• Questions Remain Regarding Impact of Brexit on Fund Managers
  • July 27, 2016
  • Law Firm: Eversheds Sutherland (US) LLP - Washington Office
  • Although the dust has somewhat settled following the historic “leave” vote on June 23, 2106, in which voters in the United Kingdom elected to leave the European Union, many questions remain. Of particular importance to fund managers based in the UK is the question of Brexit’s impact on the applicability of AIFMD. There are several possible scenarios that have been raised. The UK may elect for a full withdrawal, in which case, it will no longer be a “European fund manager” under the terms of AIFMD, thus eliminating the benefits of European “passporting.” Alternatively, under the “Norwegian” model, the UK could join the European Economic Area (EEA), which would permit a UK fund manager to continue as a European fund manager. Another option is to follow the Swiss approach through bilateral deals with the EU, which might cover some trade arrangements, but would not protect rights under the AIFMD. Until the leave process under Article 50 is initiated and terms negotiated, however, questions will remain. Recent reports suggest that the new Prime Minister, Theresa May, does not intend to trigger Article 50 this year. For the immediate future, it would appear, Brexit is not likely to have a material impact on private fund managers.