Response to the ESMA Call for Evidence on the AIFMD ......Norwegian (Norfund) and Swedish (Swedfund)...

Responsesubmittedonlineat:www.esma.europa.eu08January2015RespectfullysubmittedonbehalfofmembersofEMPEA,theglobalindustryassociationforprivatecapitalinemergingmarkets_______________________________________________________________________________________EMPEA Contact: AnnMariePlubellVicePresident,[email protected]+12023338171ext.243

EMPEA Headquarters:

107730thStreetNW,Suite100Washington,D.C.20007USAT+12023338171empea.org

ResponsetotheESMACallforEvidenceontheAIFMDPassportandThirdCountryAIFMsDoc.7November2014

|ESMA/2014/1340Table of Contents Introduction.............................................................................................................................................2

ExecutiveSummary.................................................................................................................................4

ConsultationResponse............................................................................................................................6

QuestionsontheFunctioningofthePassportforEUAIFMs.................................................................6QuestionsOnTheFunctioningOfTheNationalPrivatePlacementRegimes........................................7QuestionsontheFunctioningofBothRegimes...................................................................................10

ResponsetotheESMACallforEvidenceontheAIFMDPassportandThirdCountryAIFMsDoc.7November2014|ESMA/2014/1340

3 1077 30th Street NW, Suite 100 Washington, DC 20007 USA

T +1 202 333 8171 F +1 202 449 1165 W empea.org E [email protected]

Introduction

EMPEAwelcomestheopportunitytorespondtotheEuropeanSecuritiesandMarketsAuthority(“ESMA”)CallforEvidenceontheAlternativeInvestmentFundManagersDirective(“AIFMD”)passport,alternativeinvestmentfunds(“AIFs”)andthirdcountryalternativeinvestmentfundmanagers(“AIFMs”)(theConsultation”)andsubmitsthisresponseonbehalfofitsmembers.EMPEAistheglobalindustryassociationforprivatecapital1inemergingmarkets.Foundedin2004,EMPEAhasover300memberfirmswithofficesinmorethan100countriesincludingmanyintheEuropeanUnion(“EU”)andtheEuropeanEconomicArea(“EEA”).Memberfirmsincludeinvestmentfundmanagers(“GPs”);banks2,developmentfinanceinstitutions3,endowments,familyoffices,foundations,fund-of-funds,governmentagencies,insurancecompaniesandpensionfunds(collectively,”LPs”);andindustryadvisors.TogetherEMPEA’smemberscontrolormanageoverUS$1trillionofassets(muchofwhichisEUderived).EMPEAseekstobeathoughtful,neutralandobjectivevoice;itsindustryresearchisdeepandrespected;anditstrainingandeducationalprogramsaresoughtoutfortheirstrengthandimpact.

EMPEA’smembersshareEMPEA’sbeliefthatprivatecapitalisahighlysuitedinvestmentstrategyinemergingmarkets,deliveringattractivelong-terminvestmentreturnsforglobalinvestorsandpromotingthesustainablegrowthofcompaniesandeconomies.EMPEAsupportsitsmembers’activitiesthroughauthoritativeintelligence,conferences,networking,educationandadvocacy.Formoreinformation,pleaseseewww.empea.orgSinceEMPEAisanindustryassociationandnotitselfanAIFM(oraninvestorinanAIFmanagedbyanAIFM),wehavenotattemptedtoanswerallthequestionsposedintheConsultation.Webelievethatother associations, including the European Private Equity and Venture Capital Association (“EVCA”),withwhomEMPEAhasacloseandcollegialrelationship,maybebetterplacedtoanswerthequestionsthatwedonotaddressbelow.However,wherewecanandtotheextentpossible,wehaveprovidedanswers based on anecdotal evidence in responses gathered from our members, in particularinstitutionalinvestors,developmentfinanceinstitutions,non-EUfundmanagersandEUfundmanagersengagedacrossemergingmarketsincludinginemergingEurope,emergingAsia,Africa,theMiddleEastandLatinAmerica.EMPEArespectsESMA’smissiontogatherinputonthekeyissuesthatwilldeterminetheorientationofESMA’sopiniontotheEuropeanParliament.EMPEAismindfulofESMA’sresponsibilitytosubmitanopiniontotheEuropeanCommissiononthefollowingmattersby22July2015:

