The Alternative Investment Fund Managers (Amendment) Regulations 2013

Made: 17th July 2013

Laid before Parliament: 18th July 2013

Coming into force in accordance with regulation 1

The Treasury are a government department designated for the purposes of section 2(2) of the European Communities Act 1972 in relation to financial services.

The Treasury make these Regulations in exercise of the powers conferred on them under section 2(2) of the European Communities Act 1972 and paragraphs 13(1)(b) and 22 of Schedule 3 to the Financial Services and Markets Act 2000 .

Citation and commencement

1

• (1) These Regulations may be cited as the Alternative Investment Fund Managers (Amendment) Regulations 2013.

• (2) This regulation and regulations 2 (interpretation) and 6 (consultation on rules made for the purposes of Article 35 or 37 to 41 of the directive) come into force on 22ndJuly 2013.

• (3) Regulations 3 and 4 and Schedules 1 and 2 come into force on such day as the Treasury may by regulations appoint.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) Regulation 5 (amendments to Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001) comes into force immediately after the principal regulations come into force.

• (6) Regulations made by the Treasury under paragraph (3) may make different provision for different purposes.

• (7) The power to make regulations under paragraph (3) is exercisable by statutory instrument.

Interpretation

2

In these Regulations—

• “the Act” means the Financial Services and Markets Act 2000;

• “the directive” means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers ;

• “the FCA” means the Financial Conduct Authority;

• “the PRA” means the Prudential Regulation Authority;

• “the principal regulations” means the Alternative Investment Fund Managers Regulations 2013 ;

• “the Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;

• “rule” means a rule made by the FCA or the PRA under the Act.

Amendments to legislation that implemented Articles 35 and 37 to 41 of the directive

3

Schedule 1, which contains amendments to the Act and the principal regulations, has effect.

Amendments to legislation that come into force on appointment by the Treasury

4

Schedule 2, which contains further amendments to the Act and the principal regulations, amendments to the Regulated Activities Order, and related transitional provisions, has effect.

Amendments to Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001

5

In the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001 —

• (a) in regulation 2(6) (establishment of a branch: contents of consent notice) after sub-paragraph (a) insert—

(aa) particulars of the programme of operations to be carried on through the branch, including a description of the particular EEA activities to be carried on;

, and

• (b) in regulation 17A(1) (full-scope UK AIFM: changes to branch details or services) for “2(6)(b) to (e)” substitute “ 2(6)(aa) to (e) ”.

Consultation on rules made for the purposes of the provisions amended by Schedule 1

6

• (1) Before the date on which the Treasury makes regulations under regulation 1(3) appointing the day when the amendments in Schedule 1 to these Regulations come into force, the FCA or the PRA may make rules for the purpose of the provisions amended by Schedule 1 without complying with sections 138I to 138L of the Act (consultation).

• (2) Paragraph (3) applies in relation to rules that, as a result of paragraph (1), are made by the FCA or the PRA without complying with sections 138I to 138L of the Act, but does not apply in relation to rules that are revoked before they come into force.

• (3) After the rules are made, sections 138I to 138L of the Act apply in respect of those rules with the modifications set out in paragraphs (4) to (7).

• (4) Section 138I of the Act has effect as if—

• (a) in subsection (1)—

• (i) in the opening words for “Before making any rules” there were substituted “ Before any rules made by the FCA come into force ”, and

• (ii) in paragraph (b) for “a draft of the proposed rules” there were substituted “ the rules ”,

• (b) in subsection (2)—

• (i) in the opening words for “draft” there were substituted “ rules ”,

• (ii) in paragraphs (b) and (d) “proposed” were omitted, and

• (iii) in paragraph (e) for “proposals” there were substituted “ rules ”,

• (c) for subsection (3) there were substituted—

(3) The FCA must have regard to any representations made to it in accordance with subsection (2)(e) and must consider whether to amend the rules before they come into force.

• (d) in subsection (4) for “If the FCA makes the proposed rules, it” there were substituted “ The FCA ”,

• (e) in subsection (5) for “If the rules differ from the draft” there were substituted “ If the rules that come into force differ from the rules ”,

• (f) for subsection (7)(a) there were substituted—

(a) an analysis of the costs together with an analysis of the benefits that would arise— (i) if the rules came into force as published under subsection (1)(b), or (ii) if subsection (5) applies, from the rules as amended, and

, and

• (g) in subsection (9) for “a draft” there were substituted “ rules ”.

