Under the AIFMD, European alternative fund managers can now avail of a marketing passport to distribute alternative investment funds (AIFs) within the EU similar to the UCITS Directive. Currently, AIFs are sold on a private placement basis with various different rules for different countries. AIFMD will harmonise how AIFs are sold in the long term.
The AIFMD passport can be used if a fund promoter has an Alternative Investment Fund Manager (AIFM) based in an EU member state with a European domiciled AIF or alternatively the fund promoter establishes a European domiciled self-managed AIF (which is authorised both as the fund and the AIFM). From 2015, EU AIFMs also have the possibility of using the marketing passport for non-EU AIFs.
AIFMs authorised in their home State may exercise the right to passport their national license allowing them to manage and market units or shares of AIFs to professional investors in the EU.
Funds benefit from an EU wide “passport” which means that once they are authorised in one EU member state, they can be sold in any other EU member state without the need for any additional authorisation. This is called the notification procedure.
Some countries may require additional documentation in the form of a prospectus supplement/addendum or may have specific service provider requirements.
The process of notification requires that where the fund is to be marketed in a host EU member state for the first time (either the umbrella, a sub-fund within that umbrella not previously notified or a single fund), a notification letter, together with all required attachments, must be submitted to the home state regulator of the fund.