1)thefunctioningoftheEUpassportundertheAIFMD;and2)thefunctioningofthemarketingofnon-EUAIFsbyEUAIFMsintheEUandthemanagementand/ormarketingofAIFsbynon-EUAIFMsintheEU(underthenationalprivateplacementregimes);and

1“Privatecapital”encompassesprivateequityandventurecapitalandadjacentinvestmentapproachesincludinginfrastructure,realassets,privatecreditandinstitutionalqualityimpactinvesting2IncludingtheEuropeanInvestmentBankandEuropeanBankforReconstructionandDevelopment3IncludingtheFrench(PROPARCO),Dutch(FMO),German(DEG),Finnish(FinnishFundforIndustrialCooperation),British(CDC),Belgian(BIO),Norwegian(Norfund)andSwedish(Swedfund)developmentfinanceinstitutions




3)whetherthecurrentpassportingregimeshouldbeextendedtothemanagementand/ormarketingofAIFsbynon-EUAIFMsandtothemarketingofnon-EUAIFsbyEUAIFMs.

EMPEAhasfocusedthissubmissiononpoint3.OurGPmemberswithdirectexperienceofpoints1and2notetheirstrongagreementwithEVCA’ssubmissiononthesepoints.WestandreadytoprovidewhateverfurthercontributiontothisworktheCommissionmightfindhelpful,includingattendingmeetingsandcontributingfurthermaterialsinwriting.Executive Summary4 EMPEA Members have observed that the prompt expansion of a robust passporting system,implemented in a practical and common-sense manner, allowing them to work closely with theregulatoryregimeofoneEUMemberStateofReferencebeforeraisingcapitalacrosstheEUwouldbeoptimal.

• Opportunity: Someofourmembershaveexperienced significantdifficultieswith currentnationalprivate placement regimes (“NPPRs”) and question whether the changes which were made to anumber of European NPPRs as a result of the AIFMD might have actually worked against theinterests of investors in the affected countries, as they have decreased investor choice (thoughdiscouraging non-EU GPs frommarketing their funds in Europe) without meaningfully increasinginvestorprotection.EMPEAMembers fromboth theLPandGPcommunitiesgenerally regard theproposedextensionofthepassporttonon-EUAIFMsasanopportunitytoremedythissituationand,specifically, toensurethat thepassportsystemworks in the interestsof theEUwithout impedingaccesstoglobalprivatecapitalandtheeconomicbenefitsitbrings.

• Impact on Investor Choice: EMPEAMembers have observed that EU investment institutions areexperiencing limited investor choice and access to high quality investment options in emergingmarkets as non-AIFMs severely limit their efforts to raise capital in Europe and concentrate theireffortselsewhere.This isnotonly thecase for thestrongestperformingandestablishedGPswhohave the greatest choice as to whether and where to raise capital, but also for younger, highperforming GPs offering high quality investments in emerging markets. The consequence is alimitation on the EU investment institutions’ ability to diversify their investment portfolios byaccessingemergingmarket investmentopportunitiesandobtaintheir targetreturns.This, in turn,impacts both risk and return expectations over the near, medium and long terms with the finalresultlimitingnotonlyreturnsto,forexample,occupationalpensionholders,butalsotheabilityof

4OuranswerstothefollowingquestionsontheAIFMDmarketingpassportarebasedon:

(1) Discussionswithourmembership, inparticular the largenon-EUprivateequity firmsmost likely tobe affectedby theeventualextensionofthepassportfornon-EUAIFMs;

(2) Anecdotalevidencefromthoseofour industryadvisor members(suchasfundadministrators, lawfirmsandaccountancyfirms)thathavebeenassistingnon-EUAIFMstocomplywiththeDirectiveand,whererelevant,nationalprivateplacementregimes;and

(3) Discussions with and a review of drafts provided by colleague industry associations including the European Venture CapitalAssociation(EVCA),andthePrivateEquityGrowthCapitalCouncil(PEGCC).EMPEAexpectsthatitwillbeabletobroadlyendorsethe reflections and approach suggested by both groups. EMPEA also had discussions with the Institutional Limited PartnersAssociation(ILPA)andunderstandstheircommentswillbeincludedaspartoftheEVCAsubmission.




