On the 3rd April, 2020, the
Their purpose is to harmonise the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid, in order to establish consistent, efficient and effective supervisory practices within the European System of Financial Supervision ("ESFS"), and to ensure the common, uniform and consistent application of Union law. Such harmonisation will allow convergence in how National Competent Authorities ("NCAs") supervise performance fee models and disclosure across the EU.
These guidelines apply to:
i. Competent authorities;
ii. UCITS management companies (as defined in Article 2(1)(b) of the UCITS Directive);
iii. Investment companies that have not designated a management company authorised pursuant to the UCITS Directive;
iv. Alternative
a. Closed-ended AIFs; and
b. Open-ended AIFs that are European Venture Capital Funds ("EuVECAs") (or other types of venture capital AIFs), European Social Entrepreneurship Funds ("EuSEFs"), private equity AIFs or real estate AIFs.
(ii., iii. and iv. are hereinafter collectively referred to as "Managers").
The guidelines will now be translated into the official EU languages and subsequently published on ESMA's website and will become applicable two months after the publication of the translations.
Managers of any new funds created after the date of application of the guidelines with a performance fee, or any funds existing before the date of application that introduce a performance fee for the first time after that date, should comply with these guidelines immediately in respect of those funds. Moreover, Managers of funds with a performance fee existing before the date of application of these guidelines should apply these guidelines in respect of those funds by the beginning of the financial year following 6 months from the application date of the guidelines.
Supervisory convergence on this issue is crucial in order to ensure a level playing field and a consistent level of protection to retail investors in the
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Dr.
Mamo TCV Advocates
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Tel: 25403000
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E-mail: michael.portellimadden@mamotcv.com
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