It determines which fund managers require authorisation, sets asset thresholds that trigger full regulatory obligations, and establishes the framework for marketing alternative investment funds to EU investors. It also created a passport allowing AIFMs to market their funds throughout the EEA without relying on National Private Placement Rules (NPPRs). This note sets out the scope of AIFMD, the key thresholds and exemptions available, how the directive applies to EU and non-EU managers, as well as recent changes introduced by AIFMD II.

The Alternative Investment Fund Managers Directive (Directive 2011/61/EU), commonly known as AIFMD, is the primary EU regulatory framework governing managers of alternative investment funds (AIFs). It was adopted in 2011 and transposed into national law across EU member states by July 2013. AIFMD was subsequently amended by Directive (EU) 2024/927 (AIFMD II), which had to be transposed by member states by 16 April 2026.

AIFMD regulates alternative investment fund managers (AIFMs), not the funds themselves. Its core objectives are:

• Investor protection through enhanced transparency and disclosure requirements
• Systemic risk monitoring across the alternative investment fund sector
• A harmonised regulatory and supervisory framework for AIFMs operating across the EU

An AIF is defined broadly as any collective investment undertaking that raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which is not a UCITS fund. This definition captures hedge funds, private equity funds, real estate funds, infrastructure funds, fund of funds and other non-UCITS structures.

AIFMD applies to any entity that manages one or more AIFs, regardless of the legal form of those funds or whether they are open-ended or closed-ended. The directive captures both EU AIFMs and, in certain circumstances, non-EU AIFMs.

Funds within scope

• Private equity and venture capital funds (including carried interest and co-investment vehicles)
• Hedge funds (including single-strategy and multi-strategy vehicles)
• Real estate, infrastructure and debt funds
• Fund of funds structures
• Any other collective investment scheme that does not require authorisation under the UCITS Directive

Key regulated activities

• Portfolio management and risk management (these are the minimum functions that define an AIFM)
• Marketing of AIF units or shares to investors in the EU
• Administration, valuation and ancillary services (where performed by the AIFM)
• Delegation arrangements (the AIFM remains responsible even where functions are delegated to third parties)

Structures outside scope

Certain structures are expressly excluded from AIFMD, including holding companies, institutions for occupational retirement provision (IORPs), supranational institutions (such as the EIB and EBRD), central banks, national governments and bodies managing social security and pension funds, employee participation or savings schemes, securitisation special purpose entities, and single-investor vehicles where the investor itself has management control.

AIFMD provides a registration regime for smaller EU-AIFMs that fall below certain asset thresholds. These sub-threshold AIFMs are exempt from the full scope of AIFMD but remain subject to registration and reporting obligations with their home member state regulator.

De minimis thresholds (Article 3)

• EUR 100 million: applies where the AIFs managed include funds that employ leverage. This threshold is calculated on the total value of assets under management (AuM), including any assets acquired through leverage.
• EUR 500 million: applies where the AIFs managed are unleveraged and have no redemption rights exercisable during a period of five years from the date of initial investment.

EU AIFMs that fall below these thresholds must still register with their national competent authority and comply with ongoing reporting requirements (including Annex IV reporting under AIFMD II). They may also voluntarily opt in to full AIFMD authorisation to access the EU marketing passport.

Specific exemptions

• European Venture Capital Funds Regulation (EuVECA ): managers of qualifying venture capital funds with AuM below EUR 500 million may register under the EuVECA regime instead of seeking full AIFMD authorisation.
• European Social Entrepreneurship Funds Regulation (EuSEF): a parallel regime for managers of qualifying social entrepreneurship funds with AuM below EUR 500 million.
• European Long-Term Investment Funds Regulation (ELTIF ): the ELTIF framework allows authorised AIFMs to manage and market long-term investment funds across the EU under a tailored product regime, with ELTIF 2.0 (Regulation (EU) 2023/606) significantly broadening eligible assets and investor access from January 2024.

