage of those AIFM on the financial system in the ~~Community~~Union, as well as a common response. The European Systemic Risk Board (ESRB) and the European Securities and Market Authority (ESMA) will be responsible for monitoring the systemic risks created by AIF.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 16

(16) Activities of AIFM based on the use of ~~high levels of~~ leverage could be detrimental to the stability and efficient functioning of financial markets. It is considered necessary to allow the ~~Commission~~European Securities and Market Authority (ESMA) to impose limits on the level of leverage that AIFM could use~~, in particular in those cases where AIFM employ high levels of leverage on a systematic basis~~. The limits to the maximum amount of leverage should take into account aspects related to the source of leverage and the strategies employed by the AIFM. They should also take into account the essentially dynamic nature of the management of leverage by most AIFM using ~~a high level of~~ leverage. In this respect the limits to leverage could for example either consist in a threshold that should not be breached at any point in time or a limit on the average leverage employed during a given period (i.e. monthly or quarterly). The Commission should ensure that the requirements concerning AIF which use leverage set out of this Directive are applied to all funds, including UCITS funds, which use leverage for investing on the Union’s financial markets.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 17

It is necessary to ensure that an AIFM provides all companies over which it can exercise a controlling or ~~domin~~significant influence with the information necessary for the company to assess how this controlling influence in the short to medium term impacts the company’s economic and social situation. To this end, particular requirements should apply to AIF~~M managing AIF which are~~ in a position to exercise controlling influence over a listed or non-listed company, in particular to notify the existence of this position and to disclose information to the company and all its other shareholders about the intentions of the AIFM with regard to the future business development and other planned changes of the controlled company. In order to ensure transparency regarding the controlled company, enhanced reporting requirements should apply. The annual reports of the relevant AIF should be supplemented with information that is specific to the type of investment and the controlled company. The Commission should ensure that the requirements concerning AIF which exercise a controlling or dominant influence on companies established in the Union set out in this Directive are applied to all funds, including UCITS funds, which exercise such a controlling or dominant influence on companies established in the Union.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 17 a (new)

(17a) AIF using excessive leverage to acquire a controlling influence on non- listed companies could be detrimental to the development and the investment of these companies in particular in the case of an economic downturn. It is considered necessary to impose limits on the level of leverage that AIF could use for buying companies.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 17 b (new)

(17b) It is necessary to ensure that AIF that attempt to influence listed companies strategies are involved on a long-term basis in the company in order to prevent any short-term based strategy.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 18

(18) Many AIFM offer to European investors are currently manage ~~AIF~~d and/or domiciled in third countries. It is appropriate to allow ~~author~~investors established ~~AIFM to manage AIF~~in the Union to invest in AIF managed and/or domiciled in third countries, subject to appropriate arrangements that ensure theat requirements of this Directive regarding the protection of investors and sound administration of those AIF a~~nd th~~re effective ~~safe-keeping of assets invested by Community investors.~~ ly implemented. Investors established in the Union should not be allowed to invest in AIF established in non-cooperative third countries as regard tax and prudential cooperation. The Commission should be responsible for evaluating the degree of cooperation of a third country.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 18 a (new)

(18a) European pension funds, credit institutions, insurance companies and UCITS funds should not be allowed to invest directly or indirectly in AIF which do not comply with the requirements of this Directive regarding the protection of investors.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 18 b (new)

(18b) Many AIF managed and/or established in third countries are currently invested on the European financial markets. In order to insure the financial stability of the European Union, it is appropriate to impose on those funds some of the requirements imposed to the AIF managed and/or established in the Union.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 19

(19) AIFM should also be able to market AIF domiciled in third countries to professional investors both in the home Member State of the AIFM and in other Member States. That right should be subject to notification procedures and the existence of a tax agreement with the third country concerned which ensures an efficient exchange of information with the tax authorities in the domicile of the Community investors. Given the fact that such AIF and the third country in which they are domiciled have to meet additional requirements, some of which first have to be laid down in implementing measures, the rights granted under the Directive to market AIF domiciled in third countries to professional investors should only become effective three years after the transposition period. In the meantime Member States may allow or continue to allow AIFM to market AIF domiciled in third countries to professional investors on their territory subject to national law. During this period of three years, AIFM can however not market such AIF to professional investors in other Member States on the basis of rights granted under this Directive.deleted

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 20

(20) It is appropriate to allow the AIFM established in the Union to delegate some administrative tasks to an entity established in a third country provided that necessary safeguards are in place. Similarly, a depositary may delegate some of its depositary tasks in respect of AIF domiciled in a third country to a depositary domiciled in that third country, provided that the legislation of that third country ensures a level of protection of investor interests which is equivalent to that in the ~~Community. U~~Union. For assets located in a third country and under certain conditions, it should also be possible for the AIFM to appoint an independent valuator established in a third country.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 21

(21) Subject to the existence of an equivalent regulatory framework in a third country, as well as of effective access for AIFM established in the Community to the market of that third country, Member States should be allowed to authorise AIFM in accordance with the provisions of this Directive, without requiring that it has a registered office in the Community, after a period of three years as from the end of the transposition period. This period takes account of the fact that such AIFM and the third country in which they are domiciled have to meet additional requirements some of which first have to be laid down by implementing measures.deleted

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 22

(22) It is necessary to clarify the powers and duties of competent authorities responsible for implementing this Directive, and to strengthen the mechanisms needed to ensure the necessary level of cross-border supervisory cooperation. European Systemic Risk Board and European Securities and Market Authority (ESMA) will be competent authorities for cross-border supervision.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 23