EUdevelopmentfinanceinstitutionstodeploydevelopmentfundsconsistentwiththeirmandates.Taxpayer-fundeddevelopmentfinanceinstitutionsareexpectedtofocusfundsonsociallybeneficialinvestments that are profitable and therefore, scalable and sustainable to address povertyeradicationandeconomicdevelopmentinemergingmarkets.Foregonedevelopmentopportunityisnot recoverable and, once private capital exits, new collaborative opportunities take time andresources to pursue. EMPEAMembers have also questionedwhy there is no distinction between“professional qualified investors” (whose capital fuels the private capital industry) and “retailinvestors” (whose capital does not). Retail investors do not typically invest in capital funds. Themembers see this as one example of how the AIFMD does not take into account the differencebetween private capital investing funded by “professional qualified investors” and other forms ofinvestingfundedbyretailinvestors.

• Impact on Competition andWTO Compliance: EMPEAMembers note that the extension of thepassport to non-EU AIFMs could improve the situation by increasing competition and investorchoice,particularly if it is introducedinanefficient,common-senseway.CertainEMPEAMembersalso express concerns that theAIFMD is being applied in amanner that gives rise toWTO issuesundertheEU’sobligationsforfinancialservicesundertheGeneralAgreementonTradeinServices(“GATS”),bothastomarketaccessandpossiblelicensing,amongotherissues:

o ExperiencewithcurrentNPPRs:Fornon-EUAIFMsfromemergingmarketsthecurrentNPPRhas proven onerous and burdensome with the result that in practice non-EU AIFMs aregenerally limitedtoonlythe largestAIFMsandEUMemberStates.Asaresult, theAIFMDhas limitedcompetitionand investorchoice in theEU.Amongconcernsexpressedarethelegal uncertainty created by the AIFMD’s mechanism for selecting the Member State ofReference and the absence of clear grandfathering and transition rules. Without cleargrandfatheringandtransitionrulesEUMemberStatescanfurtherrestrictoreveneliminateprivateplacementregimes.InadditionsomeMemberStateshavedelayedandincompletetranspositiontotheAIFMDandthereareMemberStateswherenoformalmemorandumofunderstandingisyetinplacebetweensuchMemberStateandthelegaldomicileofanon-EUAIFMandthereappearstobelittlewillingnesstoenterintoone.

o Cost and resource commitment: The already non-harmonious and ambiguous NPPRs giverise to costs that are amplified when considering the wide variety and changeability ofexisting and new “fee” structures imposed by multipleMember States on a single fund.Advisory and support costs such as legal and compliance do not decrease and falldisproportionatelyonthesmallernon-EUAIFMs.Evenafterincurringsubstantialcostsinanefforttocomply,thereisoftensurprisinguncertaintyaboutwhetherthenon-EUAIFMhas,infact,compliedbecausesomeregulatorsareunfamiliarwiththenewAIFMDrulesandarereluctanttointerpretthem.WhilesomelargerAIFMsmaytaketheviewthatthisissimplyacostofdoingbusiness,itraisesaspectreofbeingamarketbarrierandisinconsistentwiththeEU’sobligationsunder theGATS. These costs also raisequestionsof thepotential forunintendeddiscriminationagainstnewerAIFMsfromemergingmarkets,whichdonothave




long-standing investor relationships within the EU and precludes them from becomingbetterknownandplayingonalevelfield.

o Asymmetrical impact with regulatory regimes in other countries: Other countries’ regulatoryregimesdonotdisadvantageordelaytheofferingofEU-basedAIFsinthesamewayastheAIFMDimpacts non-EUAIFs.Generally, EU funds experience a freedom to solicit investments in non-EUcountries and this has an asymmetrical impact on the financial service provider of the non-EUcountries, for example the costs mentioned above and requirement for the use of depositories(whicharenotrequiredinthenon-EUjurisdictions),andraisesquestionsofwhethertheEUintendstocreateadditionalrestrictions,requirementsandfeestocreateamarketaccessbarrier.