AIFMD has significant implications for non-EU fund managers (referred to in the directive as “non-EU AIFMs”). Although a non-EU AIFM is not required to obtain AIFMD authorisation simply because it manages funds, AIFMD becomes relevant in two principal scenarios:

Marketing into the EU: where a non-EU AIFM markets an AIF (whether EU or non-EU) to investors in an EU member state, AIFMD applies. In the absence of an activated third-country passport (Articles 35 and 37–40, which have not yet been switched on), non-EU AIFMs must rely on NPPRs where available. NPPRs are not harmonised and vary considerably between member states.

Managing an EU AIF: where a non-EU AIFM is appointed as the manager of an EU-domiciled AIF, the non-EU manager must comply with certain AIFMD requirements as determined by the relevant member state.

NPPR conditions (Article 42)

Where a non-EU AIFM markets under an NPPR, typical conditions include:

• The non-EU AIFM’s home jurisdiction must not be listed as a non-cooperative country by the Financial Action Task Force (FATF)
• Cooperation arrangements must be in place between the competent authority of the member state of marketing and the supervisory authority in the AIFM’s home jurisdiction
• Compliance with AIFMD transparency and reporting requirements (Articles 22–24), including annual reports and investor disclosure
• Notification to the relevant competent authority before marketing commences

AIFMD II introduces additional requirements for non-EU AIFMs, including enhanced substance expectations, stricter delegation rules to prevent letterbox entities, and expanded reporting obligations under the revised Annex IV framework.

Although AIFMD is an EU directive that requires transposition into national law, implementation varies across member states. Key areas of divergence include:

National private placement regimes

Not all member states maintain an NPPR. Some jurisdictions do not practically permit marketing by non-EU AIFMs under an NPPR. Others (such as the Netherlands, Germany and Luxembourg) offer established NPPR frameworks, though the specific conditions and notification requirements differ in each case. The United Kingdom, post-Brexit, operates outside the AIFMD framework entirely and has its own parallel regime.

Gold-plating and local requirements

Certain member states impose additional requirements beyond the AIFMD minimum. For example, local regulators may require the non-EU AIFM to appoint local paying agents and comply with supplementary local rules. Other jurisdictions may impose additional conduct-of-business obligations through local financial regulation or specific requirements on depositaries.

The EU marketing passport

A fully authorised EU AIFM benefits from the AIFMD marketing passport, which permits marketing of EU AIFs to professional investors across all EU member states through a notification procedure to the AIFM’s home member state regulator. This is one of the primary commercial advantages of full AIFMD authorisation.

The passport is not currently available to non-EU AIFMs or for the marketing of non-EU AIFs.

AIFMD II: key changes across member states

AIFMD II introduces a number of changes that will apply uniformly once transposed, including:

• Loan origination framework: AIFMs will be able to originate loans directly, subject to risk retention, diversification and leverage limits
• Enhanced delegation rules: stricter requirements to ensure AIFMs retain sufficient substance and do not become letterbox entities
• Liquidity management tools: mandatory availability of at least two liquidity management tools for open-ended AIFs (excluding suspension and redemption gates)
• Depositary regime: limited cross-border depositary services permitted for smaller markets where no suitable local depositary is available
• Expanded reporting: revised Annex IV reporting obligations with more granular data requirements and harmonised reporting templates

Early engagement with local counsel in each relevant jurisdiction is advisable to ensure compliance with both the directive and any additional national requirements.

We advise fund managers, sponsors and institutional investors on the structuring, establishment and ongoing regulatory compliance of alternative investment funds across multiple jurisdictions. Our investment funds team works closely with EU-based and non-EU managers, navigating AIFMD authorisation, sub-threshold registration, NPPR notifications and cross-border marketing arrangements.

Whether you are assessing whether your fund falls within scope, structuring to take advantage of available exemptions or preparing for the impact of AIFMD II, our team can provide tailored guidance at every stage.

To discuss how these developments affect your fund or management arrangements, please contact our investment funds team.