The European Union’s Alternative Investment Fund Managers Directive (AIFMD) caps hedge funds to €100 million in assets under management (or €500 for unleveraged closed ended funds) before being subjected to elaborate European regulations, which include requirements for an in-scope AIFMD Manager and Custodian, amongst other heavy regulatory measures.
As a result of Brexit, in March 2022 Gibraltar introduced new legislation that established a dual regime for Experienced Investor Funds (EIFs). Under the new regime, Gibraltar EIFs may continue to operate under the existing AIFMD compliant framework (which provides direct access to the UK markets) or alternatively ‘opt out’ of AIFMD and associated requirements.
Fund managers with Gibraltar EIFs under their management may therefore now opt out of complying with AIFMD requirements for their funds.
As part of the dual regime, Gibraltar regulated funds may choose whether they wish to operate under the EU’s AIFMD framework or alternatively within an updated Gibraltar regulatory funds regime which is less prescriptive than EU regulations, but at the same time complies with international standards and is in line with other leading international fund jurisdictions outside the EU.
Under the dual regime, forward-looking Gibraltar funds marketing globally, including emerging funds and funds investing in digital assets, can thrive in a better fit-for-purpose regulatory environment. This presents a strong competitive advantage for Gibraltar and an ideal ecosystem for a wide range of investment funds that are better positioned to grow outside of AIFMD. With the dual funds regime, Gibraltar now truly stands apart as a jurisdiction of choice for investments funds.
The dual regime was made possible by the joint work of Government, regulator and the Gibraltar Funds & Investments Association, with Finsbury serving as an active participator in this collaboration.