Update on the AIFM Directive and Impact on Cayman Funds Industry

On 19^th October 2010, the European Union Council of Ministers (the "Council") announced that the Council had reached agreement on compromise text (the "Proposal") of the controversial Alternative Investment Fund Managers Directive (the "Directive"). With the level of consensus reached on this Proposal, it is hoped that the European Parliament will approve the Directive without much need for further amendments or debate.

Briefly, the Directive aims to:

• establish "...a framework for monitoring and supervising the risks that alternative investments fund managers ("AIFM") pose to their investors, to counterparties, to other market participants and to the stability of the financial system; and