The Council of the European Union has issued its general approach (General Approach) on the European Commission's proposals to amend the existing Alternative Investment Fund Managers Directive (AIFMD II).
The General Approach takes the form of a revised version of the draft directive issued by the European Commission in November 2021 which proposed a number of changes to the Alternative Investment Fund Managers Directive (AIFMD), largely in respect of delegation, loan origination, liquidity risk management, data reporting and depositaries. For more information on the European Commission's original proposals on AIFMD II, please see our November 2021 briefing.
This follows the report from the European Parliament on AIFMD II proposals (ECON Report) which we discussed in our May 2022 briefing. Although many of the proposed amendments in the General Approach are similar to those set out by the European Parliament in the ECON Report, there are still some areas of divergence. Therefore there is still scope for negotiation and further amendments as part of the trilogue process and an opportunity for industry associations and other industry participants to engage further in developing the final text. In particular, given the developments in respect of European Long-Term Asset Funds, it is possible that there will be a push to include some ESG and sustainability requirements. There is some speculation that this could be in the form of a "green AIF" (which would be a further development in the ever evolving EU financial sustainability landscape) or other innovations in the context of existing AIFMD requirements. Whether this occurs remains to be seen and firms and industry associations will need to monitor the passage of AIFMD II through the EU institutions.
It seems likely that there will be some momentum from the current Czech presidency to proceed as quickly as possible but the process may not be completed by the end of the current presidency. The deadline for comments from MEPs is 27 June 2022 and the European Parliament is likely to want to sign off on its proposals by the end of October which leaves little time for the trilogue process which may therefore slip into 2023. This would point towards AIFMD II coming into force in 2025.
Some of the main changes proposed in the General Approach are discussed below. Some of these changes are also applicable to the proposals in respect of the UCITS Directive.