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Update AIFM Directive - ESMA final report on remuneration policies

February 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority published on February 11 its final guidelines on sound remuneration policies under the Alternative Investment Fund Managers Directive. This is the latest step in Esma’s preparation of subsidiary measures and technical guidance ahead of the July 22, 2013 deadline for adoption of the directive by European Union member states into their national law, the date from which the guidelines will apply.

Finalised following a consultation with industry members and other interested parties, the guidelines provide detailed rules for implementation of the directive's provisions regarding the remuneration of key employees by alternative fund managers.

They aim to ensure that managers' remuneration policies and structures protect the interests of investors by avoiding as far as possible any conflicts of interest that could prompt excessive risk-taking or collusion in it on the part of portfolio managers, senior executives, supervisory staff and any other employees whose level of remuneration and benefits could create similar incentives.

ESMA says the application of the provisions universally and consistently is essential to the establishment of a level playing field in the alternative fund sector throughout the EU. The authority also notes that the provisions will also apply to non-EU managers that market funds to EU investors under passporting arrangements, once this becomes possible in or after July 2015.

The guidelines cover areas including the categories of employees that should be covered by remuneration policies, the various forms of remuneration that fall under the guidelines, the application of the principle proportionality to the provisions, the structure and role of an alternative management firm's remuneration committee, and the role of compliance and control functions. They are due to come into force along with the directive on July 22, subject to national transition arrangements.

The article, entitled ESMA remuneration rules aim to restrain excessive risk-taking by alternative managers, can also be found by clicking on the following link: 

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In our AIFMD blog, we will continue to track and analyse progress toward the full implementation of the AIFM Directive, following the publication of the Level 2 regulation by the European Commission at the end of last year, including the progress of EU member states toward adoption of the primary legislation and the process of drafting technical guidance.


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Olivier Sciales


Chevalier & Sciales

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