(23) The relative importance of the activities of AIFM in some financial markets, especially in those cases where those AIF ~~they manage~~ do not have a material interest in the underlying products or instruments from which those markets derive, could, under some circumstances, hinder the efficient functioning of those markets. For example it could make those markets excessively volatile or affect the correct pricing of the instruments traded in them. It is therefore considered necessary to make sure the competent authorities enjoy the powers necessary to monitor the activities of AIFM in those markets and to intervene in those circumstances where it would be necessary to protect their orderly functioning. AIF involvement in commodities markets needs to be limited. In particular, it is a necessity to prohibit AIF from the agricultural commodities markets of the Union. The Commission should ensure that the requirements concerning AIF invested in commodities markets are applied to all Union or third- country funds making such investments without a material interest in the products or instruments.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 27

(27) In particular the Commission should be empowered to adopt ~~the measure~~delegated acts necessary for the implementation of this Directive. In this respect, the Commission should be able to adopt measures determining the procedures under which AIFM managing portfolios of AIF whose assets under management do not exceed the threshold set out in this Directive may exercise their right to be treated as AIFM covered by this Directive. These measures are also in accordance with Article 290 of the Treaty designed to specify the criteria to be used by competent authorities to assess whether AIFM comply with their obligations as regards their conduct of business, the type of conflicts of interests AIFM have to identify, as well as the reasonable steps AIFM are expected to take in terms of internal and organizsational procedures in order to identify, prevent, manage and disclose conflicts of interest. They arshould also be designed to specify the risk management requirements to be employed by AIFM as a function of the risks which the AIFM incurs on behalf of the AIF that it manages as well as any arrangements needed to enable AIFM to manage the particular risks associated with short selling transactions, including any relevant restrictions that might be needed to protect the AIF from undue risk exposures. They arshould also be designed to specify the liquidity management requirements of this Directive and in particular the minimum liquidity requirements for AIF. They arshould also be designed to specify the requirements that originators of securitisation instruments have to meet in order for an AIFM to be allowed to invest in such instruments issued after 1 January 2011. They ~~are as well~~should also be designed to specify the requirements that AIFM have to comply with when investing in such securitisation instruments. They arshould also be designed to specify the criteria under which a valuator can be considered independent in the meaning of this Directive. They arshould also be designed to specify the conditions under which the delegation of AIFM functions should be approved and the conditions under which the manager could no longer be considered to be the manager of the AIF in case of excessive delegation. They arshould also be designed to specify the content and format of the annual report that AIFM have to make available ~~for each AIF they manage~~ and to specify the disclosure obligations of AIFM to investors and reporting requirements to competent authorities as well as their frequency. They arshould also be designed to specify the disclosure requirements imposed on AIFM as regards leverage and the frequency of reporting to competent authorities and of disclosure to investors. They arshould also be designed to setting limits to the level of leverage AIFM can employ ~~when managing AIF They ar~~. They should also be designed to determine the detailed content and the way AIFM acquiring controlling influence in issuers and non-listed companies should fulfil their information obligation towards issuers and non-listed companies and their respective shareholders and representatives of employees, including the information to be provided in the annual reports of the AIF they manage. They arshould also be designed to specify the types of restrictions or conditions that can be imposed on the marketing of AIF to professional investor in the home Member State of the AIFM. They arshould also be designed to specify general criteria for assessing equivalence of valuation standards of third countries where the valuator is established in a third country, the equivalence of legislation of third countries regarding depositaries and, for the purpose of the authorisation of AIFM established in third countries, t~~he equivalence of prudential regulation and ongoing supervision. They ar~~o specify general criteria for assessing an effective tax and prudential cooperation. They should also be designed to specify general criteria for assessing whether third countries grant ~~Community~~Union AIFM effective market access comparable to that granted by the ~~Community~~Union to AIFM from third countries. They arshould also be designed to specify the modalities, content and frequency of exchange of information regarding AIF and AIFM between the European Stability Risk Board (ESRB), the European Securities and Market Authority (ESMA) and the competent authorities of the home Member State of the AIFM and ~~other competent authorities~~AIFM where the AIF and AIFM individually or collectively with other AIF and AIFM may have an impact on the stability of systemically relevant financial institutions and the orderly functioning of markets. They arshould also be designed to specify the procedures for on-the-spot verifications and investigations.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Recital 28

(28) Since those ~~measure~~acts are of general scope and are designed to amend non- essential elements of this Directive, by supplementing it with new non-essential elements, they must be adopted in accordance with the ~~regulatory procedure with scrutiny~~procedure provided for in Article 5a290 of ~~Decision 1999/468/EC~~the Treaty. Measures not falling under the above category should be subject to the regulatory procedure provided in Article 5 of ~~that~~ Decision 1999/468/EC. Those measures ~~are designed to~~should state that the fund valuation standards of a specific third country are equivalent to those applicable in the ~~Community~~Union where the valuator is established in a third country. They are designed to state that the legislation on depositaries of a specific third country is equivalent to this Directive. They are designed to state that the legislation on prudential regulation and on-going supervision of AIFM in a specific third country is equivalent to this Directive. They are designed to state whether a specific third country grants Community AIFM effective market access comparable to that granted by the Community to AIFM from that third country. They arshould also be designed to state that the legislation on depositaries of a specific third country is equivalent to this Directive. They should also be designed to specify standard models for notification and attestations and to specify the procedure for the exchange of information between competent authorities.

2010/02/12
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 1

This Directive lays down the rules for the authorisation, ongoing operation and transparency of alternative investment funds (AIF) in the Union and of the managers of alternative investment funds (AIFM).

