The EU Alternative Investment Fund Managers (AIFM) Directive has now been in force for over two months and funds and their advisers are coming to terms with the new regime in Jersey. Some interesting themes that have been noted in this quarter are as follows:

1. The new alternative investment fund codes contain provisions regarding the disclosure of side letters. This represents a departure from market practice in certain sectors (e.g., hedge funds). The Jersey Financial Services Commission (JFSC) has confirmed that it intends to issue formal guidance on the disclosure of investor side letter terms in due course. This should bring some welcome clarity for advisers.
2. The JFSC has issued a consultation paper recommending that the pro forma reporting template set out in the Level 2 regulations pursuant to the directive be used for the purposes of preparing reports to the JFSC required under the directive. The European Securities and Markets Authority has recently published the final guidelines on the reporting obligations for EU AIFMs, which may be of assistance for Jersey AIFMs when considering their reporting obligations to the JFSC.
3. The Jersey orders and regulations incorporate transitional provisions for implementation of the directive. Essentially, if a fund manager can avail of the transitional arrangements in its target markets in the European Union, that manager and any Jersey funds that it manages are exempt from the need to make any filings to the JFSC or to comply with any of the alternative investment fund orders or regulations.
4. Regulatory applications.
5. A number of fund managers continue to utilise the transitional arrangements in EU member states. These arrangements have the effect of delaying the requirement to make any filings in connection with marketing in the European Union. These arrangements will terminate in July 2014 and fund managers must give some consideration to any necessary filings in Jersey and in their funds’ target markets in the European Union.

Any Jersey funds managed by an EU AIFM (which may be the case with a number of listed funds that have appointed UK managers) should be aware that the UK Financial Conduct Authority has issued a request for applications to be an AIFM to be made by January 2014.

This date reflects a deadline under the directive of July 2014 (after transition) and builds in a three-month review period, plus an additional potential three-month extension..

The JFSC has not yet issued any statements or guidance in relation to processing applications for business relating to alternative investment fund services, but it is possible that there will be a rush of applications in the period up to July 2014. Therefore, it is advisable to consider now any necessary filings (and related prospectus updates) to ensure continued access to EU markets from July 2014.