In the UK, it has been implemented by the Alternative Investment Fund Managers Regulations which came into force on 22nd July 2013.
Because the concept of an “alternative investment fund” is very broad, it can catch arrangements which would not ordinarily be regarded as funds. For example, it can apply to an SPV company which is created to buy and develop property, and where the shares are held by the developer and a single investor. If the arrangement does constitute an alternative investment fund, then various requirements of the AIFM Directive are triggered, such as:
This gives rise to additional cost and additional compliance obligations.
The recitals to the AIFM Directive say that it is not intended to apply to joint ventures, but the Directive doesn’t actually define what a joint venture is.
Fortunately, guidance is available from various sources, including the UK’s Financial Conduct Authority and from the European Securities and Markets Authority (ESMA).
Based on that guidance, if you comply with the following rules when you are setting up your joint venture SPV, there should be less risk of the arrangements being caught by the AIFM Directive:
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