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 1 - introductory part

1. This Directive shall apply to all AIF~~M established in the Community, which provide management services to one or more alternative investment funds (AIF) irrespective of~~ and their AIFM, provided that AIF:

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 1 – point a

(a) are offered to EU investors, whether the AIF is domiciled inside or outside of the ~~Community~~Union;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 1 – point b

(b) ~~whether the AIFM provides its services directly or by delegat~~invest in the European Union, whether the AIF is domiciled inside or outside of the Union;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 1 – point c

~~(c) whether the AIF belongs to the open- ended or closed-ended type;~~deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 1 – point d

~~(d) the legal structure of the AIF and of the AIFM.~~deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 1 – subparagraph 2

An AIFM authorised in accordance with this Directive to provide management services to one or more AIF is also entitled to market shares or units of these AIF to professional investors in the Community subject to the conditions laid down in Chapter VI and, where relevant, Article 35.deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 2 – point a

(a) AIFM which either directly or indirectly through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIF whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of 100 million Euro or 500 millions euros when the portfolio of AIF consists of AIF that are not leveraged and with no redemption rights exercisable during a period of 5 years following the date of constitution of each AIF;deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 2 – point b

~~(b) AIFM established in the Community which do not provide management services to AIF domiciled in the Community and do not market AIF in the Community;~~deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 2 – point e

(e) institutions which are covered by Directive 2003/41/EC of the European Parliament and the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision, provided that they are not acting as AIF;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 3

~~3. Member States shall ensure that AIFM not reaching the threshold set out in paragraph 2(a) are entitled to be treated as AIFM falling under the scope of this Directive.~~deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 2 – paragraph 4

4. The Commission shall adopt implementing measures with a view to determining the procedures under which AIFM managing portfolios of AIF whose assets under management do not exceed the threshold set out in paragraph 2(a) may exercise their right under paragraph 3. Those measures, designed to amend non- essential elements of this Directive by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 49(3).deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 3 – point c

(c) ‘Valuator’ means any legal or natural person or company valuing the assets or establishing the value of the shares or units of an AIF authorised and supervised by a competent authority;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 3 – point e a (new)

(ea) ‘AIF offered to investors’ means any AIF that receives funds from investors domiciled in the Union;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 3 – point h

(h) ‘home Member State’ means the Member State in which the AIF~~M has been authorised pursuant to Art~~ is domicile 6d;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 3 – point i

(i) ‘host Member State’ means a Member State~~, other than the home Member State,~~ within the territory of which an AIF~~M provides management services to AIF or markets shares or units thereof~~ is offered to investors;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 3 – point j

(j) ‘Competent authorities’ means the national and EuropeanUnion authorities which are empowered by law or regulation to supervise AIF and their AIFM;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Chapter II - title

Authorisation of AIFM

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 4 – paragraph 1

1. Member States shall ensure that no AIF~~M covered by this Directive provides management services to any AIF or markets shares or units thereof~~ are offered to investors in the Union without prior authorisation. ~~Entities~~AIF which are n~~either~~ot authorised in accordance with this Directive nor, in case of AIFM not covered by this Directive, in accordance with the national law of a Member State, shall not be allowed to provide management services to AIF or market units or shares thereof within the Communityshall not be allowed to be offered to investors in the Union.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 4 – paragraph 2

2. AIFM may be authorised to provide management services either for all or certain types of AIF. An AIFM may hold an authorisation pursuant to this Directive and be authorised as a management or investment company pursuant to Directive 2009/…/EC – [UCITS Directive]deleted

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 5 – paragraph 1 - introductory part

A~~n AIFM applying for an authorisation shall provide the following to~~uthorisation shall be granted by the competent authorities of the host Member State where the AIF intends to be offered to investors. Authorisation given by the competent authorities of the host Member State ~~where it has its registered office~~shall not be valid for offering the AIF in any other member State. Authorisations valid for all Member States shall be granted by the ESMA. AIF which are not domiciled in the Union cannot apply for such an authorisation. An AIF applying for an authorisation shall provide the following to the competent authorities:

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 5 – paragraph 1 - point aa (new)

(aa) information on the identity of the AIFM;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 5 – paragraph 1 - point b

(b) a programme of activity, including information on how the AIF and its AIFM intends to comply with ~~its~~their obligations under chapters III, IV and where applicable, V, VI and VII;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 5 – paragraph 1 - point c

(c) detailed information about the characteristics of the AIF ~~it intends to manage~~, including the identification of the Member States or third countries on whose territory they are domiciled; ~~Justification Authorisation applied to AIF.~~Or. en

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 5 – paragraph 1 - point d

(d) the fund rules or instruments of incorporation ~~of each AIF the AIFM intends to manage~~;

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 – paragraph 1 – subparagraph 1

1. The competent authorities ~~of the home Member State~~ shall grant authorisation only if they are satisfied that the AIF and its AIFM will be able to fulfil the conditions of this Directive.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 – paragraph 1 – subparagraph 2

TOnly the authorisation granted by the ESMA to AIF domiciled in the Union shall be valid for all Member States.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 – paragraph 2 – introductory part

2. The competent authorities ~~of the home Member State~~ shall refuse authorisation where the effective exercise of their supervisory functions is prevented by any of the following:

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 – paragraph 3 – subparagraph 2

The competent authorities ~~of the home Member State~~ may restrict the scope of the authorisation, in particular as regards the ~~type of AIF the AIFM is allowed to manage, as well as the~~ delegation arrangements.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 – paragraph 5

5. AIFM may start ~~providing management services in the home Member State~~receiving funds from investors as soon as the authorisation is granted.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 6 a (new)

