How AIFMD applies specifically to PE & VC funds

How AIFMD applies specifically to PE & VC funds

What are the “anti-asset stripping” rules?

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How AIFMD applies specifically to PE & VC funds

What are the “anti-asset stripping” rules?

The directive provides that where an AIF acquires control of an EU-based listed or unlisted company - also known as “portfolio companies” - for 24 months after the acquisition the fund manager must not engage in or must use his best efforts to prevent:

  • Any reduction in capital 
  • Any share redemption 
  • Any distribution or share buyback where the net assets of the portfolio company fall below its subscribed capital and non-distributable reserves 
  • Any distribution to shareholders greater than available profits.

What are the disclosure and notification obligations?

Where an AIF - either on its own or jointly with another fund - has a shareholding in a non-listed EU company, the fund manager must inform the local regulator of reductions in the shareholding below certain thresholds - 10 percent, 20 percent, 30 percent, 50 percent and 75 percent.

Where an AIF acquires control - more than 50 percent of the voting rights - of a non-listed EU company, the fund manager must provide certain information to the portfolio company itself, to all other shareholders in the company and the relevant regulator - in Ireland’s case the Central Bank of Ireland.


 

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A guide for Private Equity & Venture Capital funds

 
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