Read this article and learn about:
- What needs to be done to adhere to remuneration reporting
- How firms can establish business processes and adopt technology to adhere to the AIFMD regulations
- Possible solutions to house the data, produce reports and provide an audit trail for these new regulatory burdens
Carol Penhale, CEO, Bedford Park Associates
The Alternative Investment Fund Managers Directive (AIFMD) is striving for many goals with its oversight of alternative investments. One area under an increased spotlight is transparency between compensation structures for portfolio and risk managers and the underlying funds/deals they construct and manage. Applying payout scrutiny to individuals stewarding investment structures and looking for staggered, multi-year compensation deals from conception through the life-cycle of the structure is rising.
Having historically produced cash flow projections to support the business case deals and monitoring reports, architects of these funds and holdings have a new – and very personal – challenge to consider when they structure, monitor and report on investments.
As the early days of this era are upon us, the undertakings for collective investment in transferable securities (UCITS) policies are the focus for interpretation of the principles governing remuneration policies. Firms size, deal/fund size, how they are managed, their internal structures, leveraged/ unleveraged and the nature, scope and complexity of activities are all factors that determine reporting thresholds.
The criteria of what needs to be done to adhere to remuneration reporting will likely affect how deals are structured going forward. Some firms will amend investments/funds to fall off the radar threshold for reporting under AIFMD.
There has been a lot of coverage on interpretation of AIFMD remuneration rules from a legal and accounting perspective, but very little on how firms establish business processes and adopt technology to adhere to these regulations” Carol Penhale, CEO, Bedford Park Associates
The scope of what is under scrutiny is expansive and covers private equity, real estate, infrastructure and other alternative assets, as well as vehicles such as hedge funds. It also covers not only funds based in Europe but any instrument or fund marketed in Europe, so operations with global reach will need to be mindful of their current footprint and future plans for expansion and AIFMD impact.