Article 6a Special conditions for granting authorisation to AIF domiciled in third countries 1. If the AIFM of the AIF applying for authorisation is established in the Union, the AIFM will be responsible for compliance with the requirements of this Directive by the AIF domiciled in third countries as if the AIF was domiciled in the Union. 2. If the AIF and its AIFM are both established in a third country, the authorisation can only be given if the AIF and the AIFM comply with the following requirement of the directive : (a) Chapter III except Articles 12 and 13 if the AIF is not operating on the Community financial markets; (b) Chapter IV; (c) Chapter V except if the AIF is not operating in the Union financial markets and does not buy non-listed companies in the Union. The fulfilment of the requirements of this Directive needs to be validated by a due diligence process done by one or more persons empowered by law to audit accounts in accordance with Directive 2006/43/EC. Authorisation will be given by competent authorities on the basis of this report that will have to be repeated on an annual basis. 3. Authorisation requires that the AIF is established in a country or jurisdiction which fully exchanges information for tax purposes with the member State in conformity with the internationally agreed standard included in Article 26 of the OECD Model Tax Convention. 4. Authorisation requires that the AIF is established in a country which ensures an effective exchange of information regarding prudential issues with the ESMA. 5. When AIF are domiciled in a third country the competent authorities may prolong the period referred to in Article 6(4), when this is necessary to check whether the conditions of this Directive are met. 6. When AIF are domiciled in a third country the competent authorities of the Member state, where the AIF applied for an authorisation, may impose supplemental requirement when it considered it necessary to protect its investors. 7. The Commission shall adopt delegated acts in accordance with Articles 49a, 49b and 49c further specifying the content of requested due diligence process and the content of an effective exchange information regarding prudential issues.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 7 – paragraph 1

AIFM shall, before implementation, notify the competent authorities of ~~the home Member State of~~ any change regarding the information provided in their initial application that may substantially affect the conditions under which the authorisation has been granted to an AIF, in particular changes of the investment strategy and policy ~~of any AIF managed by it~~, of the AIF rules or instruments of incorporation ~~and the identity of any further AIF the AIFM intends to manage~~.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 8 – introductory part

The competent authorities may withdraw the authorisation issued to an AIFM where that AIFM:

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Chapter III – title

Operating conditions for AIF and their AIFM

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 9 a (new)

Article 9a Remuneration policy 1. Competent authorities shall require AIF and AIFM to have remuneration policies and practices that are consistent with and promote sound and effective risk management and do not encourage risk- taking which is inconsistent with the risk profiles, fund rules or instruments of incorporation of the AIF it manages. The technical criteria laid down in Annex I shall be taken into account. 2. Competent authorities shall ensure that AIF and AIFM comply with the requirements set out in Annex I.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 11 – paragraph 4

4. InAt the ~~cas~~time of AIFM which engage in short selling when investing on behalf of one or more AIF, Member States shall ensure that the AIFM operates procedures which provide it with access to the securities or other financial instruments at the date when the AIFM committed to deliver them, andthe beginning of the short selling, AIF engaged in short selling shall be in possession of the securities or other financial instruments. Member States shall ensure that the AIFM implements a risk management procedure which allows the risks associated with the delivery of short sold securities or other financial instruments to be adequately managed.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 12 – paragraph 1

1. ~~For each AIF it manages the AIFM shall employ~~AIF shall have an appropriate liquidity management ~~system and adopt procedures which~~and ensure that the liquidity profile of ~~the~~its investments ~~of the AIF~~ complies with its underlying obligations. The AIFM shall regularly conduct stress tests, both under normal and exceptional liquidity conditions and monitor the liquidity risk of the AIF accordingly. The results of these stress tests need to be communicated to competent authorities. Close-ended AIF that do not use leverage are exempted from the requirements of this paragraph.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 13 a (new)

Article 13a Investment in commodities markets AIF that invest in commodities markets shall regularly provide the ESMA with information about their direct or indirect position on these markets. In order to avoid any disturbance of the commodities prices due to operations made by AIF, the ESMA may impose limits to the positions taken by AIF on commodities markets. AIF are not allowed to invest directly or indirectly in agricultural commodities.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 16 – paragraph 3 a (new)

3a. Independent valuation is not compulsory for close-ended AIF.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 16 – paragraph 3 b (new)

3b. The AIFM remains liable that the value of the shares and units of the AIF are accurately established.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 16 – paragraph 4 – subparagraph 1

4. The Commission shall adopt ~~implementing measures~~delegated acts in accordance with Articles 49a, 49b and 49c further specifying the criteria under which a valuator can be considered independent within the meaning of paragraph 1. The Commission shall also adopt delegated acts in accordance with Articles 49a, 49b and 49c further specifying which supervised entities are allowed to act as valuator.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 17 – paragraph 3

3. TFor AIFM established in the Union wherever the authorised AIF is domiciled, the depositary shall be a credit institution having its registered office in the ~~Community~~Union and be authorised in accordance with Directive 2006/48/EC ~~of the European Parliament and Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast)~~. For AIFM established in a third country, the depositary shall be a regulated credit institution in that third country.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 17 – paragraph 4

4. Depositaries may delegate ~~their~~some non- essential tasks to other depositaries. The Commission shall adopt delegated acts in accordance with Articles 49a, 49b and 49c further specifying the essential tasks of a depositary. Those acts, designed to amend non- essential elements of this Directive by supplementing it, shall be adopted in accordance with the procedure referred to in Article 290 of the Treaty on the Functioning of the European Union.

