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AIFMD


is poised for a welcome recovery. Yet venture may not be out of the woods just yet explains Strachan. “Investing seed capital and money in SMEs – Jersey is in favour of that. But one of the key things it to actually define what a venture-capital fund is? As that’s not entirely clear at the moment.”


This sentiment is echoed in all corners. The European Private Equity and Venture Capital Association (EVCA) has called for an urgent clarification of the EU’s definitions. In its position statement, published as the consultation drew to a close, it stressed that small funds may invest in various different stages of venture- or enterprise-capital and in companies of different sizes. It added that Brussels’ existing distinctions “do not necessarily reflect individual strategies that funds may pursue”.


In truth, AIFMD has been fraught with ambiguity from the outset, with large chunks ‘cut and pasted’ from existing UCITS regulation of selling shares in mutual and hedge funds. “The reality is that the AIFMD was never really written to cover venture-capital funds.


unitised products offered predominantly by banking institutions to their customers – typically high-net-worth individuals.” And it’s not just the meaning of venture capital shrouded in uncertainty. The sole reason for the Commission launching the consultation in June was to sanction much- needed investment into small- and medium- sized enterprises, yet question marks still hang over its definition of SMEs. In particular, EVCA has called for an urgent clarification to confirm that companies owned by the same fund manager “do not lose their SME status” if aggregated.


At least it wasn’t supposed to cover them in the traditional sense – contractually negotiated arrangements usually taking the form of limited partnerships,” reveals James Bermingham, General Counsel at fund administrator Aztec Group. “It seems to have been written by the Commission with a specific policy in mind – targeting those


The European Securities and Markets Authority will now pore over working groups’ suggestions and present its final findings and technical expertise to the Commission in November. Jersey and Guernsey have both made clear their commitment to the AIFMD. Now it’s up to Brussels to ensure it gets its venture-capital rollback right. l


BRENDAN SCOTT is European Editor at Real Deals


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40 businesslife.co October/November 2011


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