1. On-shore regulation after G-20 September 09 AIFM ante portas? Anja Breilmann

2. On-shore regulation after G-20 2 Overview of the AIFM Directive Regulates managers, not funds themselves Requires managers to be come authorised if they Manage EU funds, or Manage offshore funds which are purchased by EU investors Prohibits EU offering or purchase of funds managed by non- regulated managers Creates a single EU passport for the offering of AIFM managed funds to professional investors Imposes reporting and disclosure requirements and leverage limits on AIFM Requires funds managed by AIFM to appoint an EU depositary (and valuer) and imposes a high duty of care on that depositary

3. On-shore regulation after G-20 3 Significant Issues EU based managers of any fund will be subject to regulation unless Fund under 100m EUR in size Fund is an SWF Only authorised managers will be permitted to sell AIF units Leverage restriction of 200% of asset value – regulatory permission required to go beyond this Provisions for mutual recognition of non-EU AIFMs subject to “equivalent” regulation Very limited grandfathering – existing EU managers must obtain authorisation within one year of transposition date

4. On-shore regulation after G-20 4 Specific Fund Types Private equity funds Required to produce quasi-listing material on each company in which they have an interest over 30%, continuing for two years following delisting Leveraged funds Funds which are over 100% leverage are “highly leveraged” Must provide detailed information to regulators as to leverage position and funding sources Regulators may impose limits on leverage levels

5. Offshore issues – three-year period No non-EU established AIF may be marketed in the EU (even if its manager is an AIFM) No AIFM may delegate to an offshore service provider No AIFM may use an offshore valuer No AIFM may use an offshore depository On-shore regulation after G-20 5

6. Offshore issues – Post-three year period No non-EU AIF may be marketed in any EU state unless it is established in a jurisdiction with an information sharing agreement with that EU state Delegation to offshore service provider permitted only if there is a co-operation agreement between the supervisor of the AIFM and the supervisor of the delegate Use of offshore valuers permitted only if subject to “equivalent” standards Use of offshore depositories permitted only if regime recognised as “equivalent” No AIFM established offshore may be authorised under the directive unless it is subject to “equivalent” regulation On-shore regulation after G-20 6

7. Timetable 2 Apr 2009 G20 agreed that all systematically important financial institutions, markets and instruments should be subject to an "appropriate degree of regulation and oversight" 29 Apr 2009 European Commission published proposal for AIFM Directive, text was sent to the European Parliament and Council for adoption under the co-decision procedure 2 Sep 2009 Jean-Paul Gauzès MEP (EPP, France) chosen as rapporteur in the European Parliament's Economic and Monetary Affairs Committee (ECON). May 2010 Second reading of AIFM Directive or 'trialogue' meetings between the Parliament, Council and European Commission to allow adoption in a single reading July 2010 European Parliament plenary session (Strasbourg) - possible completion of legislative process assuming agreement has been reached with Council 7 On-shore regulation after G-20

8. 8 Anja Breilmann Mainzer Landstraße 46 60325 Frankfurt am Main Germany Tel: +49 69 71 99 3117 Fax: +49 69 71 99 4000 Email: anja.breilmann@cliffordchance.com Anja Breilmann is a is a senior associate in the banking and capital markets practice of Clifford Chance Frankfurt. She advises domestic and foreign credit institutions, investment firms and investment companies with respect to various questions of regulatory law. She focuses on asset management activities (on a fund basis and managed account basis), client-facing activities (such as distribution and ancillary services) as well as on insurance supervision and intermediation. Recent experience includes: Advising in relation to German financial market stability measures Advising in relation to potential changes due to the draft UCITS IV Directive Advising in relation to compliance and rules of conduct implementation projects Advising on requirements for banking business and financial service providers including application procedures with the German regulator Anja Breilmann, Frankfurt

9. Clifford Chance, PO Box 11 14 42, 60049 Frankfurt am Main, Mainzer Landstraße 46, 60325 Frankfurt am Main © Clifford Chance 2009 Clifford Chance Partnerschaftsgesellschaft von Rechtsanwälten, Wirtschaftsprüfern, Steuerberatern und Solicitors · Sitz: Frankfurt am Main · AG Frankfurt am Main PR 1000 GERMANY-1033652-v1 www.cliffordchance.com On-shore regulation after G-20