2010/02/15
Committee: ECON

Pascal CANFIN

Proposal for a directive
Chapter V - Title

Obligations regarding ~~AIFM managing~~ specific types of AIF

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Chapter V – section 1 – title

Obligations for ~~AIFM managing~~ leveraged AIF

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 22 – paragraph 1

This section shall apply only to AIF~~M which manage one or more AIF employing high levels of leverage on a systematic basis~~ employing leverage investing on European markets and whose assets under management, including any assets acquired through the use of leverage, exceed the threshold of EUR 100 million.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 22 – subparagraph 2

~~AIFM shall assess on a quarterly basis whether the AIF employs high levels of leverage on a systematic basis and shall inform the competent authorities accordingly~~deleted.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 22 – subparagraph 3

For the purposes of the second subparagraph, an AIF shall be deemed to employ high levels of leverage on a systematic basis where the combined leverage from all sources exceeds the value of the equity capital of the AIF in two out of the past four quarters.deleted

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 23 – introductory part

AIF~~M managing one or more AIF employing high levels of leverage on a systematic basis shall for each such AIF~~ employing leverage shall:

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 23 – point a

(a) disclose to investors the maximum level of leverage which the AIFM may employ ~~on behalf of the AIF~~ as well as any right of re-use of collateral or any guarantee granted under the leveraging arrangement;

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 23 – point b

(b) quarterly disclose to investors the total amount of leverage employed ~~by each AIF~~ in the preceding quarter.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 24 – paragraph 1 - subparagraph 1

1. AIF~~M managing one or more AIF employing high levels of leverage on a systematic basis~~ employing leverage whose assets, including any assets acquired through use of leverage, exceed the threshold of EUR 100 million shall regularly provide, to the ~~competent authorities of its home Member State,~~ESMA information about the overall level of leverage employed ~~by each AIF it manages~~, and a break-down between leverage arising from borrowing of cash or securities and leverage embedded in financial derivatives.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 25 – paragraph 1

1. ~~Member States~~The Commission shall ensure that the ~~competent authorities of the home Member State~~ESMA uses the information to be reported under Article 24 for the purposes of identifying the extent to which the use of leverage contributes to the build-up of systemic risk in the financial system or risks of disorderly markets.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 25 – paragraph 2

2. ~~Home Member States~~The ESMA shall ensure that all information received under Article 24, aggregated in respect of all AIFM that it supervises, ~~are~~is made available to ~~other~~Member States competent authorities through the procedure set out in Article 46 on supervisory cooperation. It shall, without delay, also provide information through this mechanism, and bilaterally to other Member States directly concerned, if an AIFM ~~under its responsibility~~ could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institution in ~~other~~ Member States.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 25 – paragraph 3 – subparagraph 1

3. In order to ensure the stability and integrity of the financial system, the ~~Commission shall adopt implementing measures setting~~ESMA shall have the power to set limits to the level of leverage that AIFM can employ. These limits should take into account, inter alia, the type of AIF, their strategy and the sources of their leverage. ~~Those measures designed to amend non- essential elements of this Directive by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 49(3).~~

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 25 – paragraph 4

4. In exceptional circumstances and when this is required in order to ensure the stability and integrity of the financial system, the competent authorities of the home Member State may impose additional limits to the level of leverage that AIFM can employ. Measures taken by the competent authorities of the home Member States shall have a temporary nature ~~and should comply with the provisions adopted~~. The ESMA shall be informed of such a limitation by the Chom~~mission pursuant to paragraph 3~~e Member State competent authorities.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Chapter V – Section 2 – Title

OBLIGATIONS FOR ~~AIFM MANAGING~~ AIF WHICH ACQUIRE ~~CONTROLLING~~ INFLUENCE IN COMPANIES

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 26 – paragraph 1

1. This section shall apply to ~~the following: (a) AIFM managing one or more AIF which~~AIF that, either individually or in aggre~~gation acquires 30 %~~ement with one or more of the ~~voting rights of an issuer or of a non- listed company domiciled in the Community, as appropriate; (b) AIFM having concluded an agreement with one or more other AIFM which would allow the AIF manag~~r AIF, acquire a significant or controlling influence, as defined by these AIF~~M to acquire 30 % or more of the voting rights~~RS standards, of ~~the~~an issuer or ~~the~~of a non-listed company~~, as appropriate~~ domiciled in the Union.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 26 – paragraph 2

2. This section shall not apply where the ~~issuer or the~~ non-listed company concerned ~~are small and medium enterprises that~~ employs fewer than 250 persons~~, have an annual turnover not exceeding 50 million euro and/or an annual balance sheet not exceeding 43 million euro~~.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 27 – paragraph 1

1. Member States shall ensure that when an AIFM is in a position to exercise ~~30 % or more of the voting rights of~~a significant or controlling influence, as defined in the IFRS standards, in a non- listed company, such AIFM notifies the non- listed company and all other share-holders the information provided in paragraph 2. This notification shall be made, as soon as possible, but not later than four trading days the first of which being the day on which the AIFM has reached the position of behaving a~~ble to exercise 30% of the voting rights~~ significant or controlling influence. After the first notification, the AIF shall notify each time the number of its voting rights is increased by more that 5 percentage points or where the AIF acquires control, as defined in the IFRS standards, of the non-listed company.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 27 – paragraph 2 – point b

(b) the conditions under which the ~~30 % threshold~~significant or a controlling influence has been reached, including information about the identity of the different shareholders involved;

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 27 c (new)

Article 27c Leverage limitation in the event of an acquisition of a controlling influence Leverage used by AIF that acquired a controlling influence in a non-listed company is limited to a ratio of financial debt used for the acquisition to earnings before interest, taxes, depreciation and amortisation. This ratio shall not be higher than 4 at the time of the acquisition of the controlling influence. This debt used for the calculation includes all the debt used by the AIF to acquire a controlling influence wherever the debt is located in either the acquired company or the AIF. The Commission shall adopt delegated acts in accordance with Articles 49a, 49b and 49c further specifying the calculation of the ratio.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 27 d (new)

Article 27d Undercapitalisation limitation for AIF investing in non-listed companies. AIF that have a controlling influence in non-listed companies by using leverage shall not use the acquired company's pre- acquisition retained earnings to reimburse the acquisition debt. Companies that have been acquired by an AIF using leverage shall not pay dividends during the first two years following the acquisition that would lead to a smaller amount of retained earnings than at the time of the acquisition. The Commission shall adopt delegated acts in accordance with Articles 49a, 49b and 49c further specifying the way of calculation of dividends limitation.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 28 – paragraph 1 – subparagraph 1

