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Hedge funds and private equity funds — rules for managers

Hedge funds and private equity funds — rules for managers


Alternative investment fund managers — Directive 2011/61/EU



It establishes a legal framework for the authorisation, supervision and oversight of managers of a range of alternative investment funds (AIFM), including hedge funds and private equity.


Exclusions from scope. The directive lists a number of entities to which it does not apply, including:

holding companies (as defined in the directive);

management of pension funds;

employee participation or savings schemes;

supranational institutions;

national central banks; and

insurance contracts.

Passport. AIFMs can ‘passport’ their services in different EU countries on the basis of a single authorisation. Once an AIFM is authorised in one EU country and complies with the rules of the directive, the AIFM is entitled to manage or market funds to professional investors throughout the EU.

Authorisations. To operate in the EU, fund managers are required to obtain authorisation from the competent authority of their home EU country. To obtain authorisation, AIFMs have to hold a minimum level of capital in the form of liquid or short-term assets.

Depositary. AIFMs are required to ensure that the funds they manage appoint an independent depositary, for example a bank or investment firm, that is responsible for overseeing the fund’s activities and ensuring that the fund’s assets are appropriately protected.

Risk management and prudential oversight. AIFMs are required to assure the competent authority of the robustness of their internal arrangements with respect to risk management. This includes a requirement to disclose, on a regular basis, the main markets and instruments in which they trade, their principal exposures and their concentrations of risk.

Treatment of investors. In order to encourage diligence amongst their investors, AIFMs are required to provide a clear description of their investment policy, including descriptions of the types of assets and the use of leverage. An annual report for each financial year has to be made available to investors on request.

Leveraged funds. The directive introduces specific requirements with regard to leverage, i.e. the use of debt to finance investment. Competent authorities have the right to set limits to leverage in order to ensure the stability of the financial system.

Private equity funds. Where an AIF acquires control of a non-listed company or an issuer, the AIFM is subject to the anti-asset stripping provisions. For a period of 2 years, the AIFM must act against any distribution, capital reduction, share redemption or acquisition of own shares by the company.

Funds and managers located in non-EU countries. Subject to conditions set out in the directive, the ‘passport’ may be extended to non-EU AIFMs and to the marketing of non-EU funds, managed by either EU or non-EU AIFMs.

Opt-outs for smaller funds. EU countries may choose not to apply the directive to smaller AIFMs, i.e. funds with managed assets below €100 million if they use leverage and with assets below €500 million if they do not. Smaller funds are however subject to minimum registration and reporting requirements.

A number of delegated and implementing measures, adopted subsequently by the European Commission, offer technical guidance on the application of the directive.


Since 21 July 2011.

It must be transposed into EU countries’ national laws by 22 July 2013.



Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, pp. 1-73)

The successive amendments and corrections to Directive 2011/61/EU have been incorporated in to the original document. This consolidated version is of documentary value only.


Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ L 83, 22.3.2013, pp. 1-95)

Report from the Commission to the European Parliament and the Council on the exercise of delegation of powers to the Commission to adopt delegated acts pursuant to Article 56 of Directive 2011/61/EU of 8 June 2011 (COM(2015) 383 final, 3.8.2015)

last update 28.10.2015