Insummary,EMPEAaddsitssupporttoEVCAtoencourageESMAtoissuepositiveadviceonenhancingandmodifyingtheexistingpassportingsystembasedontheexperienceofcurrentparticipantsandexpandingtheapplicationoftheenhancedpassportingsystemtonon-EUAIFMsandAIFs.EMPEAbelievesthatsuchadviceisconsistentwithremovingobstaclestoinvestorprotection;contributestosmooth,efficientandharmoniousEU-widemarketoperationsandcontinuestofulfilltheEU’scommitmenttofreetradeinserviceswhilebenefitingtheeconomiesoftheEUmemberstatesandEuropeasawhole.




Consultation Response

QUESTIONSONTHEFUNCTIONINGOFTHEPASSPORTFOREUAIFMS

Q1:PleasedescribeyourexperienceusingtheAIFMDpassport:a)IndicateyourhomeMemberStateb)NumberoffundsmarketedinotherMemberStates(pleaseprovideabreakdownbyhostMemberState)c)NumberoffundsmanagedinotherMemberStates(pleaseprovideabreakdownbyhostMemberState)Answer: EMPEA is an industryassociationwithmember firms inover100 countriesandnot itself anAIFM(oran investor inanAIFmanagedbyanAIFM).Asaresult,EMPEArepresentsmembersfromanumberofEUcountriesandmanyotherdevelopedanddevelopingcountries.Q2:Howhaveyoufoundthepassportapplicationprocess?a)Verysatisfactoryb)Satisfactoryc)Problemsencountered.PleaseexplainAnswer: Since EMPEA is an industry association and not itself an AIFM (or an investor in an AIFmanagedbyanAIFM),werefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoareEUAIFMs.Q3:WhatisyouroverallexperienceofusingthepassportoftheAIFMD?PleaseexplainAnswer: Since EMPEA is an industry association and not itself an AIFM (or an investor in an AIFmanagedbyanAIFM),werefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoareEUAIFMs.Q4:Whatdifficultieshaveyouencounteredwhentryingtousethepassport?WerefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoare EU AIFMs. EMPEA notes in particular the thorough analysis and commentary by EVCA on theexperience of its members under the operation of the existing AIFMD passporting regime includingrestrictions,fees,lackofharmonization,nodistinctionrelatedtoqualifiedprofessionalinvestorsandthepotentialforadverseimpactonemergingEuropeancountriesamongotherobservations.AnumberofthesearealsoapplicabletothecurrentpatchworkofNPPRs.




Q5:Haveyoubeendeterredfromusingthepassportandifso–why?Answer: Since EMPEA is an industry association and not itself an AIFM (or an investor in an AIFmanagedbyanAIFM),werefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoareEUAIFMs.Q6:HaveyouexperiencedissuesofinvestorprotectioninrelationtoAIFsmarketedormanagedfromanotherMember State, including AIFs marketed to retail investors under Article 43? If so, pleaseprovidedetails(e.g.numberofcomplaintsfrominvestors,thereasonsforthosecomplaints,etc.).Answer: Since EMPEA is an industry association and not itself an AIFM (or an investor in an AIFmanagedbyanAIFM),werefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoareEUAIFMs.

