The Alternative Investment Fund Managers Order 2014

PART 2 U.K. Amendments coming into force on [F1 16th June] 2014

Textual Amendments

F1 Words in Pt. 2 heading substituted (31.5.2014) by the Alternative Investment Fund Managers (Amendment) Order 2014 (S.I. 2014/1313), arts. 1, 2(a)

The Financial Services and Markets Act 2000 U.K.

2.  In section 418 of the Financial Services and Markets Act 2000 M1 (carrying on regulated activities in the United Kingdom)—

(a) in subsection (1) for “five” substitute “ six ”;

(b) after subsection (5A) insert—

“(5AA) The sixth case is where—

(a) the regulated activity being carried on by the person is the regulated activity of managing an AIF;

(b) the AIF being managed—

(i) has its registered office in an EEA State; or

(ii) is marketed in an EEA State;

(c) the person's registered office is in the United Kingdom or, if the person does not have a registered office, the person's head office is in the United Kingdom; and

(d) the activity is carried on from an establishment maintained in a country or territory outside the EEA.”;

(c) in subsection (6) for “(5A)” substitute “ (5AA) ”; and

(d) after subsection (7) insert—

“(8) In this section “marketing”, in relation to an AIF, is to be read in accordance with the definition of “marketing” in Article 4.1(x) of the alternative investment fund managers directive M2 .”

Marginal Citations

M1 Section 418 was amended by S.I. 2002/1775, 2011/1043 and 2012/1906 and is to be amended by S.I. 2013/1797.

M2 S.I. 2013/1773 inserted a definition of “alternative investment fund managers directive” at section 425 of, and paragraph 4E of Schedule 3 to, the Financial Services and Markets Act 2000.

The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 U.K.

3.—(1) The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 M3 is amended as follows.

(2) In article 1(2) (interpretation) for the definition of “Gibraltar-based firm” substitute—

““Gibraltar-based firm” means—

(a) an AIFM (as defined in Article 4.1(b) of the alternative investment fund managers directive M4 ) which is authorised in Gibraltar in accordance with the alternative investment fund managers directive; or

(b) a firm not falling within paragraph (a) which has its head office in Gibraltar;”.

(3) In article 2 (exercise of deemed passport rights by Gibraltar-based firms)—

(a) after paragraph (3C) insert—

“(3D) A Gibraltar-based firm falling within paragraph 5(h) of Schedule 3 is to be treated as having an entitlement, corresponding to its EEA right deriving from the alternative investment fund managers directive, to establish a branch or provide services in the United Kingdom.”;

(b) in paragraph (4)—

(i) for “and (3C)” substitute “ , (3C) and (3D) ”; and

(ii) for “and (f)” substitute “ , (f) and (h) ”;

(c) in paragraph (5)—

(i) for “or (3C)”, on each occasion it occurs, substitute “ , (3C) or (3D) ”;

(ii) after “references in Schedule 3” insert “ , article 51ZD of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 M5 ”; and

(iii) for “and Part 4 of the Undertakings for Collective Investment in Transferable Securities Regulations 2011” substitute “ Part 4 of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 and the Alternative Investment Fund Managers Regulations 2013 M6 ”; and

(d) in paragraph (7) for “or (3C)” substitute “ , (3C) or (3D) ”.

(4) In article 3(3) (EEA firms satisfying conditions under Gibraltar law) for “7” substitute “ 7A ”.

(5) In article 4(3) (exercise by UK firms of deemed passport rights in Gibraltar), for “and article 77 of the Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001” substitute “ , article 77 of the Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001 and the Alternative Investment Fund Managers Regulations 2013 ”.

Marginal Citations

M3 S.I. 2001/3084, amended by S.I. 2005/1, 2006/1805 and 3221, 2007/2932 and 3254, 2012/2017 and 2013/472 and 3115.

M4 S.I. 2013/1773 inserted a definition of “alternative investment fund managers directive” at section 425 of, and paragraph 4E of Schedule 3 to, the Financial Services and Markets Act 2000.

M5 S.I. 2001/544; article 51ZD was inserted by S.I. 2013/1773.

M6 S.I. 2013/1773.

The Alternative Investment Fund Managers Regulations 2013 U.K.

4.—(1) The Alternative Investment Fund Managers Regulations 2013 M7 are amended as follows.

(2) In regulation 2 (interpretation), after paragraph (3) insert—

“(3A) Any reference in these Regulations to an EEA State other than the United Kingdom is to be read as including reference to Gibraltar.”.

