Depositary Liability Under the EU AIFM Directive

Article by Jim Baird*

The European Alternative Investment Fund Managers Directive (the "AIFM Directive" or the "Directive") will, for the first time, impose European-wide regulatory standards on Alternative Investment Fund Managers ("AIFM"). The Directive, which was first proposed in April of last year, has been highly controversial and politically driven. Each of the numerous iterations published since April of last year has stimulated fierce debate over a range of issues, and there has been significant change in the Directive during its passage through the legislative process.

While much attention has focused on the restrictions on management and marketing rights for third country AIFM and Alternative Investment Funds ("AIF"), the provisions relating to depositaries are also of critical importance (and while the impact may not be as immediately visible as the third country restrictions, the cost and other implications are potentially more than just statistically