In our previous alert AIFMD II (Near) Final Text Agreed: What’s New? and in our recent update in our Horizon Scan, we noted that the Council of the European Union (EU) had published the final compromise amending text setting out amendments to the Alternative Investment Fund Managers Directive (AIFMD) and to the UCITS Directive.
As we expected, the European Parliament approved the text, and there is now a fixed text to guide EU and EU-member-state lawmakers and regulators into the implementation phase, ending sometime in March or April 2026 — two years and 20 days from publication of the AIFMD II text in the Official Journal (and when AIFMD II comes into force).
With the benefit of the final text, we have updated our blackline document showing the final changes to AIFMD resulting from AIFMD II.
The focus now shifts to the next two-year (and a bit) implementation phase, which will see changes to the AIFMD Level 2 Regulation, including updates to the Annex IV reporting templates and the development of guidelines by the European Securities and Markets Authority (ESMA) on matters such as liquidity management (EU Measures). The extent to which lawmakers and regulators of EU member states impose further requirements in their implementation of AIFMD II (Member State Measures) will also be important. AIFMD II also provides for EU Measures after the March or April 2026 implementation date.
In all this, managers (AIFMs) to whom AIFMD II and its implementing measures apply will need to ensure that they have made the necessary changes to their portfolio management and risk management systems and controls to comply with the EU Measures and Member State Measures.
This alert notes the areas on which we think AIFMs will need to focus (depending, of course, on their specific businesses):
- Delegation
- Host AIFM provisions
- Regulatory authorisation
- Loan origination activities
- Liquidity management for open-ended alternative investment funds (AIFs)
- Investor and regulatory disclosures
- Third-country-specific and other issues of note
Important Milestones for the Implementation Phase and Beyond
Impact on the UK and other third countries
Because the UK is no longer a member of the EU, AIFMD II will not apply to UK AIFMs. AIFMD II will still be relevant, however, for UK and other non-EU AIFMs, whether marketing in the EU under Article 42 national private placement regimes (NPPR) or acting as delegates of EU AIFMs.
For example, the new provisions on delegation, annual and regulatory reporting, and investor disclosures will apply. There are also new compliance implications for non-EU AIFMs and funds using the NPPR and for third-country depositaries. The FCA has confirmed that it will consult this year on updating the UK’s asset management rules, including those for UK AIFMs.
Delegation
Heightened Conflict-of-Interest Provisions for Third-Party AIFMs
Authorisation of AIFMs and New Retail Requirement
Loan Origination and Restrictions on ‘Loan-Originating AIFs’
Restrictions on Loan Origination
Liquidity Management for Open-Ended Funds1
Investor and NCA Disclosures
Other Provisions of Interest
Firms affected by these new rules will want to establish how and to what extent they are affected, in particular those engaged in loan origination or loan-originating AIFs (and whether or not any grandfathering provisions apply), and what changes and adaptations may be needed to their business models in advance of spring 2026, when AIFMD II comes into effect.
[1] Note the ELTIF framework contains additional LMTs over and above AIFMD II requirements: redemption policy, liquidity pockets (depending on holding of liquid assets to satisfy redemption requests), and more NCA control.
[2] See list from EU 2015/849 (AML Directive).
[3] See list from Annex I of Council of the EU’s blacklist.
[View source.]