ESMA updates its Q&As on the application of AIFMD, EuSEF and EuVECA

On 10 March 2023, ESMA updated its Q&A documents on the application of

• the AIFMD, and
• the EuSEF and EuVECA Regulations

Q&As on the AIFMD

This was updated to include a new Section XVI, “Exemptions”.

The section contains one question on the interpretation of the notion of "substantive direct or indirect holding" in Article 3(2).

The answer clarifies that the notion refers to situations where an AIFM manages the portfolios of AIFs through its direct or indirect holding in a company. This covers for example, situations whereby the AIFM de facto has the power to impose decisions on the AIF portfolio composition, its asset allocation or its risk management.

The answer also notes that Article 3(2)(a) of the AIFMD doesn’t set a quantitative threshold and that the notion of “substantive direct or indirect holding” shall be assessed on a case-by-case basis by the AIFMs supervisors.

Q&As on the EuSEF and EuVECA Regulations

A new Q5 has been added to clarify whether EuVECAs and EuSEFs can invest in other qualifying venture capital funds/qualifying social entrepreneurship funds, even where these have not been registered as a EuVECA or EuSEF fund.

ESMA’s view is that they can – so long as the qualifying funds have not themselves invested more than 10% of their aggregate capital contributions and uncalled committed capital in other qualifying venture capital / social entrepreneurship funds (see Article 3(e)(iv) of the EuVECA Regulation and Article 3(e)(iii) of the EuSEF Regulation respectively).