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An EU AIFM that cannot rely on an exemption from AIFMD will need to obtain authorisation from its home regulator in order to manage AIFs in accordance with Article 6 of AIFMD.
AIFMs may also apply for certain limited additional permissions, which are known as “MiFID Top-Up” permissions. See our overview of MiFID Top-Up permissions here.
In addition to MiFID Top-Ups, under AIFMD II, AIFMs will be able to be authorised to administer benchmarks in accordance with Regulation (EU) 2016/1011 and provide credit servicing activities in accordance with Directive (EU) 2021/2167. However, AIFMs will not be able to administer benchmarks used in the AIFs that they manage.
In addition, the list of “other functions” (in Annex I AIFMD) that an AIFM may perform will be expanded to include originating loans on behalf of an AIF and servicing securitisation special purpose entities.
As part of the application procedure, the AIFM will need to provide the following information to its home regulator:
The above described application procedure will be expanded by AIFMD II, and will require that AIFMs will need to provide the following information to its home regulator:
(i) a description of the role, title and level of seniority of those persons;
(ii) a description of the reporting lines and responsibilities of those persons within and outside the AIFM;
(iii) an overview of the amount of time that each of those persons allocates to each responsibility; and
(iv) a description of the human and technical resources that support the activities of those persons;
(i) for each delegate:
(ii) a detailed description of the human and technical resources employed by the AIFM for:
(iii) in respect of each of the AIFs that the AIFM manages or intends to manage:
(iv) a description of the periodic due diligence measures to be carried out by the AIFM to monitor the delegated activity.
Additionally, the AIFM will need to provide its home regulator with the following information on each AIF it intends to manage:
Where an AIFM is already authorised as a management company under the UCITS Directive and has provided information to its home regulator in that regard, AIFMD does not require the AIFM to provide the same information to its home regulator again, provided that such information is up to date.
The home regulator of the AIFM may only grant authorisation if:
AIFMD II will require that the business of the AIFM must be conducted by at least two natural persons who are either employed full-time by that AIFM or are executive members or members of the governing body of the AIFM committed full-time to conducting the business of that AIFM, and who are domiciled in the Union.
Prior to granting authorisation to an AIFM, the home regulator may be required to consult with other Member State regulators (for example, if the AIFM in question is associated with an entity regulated in another Member State, such as a management company under the UCITS Directive, an investment firm, a credit institution or an insurance undertaking).
The home regulator must refuse authorisation where the effective exercise of its supervisory functions is prevented by a number of factors, in particular, close links between the AIFM and other natural or legal persons.
The home regulator may also restrict the scope of any authorisation granted to an AIFM, including if relevant, the investment strategies the AIFM is permitted to manage.
The initial AIFM authorisation process will vary in each Member State, but will, however, be reflective of the general AIFMD requirements set out above. AIFMs authorised in their home Member State are able to exercise management and marketing passport rights in relation to EU AIFs. In order to exercise these rights, the competent authority of the AIFM’s home Member State will need to send the relevant notification forms, in accordance with the requirements of AIFMD, to the relevant national regulator.
For information on exemptions to authorisation please click here.
The process for obtaining a Luxembourg AIFM licence from the CSSF to manage an AIF differs depending on whether the applicant is seeking to receive a licence as a fully authorised Luxembourg AIFM in accordance with Chapter 2 of the Luxembourg AIFM Law or as a registered Luxembourg AIFM.
Any entity requiring authorisation as a Luxembourg AIFM in accordance with Chapter 2 of the Luxembourg AIFM Law must complete the “Application questionnaire for the set-up of a fully licenced alternative investment fund manager”, which may be downloaded from the CSSF’s website.
A market entry form containing AML-related information also has to be submitted.
The authorisation fee to be paid to the CSSF is specified by way of a Grand-Ducal Regulation (which is regularly updated).
Once the authorisation as an AIFM has been granted by the CSSF, the AIFM is obliged, prior to implementation, to notify the CSSF of any material changes to the organisation of the AIFM on which the initial authorisation was based, and specifically any material changes to the information provided as part of the application. Click here for more information on material change notifications.
Where an entity was previously authorised as a so-called Chapter 15 or Chapter 16 Management Company, a slightly lighter application can be made, as certain information can be recycled.
Specific requirements apply to the members of the management body and senior management of a Luxembourg AIFM, notably in terms of required number, skills and experience, or number of mandates.
In addition to the relevant application forms relating to the AIFM itself, supporting documents (e.g. a declaration of honour (template available on the CSSF website), CVs, criminal records extracts, passport copies, mandate list) must therefore be submitted to the CSSF in respect of each person who is proposed to perform a controlled function for a Luxembourg AIFM.
The CSSF must determine an application for authorisation as a Luxembourg AIFM within three months of the date on which it receives the complete application, but may extend that period by an additional three months where it considers this necessary. Given that the CSSF’s assessment period only starts to run from the point at which the CSSF receives a complete application, the CSSF will not commence its assessment if it deems the application to be incomplete for any reason.