• (5) Section 138J of the Act has effect as if—

• (a) in subsection (1)—

• (i) in the opening words for “Before making any rules” there were substituted “ Before any rules made by the PRA come into force ”, and

• (ii) in paragraph (b) for “a draft of the proposed rules” there were substituted “ the rules ”,

• (b) in subsection (2)—

• (i) in the opening words for “draft” there were substituted “ rules ”,

• (ii) in paragraphs (b) and (d) “proposed” were omitted, and

• (iii) in paragraph (e) for “proposals” there were substituted “ rules ”,

• (c) for subsection (3) there were substituted—

(3) The PRA must have regard to any representations made to it in accordance with subsection (2)(e) and must consider whether to amend the rules before they come into force.

• (d) in subsection (4) for “If the PRA makes the proposed rules, it” there were substituted “ The PRA ”,

• (e) in subsection (5) for “If the rules differ from the draft” there were substituted “ If the rules that come into force differ from the rules ”,

• (f) for subsection (7)(a) there were substituted—

(a) an analysis of the costs together with an analysis of the benefits that would arise— (i) if the rules came into force as published under subsection (1)(b), or (ii) if subsection (5) applies, from the rules as amended, and

, and

• (g) in subsection (9) for “a draft” there were substituted “ rules ”.

• (6) Section 138K of the Act has effect as if—

• (a) in subsection (1) for “proposes to make a rule (“the proposed rule”) which would apply” there were substituted “ makes a rule which applies ”,

• (b) in subsection (2)(a) “proposed” were omitted,

• (c) in the opening words of subsection (3) for “a regulator makes a rule” there were substituted “ a rule comes into force ”,

• (d) in subsection (3)(b) “draft of the proposed” were omitted, and

• (e) in subsection (4)(a) for “the impact of the rule is significantly different from the impact of the proposed rule” there were substituted “ the impact of the rule as it comes into force is significantly different from the impact of the rule published under section 138I(1)(b) or 138J(1)(b) (as the case may be) ”.

• (7) Section 138L(5) of the Act has effect as if—

• (a) in paragraph (a) for “the overall position if the rules are made and the overall position if the rules are not made” there were substituted “ the overall position if the rules come into force as published under section 138I(1)(b) or 138J(1)(b) (as the case may be) and the overall position if the rules are amended before coming into force ”, and

• (b) in paragraph (b) for “the overall position after the making of the rules and the overall position before they were made” there were substituted “ the overall position after any amendment of the rules and the overall position before any such amendment ”.

SCHEDULE 1 — Amendments to legislation that implement Articles 35 and 37 to 41 of the directive

Amendments to the Act

1

• (1) The Act is amended as follows.

• (2) In section 55V(8) (determination of applications) for “regulation 5” insert “ regulations 5 and 5A ”.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) In section 418 (carrying on regulated activities in the United Kingdom) —

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) after subsection (5AA) insert—

(5B) The seventh case is where— (a) the regulated activity being carried on by the person is the regulated activity of managing an AIF, (b) the AIF being managed— (i) has its registered office in the United Kingdom, or (ii) is marketed in the United Kingdom, (c) if the AIF being managed is marketed in the United Kingdom, it is marketed otherwise than in accordance with regulation 59 of the Alternative Investment Fund Managers Regulations 2013, and (d) the person does not have a registered office in the United Kingdom, ... (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

, and

• (c) in subsection (6) for “(5AA)” substitute “ (5B) ”.

• (5) In Schedule 3 (EEA passport rights)—

• (a) in paragraph 5(h) (EEA firm) omit “Article 6.1 of”,

• (b) in paragraph 7A(aa) (EEA right: meaning of “relevant office”) for paragraph (aa) substitute—

(aa) in relation to a person whose entitlement derives from the alternative investment fund managers directive— (i) if the person's registered office is in an EEA State, its registered office; (ii) if the person's registered office is not in an EEA State, the registered office or branch of its legal representative (as defined in Article 4(1)(u) of the alternative investment fund managers directive);

• (c) in paragraph 10A(aa) (UK firm: meaning of “relevant office”) for paragraph (aa) substitute—

(aa) in relation to a firm whose EEA right derives from the alternative investment fund managers directive— (i) if the firm's registered office is in an EEA State, its registered office; (ii) if the firm's registered office is not in an EEA State, the registered office or branch of its legal representative (as defined in Article 4(1)(u) of the alternative investment fund managers directive);

