Scope - Definition of AIFM

Under the Directive, Member States are required to ensure that each AIF managed within the scope of the Directive has a single AIFM responsible for ensuring compliance with the Directive. An AIFM is defined as an entity that provides, at a minimum, portfolio management and risk management services to one or more AIFs as its regular business irrespective of where the AIFs are located or what legal form the AIFM takes. The AIFM can either be an external manager appointed by or on behalf of the AIF, or the AIF itself (any delegate managing assets should not therefore be an AIFM). Subject to detailed provisions (e.g. the home regulator is given prior notice; see here) the functions of an AIFM may be delegated (and sub-delegated) to other service providers.

The AIFM is responsible for ensuring compliance with the Directive in respect of each AIF it manages, even where such compliance may be outside of its control. If the AIFM is unable to ensure compliance, the AIF will no longer be able to be marketed in the EU and the AIFM will be required to resign as AIFM of the AIF.

As well as setting out rules affecting EU AIFMs, the Directive also contains rules on non-EU AIFMs managing EU AIFs and marketing AIFs in the EU. Please see Marketing and Third Country Provisions for further details.