EU Directive on Alternative Investment Fund Managers (AIFMs)
from the International Association of Hedge
Funds Professionals (IAHFP)
Proposal for a Directive on Alternative Investment Fund Managers
Chapter V
Obligations regarding AIFM managing specific types of AIF
SECTION 1: OBLIGATIONS FOR AIFM MANAGING LEVERAGED AIF
Article 22
Scope
This section shall apply only to
Alternative Investment Fund Managers (AIFM) which manage one or more AIF
employing high levels
of leverage on a systematic basis.
Alternative Investment Fund Managers (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.
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.
Article 23
Disclosure to investors
Alternative Investment Fund Managers (AIFM) managing one or more AIF employing high levels of leverage on a
systematic basis
shall for each such AIF:
(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;
(b) quarterly disclose to investors the total amount of leverage
employed by each
AIF in the preceding quarter.
Article 24
Reporting to competent authorities
1.
Alternative Investment Fund Managers (AIFM) managing one or more AIF employing high levels of leverage
on a systematic
basis shall regularly provide, to the competent authorities of its
home Member State,
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.
That information shall include the identity of the five largest
sources of borrowed
cash or securities for each of the AIF managed by the AIFM, and the
amounts of
leverage received from each of those entities for each of the AIF
managed by the
AIFM.
2. The Commission shall adopt implementing measures further
specifying the
disclosure requirements with regard to leverage and the frequency of
reporting to
competent authorities and of disclosure to investors.
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).
Article 25
Use of information by competent authorities, supervisory cooperation
and limits to leverage
1. Member States shall ensure that the competent authorities of the
home Member State
use 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
2. Home Member States shall ensure that all information received
under Article 24,
aggregated in respect of all AIFM that it supervises, are made
available to other
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.
3. In order to ensure the stability and integrity of the financial
system, the Commission
shall adopt implementing measures setting limits to the level of
leverage
Alternative Investment Fund Managers (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).
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
Alternative Investment Fund Managers (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 by
the Commission pursuant to paragraph 3.
SECTION 2: OBLIGATIONS FOR AIFM MANAGING AIF WHICH ACQUIRE
CONTROLLING INFLUENCE IN COMPANIES
Article 26
Scope
1. This section shall apply to the following:
(a)
Alternative Investment Fund Managers (AIFM) managing one or more AIF which either individually or in
aggregation
acquires 30 % or more of the voting rights of an issuer or of a
non-listed
company domiciled in the Community, as appropriate;
(b)
Alternative Investment Fund Managers (AIFM) having concluded an agreement with one or more other AIFM
which
would allow the AIF managed by these AIFM to acquire 30 % or more of
the
voting rights of the issuer or the non-listed company, as
appropriate.
2. This section shall not apply where the issuer or the non-listed
company concerned
are small and medium enterprises that employ fewer than 250 persons,
have an
annual turnover not exceeding 50 million euro
and/or an annual
balance sheet not
exceeding 43 million euro.
Article 27
Notification of the acquisition of controlling influence in
non-listed companies
1. Member States shall ensure that when an AIFM is in a position to
exercise 30 % or
more of the voting rights of a non-listed company, such
Alternative Investment Fund Managers (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
Alternative Investment Fund Manager (AIFM) has reached
the position of
being able to exercise 30% of the voting rights.
2. The notification required under paragraph 1 shall contain the
following information:
(a) the resulting situation in terms of voting rights;
(b) the conditions under which the 30% threshold has been reached,
including
information about the identity of the different shareholders
involved;
(c) the date on which the threshold was reached or exceeded.
Article 28
Disclosure in case of acquisition of controlling influence in
issuers or non-listed companies
1. In addition to Article 27, Member States shall ensure that where
an AIFM acquires
30 % or more of the voting rights of an issuer or a non-listed
company, that 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.
With regard to issuers, the AIFM shall make available the following
to the issuer
concerned, its shareholders and representatives of employees:
(a) the information referred to in Article 6(3) of Directive
2004/25/EC of the
European Parliament and of the Council of 21 April 2004 on takeover
bids22;
(b) the policy for preventing and managing conflicts of interests,
in particular
between the AIFM and the issuer;
(c) the policy for external and internal communication of the issuer
in particular as
regards employees.
With regard to non-listed companies, the AIFM shall make available
the following to
the non-listed company concerned, its shareholders and
representatives of
employees:
(d) the identity of the AIFM which either individually or in
agreement with other
AIFM have reached the 30 % threshold;
(e) the development plan for the non-listed company;
(f) the policy for preventing and managing conflicts of interests,
in particular
between the AIFM and the non-listed company;
(g) the policy for external and internal communication of the issuer
or non-listed
company, in particular as regards employees.
2. The Commission shall adopt implementing measures determining:
(a) the detailed content of the information provided under paragraph
1;
(b) the way the information shall be communicated.
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).
Article 29
Specific provisions regarding the annual report of AIF exercising
controlling influence in
issuers or non-listed companies
1. Member States shall ensure that
Alternative Investment Fund Managers (AIFM) include in the annual report
provided for in
Article 19 for each AIF that they manage, the additional information
provided in
paragraph 2 of this Article.
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) with regard to operational and financial developments,
presentation of revenue arnings 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;
(b) with regard to financial and other risks at least financial
risks associated with
capital structure;
(c) with regard to employee matters, turnover, terminations,
recruitment.
(d) statement on significant divestment of assets.
In addition, the AIF annual report shall, for each issuer in which
it has acquired a
controlling influence, contain the information provided for in point
(f) of Article
46a(1) of Fourth Council Directive 78/660/EEC of 25 July 1978 based
on Article 54
(3) (g) of the Treaty on the annual accounts of certain types of
companies23 and an
overview of the capital structure as referred to in points (a) and
(d) of Article 10(1)
of Directive 2004/25/EC.
For each non-listed company in which it has acquired a controlling
influence, the
AIF report shall provide an overview of management arrangements and
the
information provided for in points (b), (c) and (e) to (h) of
Article 3 of Second
Council Directive 77/91/EEC of 13 December 1976 on coordination of
safeguards
which, for the protection of the interests of members and others,
are required by
Member States of companies within the meaning of the second
paragraph of Article
58 of the Treaty, in respect of the formation of public limited
liability companies and
the maintenance and alteration of their capital, with a view to
making such
safeguards equivalent.
3. The AIFM shall, for each AIF it manages and for which it is
subject to this section,
provide the information referred to in paragraph 2 above to all
representatives of
employees of the company concerned referred to in paragraph 1 of
Article 26 within
the period referred to in Article 19 (1)
4. The Commission shall adopt implementing measures specifying the
detailed content
of the information to be provided under paragraphs 1 and 2.
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).
Article 30
Specific provisions regarding companies whose shares are no longer
admitted to trading on a
regulated market
Where, following an acquisition of 30 % or more of the voting rights
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.
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