• (d) in paragraph 14(3A) (services) after “Article 32” insert “ , 35, 39 or 40 ”,

• (e) in paragraph 19(7BB)(b) (establishment) omit “Article 6.1 of”,

• (f) in paragraph 20(3D)(a)(ii) (services) omit “Article 6.1 of”, and

• (g) in paragraph 20C (notice of intention to market an AIF) —

• (i) in sub-paragraph (1) for “a UK AIF or EEA AIF” substitute “ an AIF ”,

• (ii) for sub-paragraph (5)(b) substitute—

(b) if the AIF is a third country AIF or a third country feeder AIF— (i) appropriate co-operation arrangements are in place between the FCA and the supervisory authorities of the relevant third country in order to ensure an efficient exchange of information that allows the FCA to carry out its duties in accordance with the alternative investment fund managers directive, (ii) the relevant third country is not listed as a Non-Cooperative Country and Territory by the Financial Action Task Force, (iii) the relevant third country has signed an agreement with the United Kingdom and with each other EEA State in which the units or shares of the AIF are intended to be marketed, and (iv) the agreement fully complies with the standards laid down in Article 26 of the Organisation for Economic Co-operation and Development's Model Tax Convention on Income and on Capital 2010 and ensures an effective exchange of information on tax matters, including any multilateral tax agreements.

, and

• (iii) in sub-paragraph (12), in the appropriate places insert the following definitions—

• “relevant third country” means—
  1. in relation to a third country AIF, the country in which the AIF is authorised or registered or, if the AIF is not authorised or registered, the country in which it has its registered office;
  2. in relation to a third country feeder AIF, the country in which the master AIF is authorised or registered or, if the master AIF is not authorised or registered, the country in which it has its registered office;
• “third country AIF” has the meaning given in regulation 2 of the Alternative Investment Fund Managers Regulations 2013;
• “third country feeder AIF” has the meaning given in regulation 2 of the Alternative Investment Fund Managers Regulations 2013;
• “third country AIFM” has the meaning given in regulation 2 of the Alternative Investment Fund Managers Regulations 2013.

• (6) In paragraph 2B of Schedule 6 (threshold conditions - location of offices) , in sub-paragraph (7), for “a full-scope UK AIFM, A's head office and registered office must be in the United Kingdom” substitute—

a full-scope UK AIFM— (a) A's head office and registered office must be in the United Kingdom, or (b) A's registered office must be in a third country.

Amendments to the principal regulations

2

• (1) The principal regulations are amended as follows.

• (2) In regulation 2(1) (interpretation)—

• (a) in the definition of “external valuer” after “full-scope UK AIFM” insert “ other than an AIF that is marketed only pursuant to regulation 59 of these Regulations ”,

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) in the definition of “small third country AIFM” at the end insert “ and which has not exercised the option ... to meet the full requirements applying to a full-scope AIFM”,

• (e) at the appropriate place insert—

“third country feeder AIF” means a UK AIF , Gibraltar AIF or EEA AIF that— 1. is managed by an AIFM with its registered office in the United Kingdom or Gibraltar, and 2. is a feeder AIF whose the master AIF is a third country AIF or is managed by a third country AIFM;

, and

• (f) for the definition of “UK AIFM” substitute—

“UK AIFM” means an AIFM that— 1. has its registered office in the United Kingdom, 2. has its registered office in a third country but has been given permission by the FCA under Part 4A of the Act to carry on the regulated activity of managing an AIF. 3. ...

• (3) At the end of regulation 2 insert—

(4) Any reference in these Regulations to cancellation of a Part 4A permission to carry on the regulated activity of managing an AIF includes reference to the variation of a Part 4A permission to remove the regulated activity of managing an AIF from those activities to which the permission relates.

• (4) In regulation 5 (applications for Part 4A permission)—

• (a) in paragraph (1) for “applies” in the first place it appears substitute “ and regulation 5A apply ”,

• (b) in paragraph (3)(b) for “the regulator” substitute “ subject to regulation 5A(4), the regulator ”,

• (c) in paragraph (4) for “The regulator” substitute “ Subject to regulation 5A(5), the regulator ”,

• (d) in paragraph (7) for “If the regulator” substitute “ Subject to regulation 5A(5), if the regulator ”, and

• (e) in paragraph (8) for “An application” substitute “ Subject to regulation 5A(6), an application ”.

• (5) After regulation 5 insert—