Key takeaways

• ESMA has published new guidance related to the relocation of entities, activities and functions from the United Kingdom. While ESMA’s opinions are provided in light of Brexit, they will have an impact on EU fund managers and fund structures in general. 
• ESMA urges national regulators to adopt a strict approach as regards the following:
  • Tighter requirements for managers to obtain authorisation in a particular country.
  • Possible increase in the minimum number of senior managers in a country in order to obtain authorisation.
  • Choice of location must be driven by objective factors and should be the centre of planned activity.
  • Ability of managers to delegate to providers in third countries subject to strict conditions.
  • Advisory models to be scrutinized to see if fund managers conduct their own substantive analysis and judgment with respect to portfolio management decisions; otherwise, advisory models viewed as a delegation of investment management functions.
  • Rented AIFM models (white label) to be recognised, but scrutinized to ensure there are sufficient personnel and know-how to deal with possible increase in workload due to Brexit.