The AIFM may start managing AIFs in Luxembourg with investment strategies described in the application for authorisation as soon as the authorisation is granted but not earlier than one month after having submitted any missing information in respect of each AIF (e.g. a copy of the rules or instruments of incorporation of the AIF information that will be made available to investors).
AIFMs managing AIFs below the thresholds of Article 3(2) of AIFMD do not need to be authorised under Chapter 2 of the Luxembourg AIFM Law, but must submit a request for registration as AIFM to the CSSF.
The registration request must at least include the “Declaration for a registered AIFM”, the “Registration form for an alternative investment fund manager”, and the “IFM EMIR questionnaire” which are available for download on the CSSF’s website.
A market entry form containing AML-related information also has to be submitted.
The information required to register the AIFM shall be kept up to date. Hence, any change to the information provided in the registration request must be communicated to the CSSF without delay. In addition, an updated registration form shall be transmitted to the CSSF at least once a year.
The CSSF acknowledges receipt of the registration request within two working days and will communicate the name of the agent in charge of examining the request by way of an email to the email address of the contact person indicated in the registration form.
The CSSF endeavours to contact the applicant within ten working days after reception of the initial request and reserves the right to request additional information and/or documents and other additional confirmations, and/or specifications on other aspects of the request.
The CSSF sends a letter of registration of the AIFM to the applicant as soon as the review of the request is completed and conclusive.
The timing of the initial authorisation/registration should be considered in tandem with any management passport, marketing passport and on-boarding notification to be made to the CSSF. In particular, where such filings require the submission of offering documents in final form, this will need to be factored into the timing of the submission of notifications.
In cases where a Luxembourg AIFM is managing an EU AIF, it may also be the case that the AIF will be subject to separate regulatory filing requirements in the country in which it is established and it will therefore be necessary to ensure that the regulatory filings in each jurisdiction are adequately dovetailed.
In order to on-board a new Luxembourg regulated AIF (e.g. a specialised investment fund), a Luxembourg AIFM must complete a specific application questionnaire for the setting-up of such Luxembourg regulated AIF, which is available on the CSSF platform eDesk.
The management of an additional AIF (i.e. any unregulated AIF and any regulated AIF established in a third country which has not been notified to the CSSF either during the review of the AIFM's authorisation or registration file or during an update of said file) must be communicated to the CSSF in accordance with CSSF Circular 15/612 using the appropriate form, which can be downloaded from the CSSF’s website.
The management of an additional AIF must be communicated to the CSSF within ten working days following the beginning of the management of this additional AIF.
A Luxembourg AIFM that wishes to manage an AIF in another Member State on a passported basis must notify the CSSF of its intention to do so using the notification form regarding the free provision of services, which can be downloaded from the CSSF’s website.
This form should also be used for the purpose of notifying the CSSF of changes to the provision of existing cross-border services.
The CSSF must (subject to being satisfied that the AIFM complies with its obligations under AIFMD) transmit the notification to the relevant authorities of the Member State where the AIF to be managed is established within one month where the AIFM wishes to manage the AIF on a cross-border basis (or within two months where the AIFM wishes to establish a branch in the relevant Member State). The CSSF must notify the AIFM immediately once the notification has been transmitted to the authorities of the relevant Member State.
The AIFM may only manage the AIF in accordance with the passport from the date it receives this notification.
The process for obtaining AIFM authorisation from the FCA to manage an AIF differs depending on whether the applicant is an existing firm already authorised to carry on other regulated activities or not, and whether the applicant is seeking to opt in as a “full-scope UK AIFM” or whether it qualifies as a “small AIFM”.
Click here for information on how the United Kingdom’s exit from the European Union affects UK AIFMs.
The FCA must determine an application for authorisation as a full-scope UK AIFM within three months of the date on which it receives the complete application, but may extend that period by an additional three months where it considers this necessary. Given that the FCA’s assessment period only starts to run from the point at which the FCA receives a complete application, the FCA will not commence its assessment if it deems the application to be incomplete for any reason.
Certain UK AIFMs (i.e. AIFMs managing AIFs below a threshold in Regulation 9 of the UK Regulations) are required to be authorised or registered with the FCA as small UK AIFMs, or may opt in to the full requirements of AIFMD as full-scope UK AIFMs. It is important to note that small UK AIFMs may act in a dual capacity as both a small authorised UK AIFM for one or more AIFs, and a small registered UK AIFM for one or more other AIFs.
Following initial authorisation or registration of the small UK AIFM, the AIFM may elect to manage new funds other than those which were designated in the initial authorisation or registration of the AIFM. Such AIFMs must seek approval from the FCA to manage new AIFs or sub-funds before taking up management of the new stand-alone fund or sub-fund.
Firms based in non-EU (3rd country) jurisdictions are currently unable to obtain authorisation under AIFMD. Firms based in non-EU (3rd country) jurisdictions wishing to market AIFs in the EU are currently unable to rely on a marketing passport. Please see the “Marketing – Private Placement” page for more information.
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