Explanatory Note
(This note is not part of the Regulations)
These Regulations implement those provisions of Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers (“the Directive”) that must be transposed by 22nd July 2013 but do not come into effect until a date to be specified by the European Commission in a delegated act (“third country provisions”). The Financial Conduct Authority (“FCA”) is responsible for the implementation of other elements of the third country provisions. The parts of the Directive that come into effect on 22nd July 2013 are implemented by the Alternative Investment Fund Managers Regulations 2013 (“the principal regulations”). A transposition note setting out how the Directive will be transposed into United Kingdom law is available on HM Treasury's website (www.hm-treasury.gov.uk).
Regulation 1(3) provides that regulation 3 comes into force on the date on which Articles 35 and 37 to 41 of the Directive become applicable. Regulation 3 introduces Schedule 1, which makes amendments to legislation in order to implement those Articles. In particular, paragraph 1 of Schedule 1 amends section 418 of the Financial Services and Markets Act 2000 (“the Act”) to provide that the management of alternative investment funds is considered to take place in the UK where managers from outside the EEA have the UK as their Member State of reference (as defined in the Directive) and the funds managed are either EEA funds or are marketed in the EEA. Paragraph 1 also amends the Act to provide for such managers, and for UK managers of funds outside the EEA, to have access to the procedure by which UK managers may manage or market EEA funds in other EEA states.
Paragraph 2 of Schedule 1 amends the principal regulations. The effect of the amendments is to apply the regime for authorisation or registration of UK managers of alternative investment funds to managers from outside the EEA that have the UK as their Member State of reference. The amendments also apply provisions relating to the managing and marketing of alternative investment funds by UK managers to managers from outside the EEA that become authorised or registered in the UK. The separate national regime permitting managers from outside the EEA and UK managers of funds from outside the EEA to market their funds in the UK is, however, retained as an alternative. Paragraph 2 also amends the principal regulations to enable EEA managers of funds outside the EEA to market those funds in the UK on the same basis as EEA funds.
Regulation 1(4) provides that regulation 4 comes into force on a later date on which regimes under Articles 36 and 42 of the Directive are to be terminated. Regulation 4 introduces Schedule 2, Part 1 of which makes amendments to legislation to revoke the separate national regime for managers from outside the EEA and UK managers of funds from outside the EEA to market their funds in the UK, with the result that from that point all managers of alternative investment funds managing UK funds or marketing funds in the UK must be authorised in the UK or in another EEA state. Part 2 of Schedule 2 contains transitional provisions to preserve the ongoing obligations of managers from outside the EEA that have marketed funds under those separate national regimes.
Regulation 1(5) provides that regulation 5 comes into force immediately after the principal regulations come into force (on 22nd July 2013). Regulation 5 makes two minor amendments to the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001 to correct an error in amendments to those Regulations made by the principal regulations.
Regulation 1(2) provides that regulation 6 comes into force on 22nd July 2013. Regulation 6 provides that the FCA or the Prudential Regulation Authority (“PRA”) may make rules to implement the third country provisions without complying with various procedural requirements imposed under the Act, including the obligation to consult on a draft of the rules before making them. If the FCA or PRA does so, an equivalent consultation will need to be carried out before the rules come into force, unless the rules are revoked before they come into force.
An impact assessment of the effect of the principal regulations on the costs of business and the voluntary sector has been prepared and is available from Her Majesty's Treasury, 1 Horse Guards Road, London, SW1A 2HQ or on www.hm-treasury.gov.uk and is published with the Explanatory Memorandum alongside those Regulations on www.legislation.gov.uk.