1. In addition to Article 27, Member States shall ensure that where an AIFM acquires ~~30 % or more of the voting rights of~~a significant or a controlling influence over an issuer or a non-listed company, that its AIFM makes the information set out in the second and third subparagraphs available to the issuer, the non-listed company, their respective shareholders and representatives of employees or, where there are no such representatives, to the employees themselves.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 28 – paragraph 1 – subparagraph 2 – point c

(c) for AIF having a controlling influence, the policy for external and internal communication of the issuer in particular as regards employees.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 28 – paragraph 1 – subparagraph 3 – point d

(d) the identity of the AIFM which either individually or in agreement with other AIFM have ~~reached the 30 % threshold~~acquired a significant or a controlling influence;

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 28 – paragraph 1 – subparagraph 3 – point e

(e) for AIF having a controlling influence and using leverage, the development plan for the non-listed company;

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 28 – paragraph 1 – subparagraph 3 – point g

(g) for AIF having a controlling influence and using leverage, the policy for external and internal communication of the issuer or non-listed company, in particular as regards employees.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 29 – paragraph 2 – introductory part

2. The AIF annual report shall include the following additional information for each issuer and non listed company in which the AIF has ~~invested~~a controlling influence:

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 29 – paragraph 2 – subparagraph 1 - point a

(a) with regard to operational and financial developments, capital structure, capital expenditure and research and development spending, presentation of revenue and earnings by business segment, statement on the progress of company's activities and financial affairs, assessment of expected progress on activities and financial affairs, report on significant events in the financial year;

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 29 a (new)

Article 29a Specific provisions regarding the information of employees of companies in which AIF excercice a controlling influence For AIF having acquired a controlling influence in a non-listed company by using leverage, the AIFM shall meet not later than two months after the acquisition the representatives of the employees, or, where there are no such representatives, the employees themselves. This meeting has to include a review of the development plan of the non-listed company and discuss the potential consequences of the AIF acquisition for employees. After the acquisition, the AIFM shall meet at least once a year with the representatives of the employees, or, where there are no such representatives, the employees themselves in order to discuss the information included in the annual report of the AIF regarding the acquired company.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 29 b - paragraph 1 (new)

Article 29b Specific provisions for AIF participating in the general assembly of listed companies 1. AIF investing in listed companies shall hold their shares for at least two months to be able to use the related voting rights in the general assembly of such listed companies.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 29 b paragraph 2 (new)

2. Voting rights in a listed company attached to borrowed shares held by AIF cannot be used in the general assembly of such listed company.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 30

Where, following anthe acquisition of ~~30 % or more of the voting rights~~a controlling influence of an issuer, the shares of that issuer are no longer admitted to trading on a regulated market, it shall nevertheless continue to comply with its obligations under Directive 2004/109/EC for two years from the date of withdrawal from the regulated market.

2010/03/08
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 31 – title

Marketing of shares or units of ~~AIF in the home~~authorised AIF in a Member State

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 31 – paragraph 1

1. AShares or units of an authorised AIFM may be market ~~shares or units of AIF~~ed to professional investors in ~~the home~~a Member State as soon as the conditions laid down in this Article are met.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 31 – paragraph 2 – subparagraph 1

2. The AIFM shall submit a notification to the competent authorities of ~~its home~~a Member State in respect of each AIF that it intends to market in that Member State.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 31 – paragraph 3 – subparagraph 1

3. No later than t~~en working day~~wo months after receipt of a complete notification pursuant to paragraph 2, the competent authorities of the ~~home~~ Member State shall inform the AIFM whether it may start marketing the AIF identified in the notification referred to in paragraph 2.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 32 – paragraph 1 – subparagraph 1

1. Member States may allow the marketing of AIF domiciled in the Union to retail investors in their territory.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 33 – paragraph 1 – introductory part

1. Where an AIF, authorised ~~AIFM intend~~by the ESMA is to be marketed to professional investors ~~the units or shares of an AIF it manages in another~~in a Member Sstate, it shall submit the following documents to the ~~competent authorities of its home Member State~~ESMA :

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 33 – paragraph 1 – point d

(d) the indication of the Member State in which ~~it intend~~the AIF is to be market ~~the units or shares of an AIF under its management~~ed to professional investors;

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 33 – paragraph 2

2. The ~~competent authorities of the home Member State~~ESMA shall, no later than ten working days after the date of receipt of the complete documentation, transmit the complete documentation referred to in paragraph 1 to the competent authorities of the Member State where the AIF will be marketed. They shall enclose an attestation that the AIFM concerned is authorised.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 34 – paragraph 4 – subparagraph 1

4. The competent authorities of the home Member State shall, no later than t~~en working day~~wo months after the date of receipt of the complete documentation, transmit the complete documentation referred to in paragraph 2, and where relevant 3, to the competent authorities of the Member State where the management services will be provided and an attestation that they have authorised the AIFM concerned. They shall immediately notify the AIFM about the transmission.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 35 – title

Conditions for ~~the marketing in the Community of~~investing in AIF domiciled in third countries