QUESTIONSONTHEFUNCTIONINGOFTHENATIONALPRIVATEPLACEMENTREGIMES

Q7:PleasedescribetheactivityofyourorganisationintheEU:a) Identify whether your organisation operates under Article 36 (marketing of non-EU AIFs by EUAIFMsinaMemberState)orArticle42(managementand/ormarketingofAIFsbynon-EUAIFMsinaMemberState)oftheAIFMDb)Identifythenon-EUcountryoftheAIFMand/ortheAIFc)NumberoffundsmarketedinanEUMemberState(pleaseprovideabreakdownbyMemberState)

a) A number of EMPEAmember firms engage in themanagement and/ormarketing of AIFs bynon-EUAIFMsinaMemberStateoftheAIFMDunderArticle42.

b) EMPEAMembersoperateinover100countries.c) EMPEA does not have access to this information in respect of all of our GP members but

believes the number to be significant.We note that emergingmarket funds,whether basedinsideoroutsideoftheEU,havehistoricallysoughttoraisecapitalfromEuropeaninvestorsandbelieve that capital sourced fromEuropean investorsaccounted foramaterialportionof theemergingmarketsprivateequity fundsraisedbefore theAIFMD.Wenote that fromQ32013(note AIFMD effective date July 22, 2013) through Q3 2014, GPs in total (inclusive of bothmembersandnon-members)raisedUS$58billionthrough218emergingmarketsprivateequityandventurecapitalfunds.

Q8: Howmany times has your organisation received a request for information from an EU NCA?Pleaseindicateyouraveragetimeofresponse.




N/AQ9:Howmanytimeshasyourorganisationrefusedtoprovidethe informationrequestedbyanEUNCA?Pleaseexplainthereasons.N/AQ10:HowmanytimeshasanEUNCAperformedanon-sitevisitatyourorganisation?N/AQ11:HowmanytimeshasanEUNCAinitiatedenforcementactionagainstyourorganisation?N/AQ12:HowmanytimeshasanEUNCAimposedasanctiononyourorganisation?N/AQ13:Are thereanyspecific limitations in the legal framework inyourcountry that impedeor limityourorganisationfromcollaboratingwithanEUNCA?Ifyes,pleasespecify.N/AQ14:HasyourorganisationexperiencedissuesofinvestorprotectioninrelationtoAIFsmarketedormanaged inanEUMemberState? Ifso,pleasedescribe(e.g.numberofcomplaints frominvestors,thereasonsforthosecomplaints,etc.).EMPEAnotesthatsomeofitsmembershavehistoricallymarketedfundsintheUnitedStatesaswellasthe EU and EMPEA notes the thorough description by PEGCC of the legal framework for investorprotectionasappliedintheUnitedStates.Additionally, the EMPEA Guidelines produced by EMPEA (please see attachment A) identify the keyelementsof legalandtaxregimesoptimal forthedevelopmentofprivateequityandEMPEAbelievestheGuidelinesincludeaframeworkthatprovidesforinvestorprotection.Q15:WhathavebeenthebenefitsoftheNationalPrivatePlacementRegimes(NPPR)toyou?EMPEAnotesEVCA’sobservationthat theprivateequityandventurecapital industry isan inherentlyglobalone.Privateequity isaboutraisingmoneyworldwideto invest locallyand/orregionally.Cross-




