The final rules were broadly consistent with the drafts published last November. The European PE community is entitled to feel some degree of relief that the relatively generous exemptions applicable to non-US houses survived the consultation period. Furthermore, the deadline for registration has been deferred from July 2011 to the end of March 2012.
What this means is those European firms with substantial capital committed from US investors, but critically no asset management activities in the US, will be designated “Exempt Reporting Advisors” under the “Private Fund Advisor” exemption. While this status will involve some fairly limited SEC reporting, these firms will not have to establish SEC compliance programmes. However, those European firms with significant US investors and a place of business in the US may still be caught and those firms should seek legal advice on whether their US office is engaged in “management” activities.
This is a very different scenario to that facing mid market and leveraged buyout houses in the US, virtually all of whom will have to register with the SEC and develop a full compliance programme. This lack of symmetry between US and European obligations is likely to contrast with the EU’s Alternative Investment Fund Managers Directive (AIMFD) programme, which does not include such relief to non European funds with significant EU capital.