(3) In regulation 22 (power to direct small registered UK AIFMs and EuSEF and EuVECA Managers to take appropriate measures), for paragraph (4) substitute—

“(4) Sections 55Y (exercise of own-initiative power: procedure) and 55Z3(2) (right to refer matters to the Tribunal) of the Act apply to a direction to an AIFM under paragraph (1) or (2) as they apply to a requirement imposed on an authorised person under section 55L(3) of the Act (imposition of requirements by the FCA).”.

(4) In regulation 71 (application of provisions of the Act to unauthorised AIFMs), in paragraph (5)—

(a) at the end of sub-paragraph (e) omit “or”;

(b) at the end of sub-paragraph (f) add—

“; or

(g) an AIFM to which regulation 75 (closed-ended AIFs whose subscription period has closed) applies”.

(5) In regulation 72 (AIFMs managing AIFs immediately before 22nd July 2013)—

(a) in paragraph (6) after “these Regulations” insert “ or the Alternative Investment Fund Managers Order 2014 ”;

(b) after paragraph (6) insert—

“(6A) Paragraphs (6B) and (6C) apply where a UK AIFM falling within paragraph (1) submits an application in accordance with paragraph (3)(a) or (b), but on 22nd July 2014—

(a) where the application was submitted in accordance with paragraph (3)(a), the AIFM does not have a Part 4A permission to carry on the regulated activity of managing an AIF;

(b) where the application was submitted in accordance with paragraph (3)(b), the AIFM is not a small registered UK AIFM;

(c) the AIFM has not received a decision notice from the FCA or the PRA refusing the application; and

(d) the AIFM has not withdrawn the application in accordance with section 55V(4) of the Act (determination of applications).

(6B) During the additional transitional period—

(a) sections 19(1) (the general prohibition) and 20(1) and (1A) of the Act (authorised persons acting without permission) do not apply to the AIFM in respect of the activities to which the application relates, in so far as those activities are specified in article 51ZC of the Regulated Activities Order;

(b) notwithstanding paragraph (5), Part 6 of these Regulations does not apply to the AIFM in respect of the AIFs to which the application relates;

(c) all other implementing provisions M8 apply in respect of the AIFM—

(i) where the application was submitted in accordance with paragraph (3)(a), as if the appropriate regulator (within the meaning of section 55V(1) of the Act (determination of applications)) had given the AIFM written notice on 22nd July 2014 granting its application with immediate effect;

(ii) where the application was submitted in accordance with paragraph (3)(b), as if the AIFM had been entered on the register of small registered UK AIFMs on 22nd July 2014; and

(d) if the AIFM is not an authorised person and is not an unauthorised AIFM (as defined in regulation 71(5)), the AIFM is to be treated as an unauthorised AIFM for the purposes of paragraphs (1) to (4) of regulation 71 (application of provisions of the Act to unauthorised AIFMs).

(6C) In paragraph (6B) “the additional transitional period” means the period starting on 22nd July 2014 and ending—

(a) where the application was submitted in accordance with paragraph (3)(a), on the date on which a Part 4A permission for the AIFM to carry on the regulated activity of managing an AIF has effect;

(b) where the application was submitted in accordance with paragraph (3)(b), on the date on which the AIFM becomes a small registered UK AIFM;

(c) on the date on which the FCA or the PRA gives the AIFM a decision notice refusing the application; or

(d) on the date on which the AIFM withdraws the application.”

(6) In regulation 74 (closed-ended AIFs that make no additional investments)—

(a) in paragraph (2) for “The AIFM need not” substitute “ Notwithstanding regulation 72(3), the AIFM need not ”; and

(b) for paragraph (4) substitute—

“(4) If the AIFM is given a Part 4A permission to carry on the regulated activity of managing an AIF, article 72AA of the Regulated Activities Order (managers of UCITS and AIFs) M9 does not apply in respect of the AIFM's management of the AIF referred to in paragraph (1).

(5) If, at the same time that the AIFM is given a Part 4A permission to manage an AIF, the AIFM's Part 4A permission is also varied by the removal from the regulated activities to which that permission relates of regulated activities that the AIFM carries on in connection with or for the purposes of managing the AIF referred to in paragraph (1), the AIFM is to be treated as if the AIFM's Part 4A permission had not been varied by such removal at such time.

