Alternative Investment Funds (AIFs)
Alternative Investment Funds (AIFs) are entities or other type of collective investment schemes where funds are raised from several investors to invest them by a defined investment policy. AIFs may include, e.g., hedge funds, private debt funds, private lending funds, private equity funds, and others.
As a rule, AIFs are only marketed to professional customers. Suppose an AIF is sold to non-professional customers. In that case, the alternative investment fund manager (AIFM) must, as a rule, have a national authorization as referred to in the Directive for AIFM – Alternative Investment Fund Managers or a similar authorization granted in another EEA state.
Source: BVAI - Germany
The AIFMD and Fund Distribution in the EU
The AIFMD limits the possibility for non-EU domiciled fund managers to market their funds to professional investors in the EU. The best scenario for a fund manager to benefit from the passport provided by the Directive is to set up a fund management firm (AIFM) in an EU member state and domicile the fund (AIF) in the same or another EU member state.
This solution would provide the EU AIFM with a full passport, enabling such a manager to market the AIF to professional investors in the EU without any restrictions.
Sometimes, an EU AIFM may want to establish funds outside the EU for various reasons. In such cases, a fund can still be marketed in the EU on a private placement basis, subject to each member state’s National Private Placement Regimes (NPPRs). However, this is not ideal, as the NPPRs can vary significantly between one member state and another.
If you operate a fund and wish to redomicile it, please get in touch with us at TAXEDO LLP to arrange an introductory meeting.
Structuring Alternative Investment Funds
Any legislative framework permits AIFs to be established using various legal forms, each having characteristics suited to particular needs. An AIF may be set up as follows:
- A limited partnership or partnership en commandite;
- A unit trust, constituted by a trust deed between a management company and a trustee;
- A mutual fund;
- An investment company with variable share capital (“SICAV”);
- An investment company with fixed share capital (“INVCO”).
- SICAVs can also be established as umbrella funds.
Preferable Fund Jurisdictions
Any legislative framework has advantages and disadvantages and characteristics suited for particular needs. However, a regulatory framework was provided by the EU-Directive AIFM 2011/2013. We, therefore, offer dedicated advice to fund structures in
- Luxembourg;
- Liechtenstein;
- Switzerland;
- Malta;
- Cyprus.
Speak to us to discuss advantages and disadvantages of anyone jurisdiction. Our Boutique Law Firm TAXEDO LLP can provide valuable knowlegde, putting you into a strong position during the decision making process.
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