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 35

An AIFM may only market shares or units of an AIF domiciled in a third country to professional investors domiciled in a Member State, if the third country has signed an agreement with this Member State which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention and ensures an effective exchange of information in tax matters. Where AIFM market shares or units of AIF domiciled in a third country the home Member States may prolong the period referred to in Article 31(3), when this is necessary to check whether the conditions of this Directive are met. Before allowing AIFM to marketUCITS investment companies authorised in accordance with Directive 2009/65/EC, credit institutions covered by Directive 2006/48/EC, institutions covered by Directive 2003/41/EC and institutions covered by Directive 73/239/EEC, Directive 2002/83/EC and Directive 2005/68/EC shall not own directly or indirectly shares or units ofin AIF ~~domiciled in a third country, the home Member State shall have particular regard to the arrangements made by the AIFM in accordance with Article 38, where relevant~~that would not be authorised in the Union.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 35 a (new)

Article 35a Conditions for investing in European markets for unauthorised third-country AIF Unauthorised third-country AIF as defined by Article 3(a), taking into account the exemptions listed in Article 2, and that own more that EUR 100 millions in assets in the Union and employ leverage shall be registered with the ESMA. In order to be allowed to operate on European markets, unauthorized AIF shall comply with the requirements of Articles 11(4), 12(1), 13, 13a, 24 and 25. In that case, the competent authority shall be the ESMA.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 35 c (new)

Article 35c Investment in authorised AIF Authorised AIF shall not invest directly or indirectly more than 20 percent of their total assets in AIF not authorised in the Union.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 35 d (new)

Article 35d Conditions for acquiring a significant or a controlling influence in a European issuer or a European non-listed company for unauthorised third-country AIF Unauthorised third-country AIF as defined by Article 3(a), taking into account the exemptions listed in Article 2, that employ leverage for acquiring a significant influence or a controlling influence in non-listed companies or in an issuer shall comply with Articles 26 to 30.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 36

Member States shall ~~only~~not allow an AIFM ~~to delegate administrative services to entities establish~~of an AIF domiciled in a th~~ird country, provided that all of the following conditions are met: (a) the requirements set out in Article 18 are fulfilled; (b) the entity is authorised to provid~~e Union to delegate administrationve services or registered in the third country in which it is established and is subject to prudential supervision; (c) there is an appropriate co-operation agreement between the competent authority of the AIFM and the supervisory authority of the entitto entities established in a third country.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 37

1. Member States shall only allow the appointment of a valuator established in a third country, provided that all of the following conditions are met: (a) the requirements set out in Article 16 are fulfilled; (b) the third country is the subject of a decision taken pursuant to paragraph 3 stating that the valuation standards and rules usThe competent authorities may, on an exceptional basis, allow AIFM established in the Union to appoint a valuator established in a third country if assets located in third countries cannot be accurately valued by a valuators established on its territory are equivalent to those applicable in the Community. 2. The Commission shall adopt implementing measures specifying the criteria for assessing the equivalence of the valuation standards and rules of third countries as referred to in paragraph (1) (b). Those measures, designed to amend non- essential elements of this Directive by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to inin the Union. The Commission shall adopt delegated acts in accordance with Articles 49~~(3). 3. On the basis of the criteria referred to in paragraph 2, the Commission shall,~~ a, 49b and 49c specifying the criteria for assessing accordance with the procedure referred to in Article 49(2), adopt implementing measures, stating that the valuation standards and rules of a third country legislation are equivalent to those applicable in the Communityssets that would not be accurately valued by a valuator established in the Union.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 39

Article 39 Authorisation of AIFM established in third countries 1. accordance with this Directive, AIFM established in a third country to market units or shares of an AIF to professional investors in the Community under the conditions of this Directive, provided that: (a) the third country is the subject of a decision taken pursuant to paragraph 3 (a) stating that its legislation regarding prudential regulation and on-going supervision is equivalent to the provisions of this Directive and is effectively enforced; (b) the third country is the subject of a decision taken pursuant to paragraph 3 (b) stating that it grants Community AIFM effective market access comparable to that granted by the Community to AIFM from that third country; (c) the AIFM provides the competent authorities of the Member State in which it applies for authorisation with the information referred to in Articles 5 and 31 ; (d) a cooperation-agreement between the competent authorities of that Member State and the supervisor of the AIFM exists which ensures an efficient exchange of all information that are relevant for monitoring the potential implications of the activities of the AIFM for the stability of systemically relevant financial institutions and the orderly functioning of markets in which the AIFM is active. (e) the third country has signed an agreement with the Member State in which it applies for authorisation which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention and ensures an effective exchange of information in tax matters. 2. implementing measures aimed at establishing: (a) general equivalence criteria for the equivalence and effective enforcement of third country legislation on prudential regulation and on-going supervision, based on the requirements laid down in Chapters III, IV and V. (b) general criteria for assessing whether third countries grant Community AIFM effective market access comparable to that granted by the Community to AIFM from those third countries. Those measures, designed to amend non- essential elements of this Directive by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 49(3). 3. referred to in paragraph 2, the Commission shall, in accordance with the regulatory procedure referred to in Article 49(2), adopt implementing measures stating: (a) that the legislation on prudential regulation and ongoing supervision of AIFM in a third country is equivalent to this Directive and effectively enforced; (b) that a third country grant Community AIFM effective market access at least comparable to that granted by the Community to AIFM from that third country.deleted Member States may authorise, in The Commission shall adopt On the basis of the criteria

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 40 – paragraph 2

Where a Member State designates several competent authorities it shall inform the Commission and the ESMA thereof, indicating any division of duties.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 41 – paragraph 1 – introductory part

1. Competent authorities designated by Member States and the ESMA shall be given all supervisory and investigatory powers that are necessary for the exercise of their functions. Such powers shall be exercised in any of the following ways:

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 42 – paragraph 1 – introductory part

1. ~~The home~~ Member States shall ensure that the competent authorities may take them following measures:

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 45 – paragraph 1

1. The competent authorities of the Member States shall co-operate with each other and with the ESMA and the ESRB whenever necessary for the purpose of carrying out their duties under this Directive or of exercising their powers under this Directive or under national law.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 46 – paragraph 1

