Brussels, 01/07/2009 (Agence Europe) - The European Private Equity and Venture Capital Association (EVCA) is of the opinion that a number of provisions of the proposed directive of the European Commission creating a framework for the activities of alternative investment funds may have a negative impact on the industry (EUROPE 9892). The shortcomings it perceives relate to the scope of application of the future directive, the distinction between the various strategies of the alternative investors, publicity obligations and provisions targeting funds established outside the European Union.
The proposed directive covers venture capital fund managers managing portfolios of over 500 million euros. EVCA takes the view that that this threshold should be raised to a billion euros. It also voiced concerns over the introduction of measures which may bring about distortions of competition. The direct rivals of capital investment companies, such as "companies controlled by sovereign funds, wealthy people or families, foundations, pension funds and insurance companies", should be subject to the same requirements of transparency as those laid down in the proposed directive, the organisation states in a document outlining its detailed position on this dossier. It is also of the view that the obligation for an alternative investment fund manager to hold minimum capital of 125,000 euros is ill-adapted to the commercial model of its members. As these are closed-ended investment funds, investors cannot ask for their investments to be paid back before the expiry of their commitments. EVCA went on to oppose the measure whereby it is members would be obliged to appoint an independent assessor and trustee from among the European credit establishments.
The proposed directive paves the way for the distribution within the EU of alternative funds residing in offshore financial centres, as long as the rules for other third countries are acknowledged to be equivalent to the future European legislation. According to EVCA, the criteria laid down to determine whether the legislation of third countries is equivalent to Community law create "a dangerous precedent", as they go beyond other provisions in this field already enshrined in European legislation. The organisation is therefore pleading for the directive to grant a "European passport to legitimate fund managers situated outside the EU, so that they can at least distribute the funds to professional investors", and to ensure that this happens at the same time as the entry into force of the rules targeting funds domiciled within the EU. (M.B./trans.fl)