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News & Insights

Annex IV obligations continue to burden funds

09 November 2022
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Asset managers selling funds into the EU are subject to a plethora of requirements, one being the obligation to file an Annex IV report. This is a detailed regulatory report introduced under the AIFMD which compels asset management companies to provide comprehensive information to the relevant regulatory bodies covering their underlying investments, investors, risk management processes, and leverage.

Managing Annex IV deadlines can be challenging, especially as investment firms are dealing with increased operational requirements throughout their businesses. Difficult macro conditions (equity market volatility, rising interest rates & inflation fears), rising operational costs and an ever increasing volume of regulations can often mean Annex IV filings get lost in the noise and fall down the list of tasks for asset managers. 

Since Brexit, the situation has become more complex. UK asset managers are now treated as third country managers, meaning they can only utilise national private placement regimes (NPPR) instead of being able to sell freely across all 27 member states. Under NPPR, UK asset managers are unable to distribute their funds on a pan-EU basis, but can only sell them into the select markets, where they are registered. Compounding matters further is that the rules in each of these markets might not necessarily be aligned, leading to arbitrage.

More recently, the EU has clamped down on what it considers to be pre-marketing, which means asset managers need to be  careful about how they engage with EU investors during the preliminary stages of the relationship. Again, the rules across member states are not uniform when it comes to pre-marketing, creating added complexity.

For funds who are considering expanding to selling funds in the EU, or for those that already are, these requirements can often be better managed by a third party outsourced specialist. This route offers cost effective solutions to support internal compliance teams with fixed reporting deadlines, access to subject matter experts, and scalability as funds grow. Engaging with qualified consultants who have a deep-rooted expertise of EU regulations, and the bespoke Annex IV reporting requirements, will be critical if firms are to successfully distribute into the EU, without falling foul of the rules.

For more information, please contact

Alexander Prentice
Commercial Director – Governance, Risk & Compliance
t. +44 (0) 20 3404 1496
m. +44 (0) 7595 332 010