(6) If, immediately before 22nd July 2013, the AIFM had a Part 4A permission to carry on an activity of the kind specified by article 51 of the Regulated Activities Order (establishing, operating or winding up a collective investment scheme) as that article applied at that date M10 , from the relevant date (as defined in regulation 72(7)) that permission is to be treated as if it were a Part 4A permission to carry on an activity of the kind specified by article 51ZE of the Regulated Activities Order.”.

(7) In regulation 75 (closed-ended AIFs whose subscription period has closed)—

(a) in paragraph (2) for “The AIFM need not” substitute “ Notwithstanding regulation 72(3), the AIFM need not ”;

(b) after paragraph (2) insert—

“(2A) If the AIFM is given a variation of its Part 4A permission to add the regulated activity of managing an AIF, article 72AA of the Regulated Activities Order (managers of UCITS and AIFs) M11 does not apply in respect of the AIFM's management of the AIF referred to in paragraph (1).

(2B) If at the same time that the AIFM is given a Part 4A permission to manage an AIF, the AIFM's Part 4A permission is also varied by the removal from the regulated activities to which that permission relates of regulated activities that the AIFM carries on in connection with or for the purposes of managing the AIF referred to in paragraph (1), the AIFM is to be treated as if the AIFM's Part 4A permission had not been varied by such removal at such time.

(2C) If, immediately before 22nd July 2013, the AIFM had a Part 4A permission to carry on an activity of the kind specified by article 51 of the Regulated Activities Order (establishing, operating or winding up a collective investment scheme) as that article applied at that date M12 , from the relevant date (as defined in regulation 72(7)) that permission is to be treated as if it were a Part 4A permission to carry on an activity of the kind specified by article 51ZE of the Regulated Activities Order.”.

(c) for paragraph (3) substitute—

“(3) Subject to paragraph (4), the AIFM need not comply with the implementing provisions in respect of that AIF.”

(d) in paragraph (4) for “that would apply to it” substitute “ with which it would be required to comply ”;

(e) after paragraph (4) add—

“(5) The AIFM must give the FCA such information in respect of its compliance with paragraph (4) as the FCA may direct.

(6) The AIFM must give information required under paragraph (5) at such times and in such manner, and verify that information in such manner, as the FCA may direct.

(7) The AIFM must take such steps as are necessary to ensure compliance with paragraph (4) as the FCA may direct.

(8) Sections 55Y (exercise of own-initiative power: procedure) and 55Z3(2) (right to refer matters to the Tribunal) of the Act apply to a direction to an AIFM under paragraph (7) as they apply to a requirement imposed on an authorised person under section 55L(3) of the Act (imposition of requirements by the FCA).”.

(8) In regulation 78(3) (permission for existing managers, depositaries and trustees of UCITS) after “these Regulations” insert “ or the Alternative Investment Fund Managers Order 2014 ”.

Marginal Citations

M7 S.I. 2013/1773, amended by S.I. 2013/1797.

M8 “implementing provision” is defined in regulation 2(1) of the Alternative Investment Fund Managers Regulations 2013.

M9 Article 72AA of the Regulated Activities Order was inserted by S.I. 2013/1773.

M10 Articles 51ZA to 51ZG of the Regulated Activities Order were substituted for article 51 of that Order by S.I. 2013/1773.

M11 Article 72AA of the Regulated Activities Order was inserted by S.I. 2013/1773.

M12 Articles 51ZA to 51ZG of the Regulated Activities Order were substituted for article 51 of that Order by S.I. 2013/1773.

The Alternative Investment Fund Managers (Amendment) Regulations 2013 U.K.

5.  In Schedule 1 to the Alternative Investment Fund Managers (Amendment) Regulations 2013 M13 (amendments to legislation that implement Articles 34 and 37 to 41 of the Directive), in paragraph 1(4) (which contains amendments of section 418 of the Financial Services and Markets Act 2000 which have not yet come into force)—

(a) for paragraph (a) substitute—

“(a) in subsection (1) for “six” substitute “ seven ”,”;

(b) in paragraph (b)—

(i) for “after subsection (5A)” substitute “ after subsection (5AA) ”;

(ii) in the subsection (5B) to be inserted, for “sixth” substitute “ seventh ”;

(iii) omit the subsection (5C) that was to have been inserted; and

(c) for paragraph (c) substitute—

“(c) in subsection (6) for “(5AA)” substitute “ (5B) ”.”.

Marginal Citations

M13 S.I. 2013/1797.