borderstructuresandcross-bordermarketingarekeyelementsoftheindustryandthefreemovementof capital on a global basis is important both for European companies, which are the recipients ofsignificantthirdcountryprivateequityinvestmentandEuropeaninvestors,whoinvestinthirdcountryprivateequityfundsaspartoftheirassetallocationandriskdiversificationstrategies.Managersraisefundsfromprofessionalinvestorswhicharetheninvestedintotherealeconomy.Asacommercialmatter,thelocationofthemanagerdoesnotlimitwherefundsareraisedorwherefundsareinvested.For instance,providedtherelevant lawspermitthis,aUSmanagercanraisefundsfromEuropean investors for investment in Europe. Similarly an African manager can raise money fromEuropean investors for investment into Africa. Indeed, foreign direct investment from emergingmarketsprivateequity funds isacriticalsourceofcapital forbusinesses inemergingmarketsandforthe economies in which those businesses operate. Under the current AIFMD regime, the only legalavenuetoraiseandinvestmoneyinthiswayistheNPPRregime.InthissenseNPPRshaveprovidedabenefit to ourmembers, and to those emergingmarkets businesses and economies, in thatwithoutNPPRstherewouldbenosuchavenue.However,ourmembersviewarobustpassportingsystemasafar superior, effective, and impactful architecture than the existing NPPRs for the reasons set forthbelow.Q16:WhathavebeentheobstaclesorbarrierstoentryoftheNPPRtoyou?EMPEA’snon-EUAIFMmembershavefacedanumberofpracticalissueswhenseekingtomarketintoMemberStatesunderNPPRs.Wenotetheexperienceofourmemberswhohavestressedthehighcostof seekingcounsel’sguidance inorder tocomplywithmarketing restrictionsandseekwaiverswhereappropriate and then discovering that there is a surprising lack of clarity in the final responses. Theuncertaintyseemstobetheresultofuncertaintywithinthenational regulatoryauthorityaroundtheAIFMDrulesandtheregulator’sreluctancetobe“early”tointerprettherules.EMPEAnotesourmembers’supportofEVCA’sdetailedanalysisofsomeofthebarriersandobstaclestheNPPRsraiseincludingamongothers,lackofharmonization,compliancecostsandtime,registrationrequirementsatdifferingpointsintimeandambiguousdisclosurerequirements.Q17:WhatobstaclesdidyouencounterwhentryingtoregisterthroughtheNPPR?Answer: Since EMPEA is an industry association and not itself an AIFM (or an investor in an AIFmanagedbyanAIFM),werefertoEVCA’ssubmissiontoESMA,whichisrepresentativeoftheviewsofourGPmemberswhoareEUAIFMs.Q18:Whathavebeenthecosts?EMPEAMembershaveidentifiedextensiveresourcerequirementswhentryingtoregisterthroughtheNPPRincludingmoneyandtime.Costsincludenotonlylegal,accountingandotheradvisorycosts,but




also “fees’” (see EVCA analysis) that vary by jurisdiction. The number of legal advisors alone, withofficesintherelevantjurisdictions,isitselfnotsmall.Allofthisabsorbstimeandfocusonthepartoffundmanagersandtheirinternalandoutsidecounseloftenleadingtofrustratinglyambiguousopinionsastowhetherthefundiscompliant.InonecaseafundwasbeinghelpedbytheEUinvestorswhowereheavily engaged in structuring the fund and the fund sought a simple waiver under “reversesolicitation”analysisandendedwithsurprisinguncertaintyastowhethertheyhadcomplied.Q19:HaveyouexitedcountriessincetheentryintoforceoftheAIFMDNPPR–andifso,why?EMPEA’s members, including its LP members, have cited examples of non-EU GPs deciding not tomarketinEuropeancountries,orinEuropeasawhole,forthereasonssetoutinourresponsestoQ16-18.Q20:Haveyoubeendeterredfromundertakingprivateplacement,andifsowhy?

EMPEA’sGPmembershavecitedlegaluncertaintyandcostsastheprimaryreasonsforbeingdeterredfromundertakingaprivateplacement.

QUESTIONSONTHEFUNCTIONINGOFBOTHREGIMES

Q21: What is the possible impact of an eventual extension of the passport to non-EU AIFMs oncompetition?EMPEAnotesEVCA’sextensivesubmissiontothisquestionandagreesthatappropriategrandfatheringandtransitionruleswouldbenecessaryaswellaspredictabilityaroundwhatconstitutes“marketing”withintheMemberStateofReference.EMPEA expresses concern that ESMA not delay passport expansion while trying to resolve theinternationalpolicyandcomplexitysurrounding“taxcompliant”regimedeterminations.Q22:What are the risks of an eventual extension of the passport to non-EU AIFMs in relation tomarketdisruptionsandinvestorprotection?No unusual risks that have not already been identified during the period prior to expansion. Thegreatestriskwouldderivefromdelayingtheextension.




