EU AIFM - Update No. 9

The Alternative Investment Fund Managers Directive remains a priority for the BVCA and we have expressed gratitude to the HM Treasury and the FSA for the focus and attention they have given this legislation; we are hopeful that this, combined with continued pressure applied by the BVCA, EVCA and other national associations, will lead to substantive progress in the crucial next few months.

Encouraging progress does appear to have been has been made in some areas, but critical areas of concern remain over the third country regime, depositaries, portfolio company disclosure and overall scope of the regulation.  As noted in a recent House of Lords Committee report (to which we publicly responded), unless the legislation is consistent with a global regulatory approach, it will "seriously damage EU and UK economies".  The Bank of England's Financial Markets Committee has called the current text "riddled with ambiguities".

The Spanish presidency appears to be committing to a highly ambitious timetable in seeking to reach an agreement on the text within the coming weeks. (The Spanish presidency has their 'Compromise' document earlier this week and can be read here.) In seeking to reach a faster deal we urge government to ensure we do not reach unsatisfactory compromises on key issues.  The fact that over 2,000 amendments have been tabled to the ECON committee's report in the European Parliament demonstrates the strength of feeling on these issues and that there is still a way to go on reaching agreement. In light of this, we have taken the view that we would much rather see greater time taken to arrive at a workable Directive than a quick agreement on a text which retains significant areas of difficulty.

One additional concern currently under the BVCA's radar is the timing of a UK General Election and the potential impact that may have on the government's own ability to continue discussions during a vital phase for the Directive.  Our concern is that the election will distract attention and could well hinder the UK government's ability to take high level political decisions at a time when the EU institutions are trying to reach conclusions at first reading.

Ahead of the debate due to take place next week in the House of Commons we have been actively engaging with MPs in the relevant committee to ensure they are well briefed on the BVCA's principal areas of concern.  Finally, we intend to submit our pre-Budget report to HM Treasury imminently anticipating a Budget to be announced in early/mid March. The AIFM Directive will form a crucial part of this submission.  Look out for the report soon in the BVCA Newsroom.