International Administration GroupIAG

Guernsey moves towards AIFMD Passport with latest ESMA advice

Friday, August 5, 2016

On 18th July the European Securities and Markets Authority (ESMA) published its latest advice on the application of a third country passport to certain non-EU countries. The advice to the EU Commission, Parliament and Council concluded that there are no obstacles impeding the application of the Alternative Investment Fund Managers Directive (AIFMD) passport to Guernsey along with four other jurisdictions (Canada, Japan, Jersey and Switzerland).

This third country passport will allow managers in third countries to manage and market funds throughout the EU so long as they are in compliance with the AIFMD. Currently, Guernsey alternative investment fund managers (AIFMs) and alternative investment funds (AIFs) can market a fund to EU based investors on a country by country basis using the National Private Placement regimes, which significantly reduces the costs and disclosure requirements applicable under the directive. Alternatively, they can launch funds that are entirely outside the scope of AIFMD provided that the fund is not “marketed” in the EU. Upon the EU granting Guernsey the AIFMD passport, all three fund raising options will become available to AIFMs and AIFs in Guernsey, thus providing tremendous flexibility and options for our clients across the world.

In order for the passport to become effective for those countries receiving positive advice from ESMA the Commission will need to pass a delegated act. The AIFMD specifies a period of three months from the receipt of positive advice from ESMA for the Commission to make the delegated act although it is currently uncertain whether this timescale will be followed.

Raymond Page, Managing Director, commented, “This positive advice from ESMA represents a big step forward for Guernsey in accessing the third country passport. It will make Guernsey an even more attractive jurisdiction for non-EU AIFMs looking to market their funds into the EU. With over sixteen years’ experience in administering Guernsey domiciled funds IAG is ideally placed to help Asian and other non-EU managers in setting up and running AIFs to take advantage of the passport when finally approved.”
In addition, ESMA has also given advice relating to Hong Kong, Singapore, USA, Australia, Bermuda, Cayman Islands and Isle of Man. Although for Hong Kong and Singapore there are no significant obstacles to the application of the passport certain caveats have been set out.

We will continue to follow developments and advise our clients accordingly.