Notion of ‘substantive direct or indirect holding’ in Article 3(2) of the AIFMD

[ESMA 34-32-352 AIFMD Q&A, Section 16, 1] Answer provided by the European Commission in accordance with Article 16b(5) of the ESMA Regulation [1] As mentioned in Article 3(2)(a) AIFMD, the notion of “substantive direct or indirect holding” refers to situations where the AIFM manages the portfolios of AIFs through its direct or indirect holding in a company. This covers, for instance, situations whereby the AIFM de facto has the power to impose decisions on the AIF portfolio composition, its asset allocation or its risk management. Article 3(2)(a) AIFMD does not set a quantitative threshold. The notion of “substantive direct or indirect holding” shall be assessed on a case-by-case basis by AIFMs supervisors. [1] The answers provided by the European Commission clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.