Q23:Isthereanyparticularnon-EUcountrywhere,asaconsequenceoftheregulatoryenvironment(financial regulation,supervision, taxandanti-money launderingprovisions),aneventualextensionof thepassportwouldputEUAIFMsandUCITSmanagementcompaniesatadisadvantagevis-a-vistheAIFMsfromthatcountry?Pleasespecifyandexplain.None are known. In fact, the reverse may be true. Non-EU funds have been freely able to solicitinvestment in most other countries except the EU and EU funds have been able to freely solicitinvestmentinthenon-EUjurisdictions.TheEMPEAGuidelinessettingoutthekeyelementsoflegalandtax regimes optimal for the development of private equity have served as a framework in emergingeconomies.Theyaddressanumberof thenumeroustypesof laws, includingthoseEVCAhascited inoperationtoprotectinvestors:

• lawsgoverningthevehicle(s)usedtoestablishthefund,suchaslimitedpartnershiplaws;• insomecases,localproductregulation(althoughthisistheexceptionnottherule);• taxlawsapplicabletoinvestorsand/orfundvehicles;• taxreportingorfilingobligationse.g.FATCAandtheCommonReportingStandard;• lawsconcerningpermissibleinvestmentsbyinvestorse.g.CRDIV,SolvencyII,theVolckerrule

andERISA;• laws concerning the preparation, audit and publication of accounts e.g. the EU Accounting

Directive;and• lawsconcerning thepreventionof financialcrime including the identificationof investorsand

sanctionslaws.EMPEAagreesthat,quiteproperly,theAIFMDseekstonormalise(andtoanextentharmonise)certainlimitedaspectsoftheoperationofalternativeinvestmentfunds,includingthefitnessandproprietyofthe non-EU AIFM (and its staff), its governance, certain aspects of the conduct of its business andtransparencytowardsregulators(forthepurposesofsystemicriskoversight)andinvestors.EMPEAalsoagreeswithEVCA’sviewthat, itwouldbebeyondthescopeofESMA’sreviewtoseektounderstand the various laws that affect the competitive landscape relevant to the extension of thepassport and, that ESMA’s mission is best achieved by removing barriers to entry and competitivedistortionscreatedbytheAIFMDanddescribedintheprecedingsectionsofthisresponse.Q24:Isthereanyparticularnon-EUcountrythatimposesheavierrequirementsforEUAIFMsorUCITSmanagementcompaniesincomparisontothosethatnon-EUAIFMshavetocomplywithinordertodobusinessintheEU?Pleasespecifyandexplain.Noneknown.




Q25:HaveyouexperienceddifficultiesorlimitationsinestablishingormarketingAIFsorUCITSinanynon-EUcountry?Pleasespecifythenon-EUcountryandthespecificdifficultiesorlimitationsthatyouhaveencountered.N/AQ26:Doyouhaveevidenceshowingthatexistingdifficultiesorlimitationsinnon-EUcountrieshavedeterredfundmanagersinyourjurisdictionfromdecidingtoestablishormarketAIFsorUCITStheymanage in the non-EU country? Please specify the non-EU country and explain the difficulties orlimitations.Noneknown.

Q27:Couldyoupleaseidentifythenon-EUcountriesthat,inyouropinion,grantmarketaccesstoEUAIFMsandUCITSmanagementcompaniesunderbroadlyequivalentconditions?N/A

Q28:WhataretheconditionsthatEUAIFMsandUCITSmanagementcompanieshavetocomplywithinordertomanageormarketAIFsorUCITSinyourjurisdiction?Pleasespecify.EMPEA notes, by way of example, the thorough response of the PEGCC describing the investorprotectionregimeintheUnitedStates.

Q29: In what way is your current regime (regulatory, tax etc.) different from the EU framework?Pleaseexplain.EMPEA’s members operate in over 100 jurisdictions, each with their own legal regimes. By way ofexample, see the granular and thorough comparison betweenoneof those jurisdictions and the EU,referencedinanswertoQ28above.

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Response to the ESMA Call for Evidence on the AIFMD ......Norwegian (Norfund) and Swedish (Swedfund)...

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