1. The competent authorities responsible for the authorisation and supervision of AIFM under this Directive shall communicate information to the ~~competent authorities of other Member States~~ESMA and the ESRB where this is relevant for monitoring and responding to the potential implications of the activities of individual AIFM or AIFM collectively for the stability of systemically relevant financial institutions and the orderly functioning of markets on which AIFM are active. The ~~Committee of European Securities Regulators (CESR) established by Commission Decision 2009/77/EC of 23 January 20091 shall also be informed and~~ESMA shall forward this information to the competent authorities of the other Member States.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 48 – paragraph 1

1. The ~~Committee of European Securities Regulators (CESR)~~ESMA shall establish a mediation mechanism.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive
Article 48 – paragraph 2

2. In case of disagreement between competent authorities on an assessment, action or omission of one of the competent authorities concerned under this Directive, the competent authorities shall refer the matter to the CESRMA, where discussion will take place in order to reach a rapid and effective solution. ~~The competent authorities shall duly consider the advice of the CESR~~If the disagreement persists, the ESMA may impose a solution to the competent authorities concerned.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive – amending act
Article 51

AIF and AIFM operating in the Community before ~~[the deadline for the transposition of this Directive]~~...* shall adopt all necessary measures to comply with this Directive and shall submit an application for authorisation ~~within one year of the deadline for the transposition of this Directive~~by ...**. * OJ: please insert date: date referred to in Article 54. ** OJ: please insert date: one year from the date referred to in Article 54.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive – amending act
Article 51 – paragraph 1 a (new)

The restrictions on investment policies set out in Article 35 of this Directive shall be implemented immediately for new investments.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive – amending act
Article 51 – paragraph 1 b (new)

For investments in open-ended unauthorised AIF made before ...*, investors shall have three years to comply with this Directive. * OJ: please insert date: date referred to in Article 54.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive – amending act
Article 51 – paragraph 1 c (new)

For investments in closed-ended unauthorised AIF made before ...*, the requirements of this Directive regarding investment policies shall not apply to investors as long as no shares or units are redeemed by the unauthorised AIF. * OJ: please insert date: date referred to in Article 54.

2010/02/18
Committee: ECON

Pascal CANFIN

Proposal for a directive – amending act
Annex I a (new)

ANNEX Ia REMUNERATION POLICIES 1. When establishing and applying the remuneration policies for those categories of staff, including senior management, whose professional activities have a material impact on their risk profile or the risk profiles of AIF they manage, AIFM shall comply with the following principles in a way and to the extent that is appropriate to their size and the size of AIF they manage, their internal organisation and the nature, the scope and the complexity of their activities: (a) the remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles, fund rules or instruments of incorporation of the AIF it manages; (b) the remuneration policy is in line with the business strategy, objectives, values and interests of the AIFM and the AIF it manages or the investors of the AIF, and includes measures to avoid conflicts of interest; (c) the management body in its supervisory function of the AIFM adopts and periodically reviews the general principles of the remuneration policy and is responsible for its implementation; (d) the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the management body in its supervisory function; (e) staff members engaged in risk management are compensated in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control; (f) where remuneration is performance related, the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit or AIF concerned and of the overall results of the AIFM, and when assessing individual performance, financial as well as non- financial criteria are taken into account; (g) the assessment of performance is set in a multi-year framework appropriate to the life-cycle of the AIF managed by the AIFM in order to ensure that the assessment process is based on longer term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the redemption policy of the AIF it manages and their investment risks; (h) guaranteed variable remuneration is not allowed; (i) the proportion of variable components of total remuneration shall be limited ; the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component; (j) payments related to the early termination of a contract reflect performance achieved over time and are designed in a way that does not reward failure; (k) the measurement of performance used to calculate variable remuneration components or pools of variable remuneration components includes an adjustment for all relevant types of current and future risks; (l) variable remuneration is deferred over a period which is appropriate in view of the life cycle and redemption policy of the AIF concerned and is correctly aligned with the nature of the risks of the AIF in question; for closed-ended funds, variable remuneration can only be paid at the liquidation of the AIF ; for open-ended funds, variable remuneration can only be paid after a period of 5 years; remuneration payable under deferral arrangements vests no faster than on a pro-rata basis; (m) the variable remuneration, including the deferred portion, is paid or vests only if it is sustainable according to the financial situation of the AIFM as a whole, and justified according to the performance of the business unit, the AIF and the individual concerned; the total variable remuneration is generally considerably contracted where subdued or negative financial performance of the AIFM or of the AIF concerned occurs; (n) staff members are required to undertake not to use personal hedging strategies or remuneration- and liability- related insurance to undermine the risk alignment effects embedded in their remuneration arrangements. 2. The principles set out in point 1 shall apply both to the remuneration paid by the AIFM and to the remuneration paid by the AIF itself (carried interest). Paragraph 1 shall not apply to returns to employees from their investments in AIF managed by the AIFM nor shall it apply to remuneration paid in connection with the liquidation of an AIF. Point 1(l) shall not apply in respect of variable remuneration linked directly to fees earned by the AIFM which cannot be clawed back. 3. AIFM that are significant in terms of their size or the size of the AIF they manage, their internal organisation and the nature, the scope and the complexity of their activities shall establish a remuneration committee. The remuneration committee shall be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk. The remuneration committee shall be responsible for the preparation of decisions regarding remuneration, including those which have implications for the risk and risk management of the AIFM or the AIF concerned and which are to be taken by the management body in its supervisory function. The remuneration committee shall be chaired by a member of the management body who does not perform any executive functions in the AIFM concerned.

2010/02/18
Committee: ECON

128 Amendments of Pascal CANFIN related to 2009/0064(COD)

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