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AIFMD Anatomy™
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In a Nutshell™ Section 36:
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36(1). Member States may allow an authorised EU AIFM to market non-EU AIFs to professional investors, in their territory only as long as:
- (a) Depositary-lite: the AIFM complies with all of AIFMD except for having a depositary — though it must appoint someone to perform the following depositary functions:
- (i) Cashflows: monitor cashflows (art. 21(7)),
- (ii) Custody: hold assets in custody (art. 21(8)), and
- (iii) Subscriptions and redemptions: issue and cancel units and calculate NAV (art. 21(9))
- and the AIFM may not do this itself. It must tell the regulator who it has appointed.
- (b) Regulatory cooperation: there must be suitable arrangements between regulators in the AIFM’s member state and the AIF's home regulator to exchange information and cooperate to monitor systemic risks;
- (c) No dodgy money-laundering types: the AIF’s home jurisdiction is not listed as a Non-Cooperative Country and Territory by FATF.
36(2). Member States may impose stricter rules on the AIFM on marketing of units non-EU AIFs to investors in their territory.
36(3). The Commission must adopt measures to cooperate with third countries.
36(4). ESMA must develop guidelines as to what counts as regulatory cooperation arrangements referred to in paragraph 1.
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Full text
This is an unoffical transcription, may be wrong, buggered up, out of date etc. You should Google the original.
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Article 36 Conditions for the marketing in Member States without a passport of non-EU AIFs managed by an EU AIFM
36(1). Without prejudice to Article 35, Member States may allow an authorised EU AIFM to market to professional investors, in their territory only, units or shares of non-EU AIFs it manages and of EU feeder AIFs that do not fulfil the requirements referred to in the second subparagraph of Article 31(1), provided that:
- (a) the AIFM complies with all the requirements established in this Directive with the exception of Article 21. That AIFM shall however ensure that one or more entities are appointed to carry out the duties referred to in Article 21(7), 21(8) and 21(9). The AIFM shall not perform those functions. The AIFM shall provide its supervisory authorities with information about the identity of those entities responsible for carrying out the duties referred to in Article 21(7), 21(8) and 21(9);
- (b) appropriate cooperation arrangements for the purpose of systemic risk oversight and in line with international standards are in place between the competent authorities of the home Member State of the AIFM and the supervisory authorities of the third country where the non-EU AIF is established in order to ensure an efficient exchange of information that allows the competent authorities of the home Member State of the AIFM to carry out their duties in accordance with this Directive;
- (c) the third country where the non-EU AIF is established is not listed as a Non-Cooperative Country and Territory by FATF.
36(2). Member States may impose stricter rules on the AIFM in respect of the marketing of units or shares of non-EU AIFs to investors in their territory for the purpose of this Article.
36(3). The Commission shall adopt, by means of delegated acts in accordance with Article 56 and subject to the conditions of Articles 57 and 58, measures regarding the cooperation arrangements referred to in paragraph 1 in order to design a common framework to facilitate the establishment of those cooperation arrangements with third countries.
36(4). In order to ensure uniform application of this Article, ESMA shall develop guidelines to determine the conditions of application of the measures adopted by the Commission regarding the cooperation arrangements referred to in paragraph 1.
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Cut-down despotary function: Non-EU AIFs marketed by an EU AIFM to EU investors through private placement have to comply with everything else in AIFMD but the depositary requirement is restricted to just cash monitoring, custody and handling subscriptions and redemptions.
Liability: Unlike in a full-blown depositary, under article 21 there is no strict liability for loss of assets for a non-EU AIF, and no requirement to appoint a single depositary - therefore this regime is referred to as “Depositary-Lite” or “Depo-Lite”.
Prime Broker as depositary lite
An AIFM can appoint the prime broker as its custodian for a non-EU AIF, but the PB will not want to assume all liability, so will accept this the role subject to 28(1)(a) as it applies to a person carrying out the safe-keeping function under (36(1)(a)).
Tedious, isn’t it.