There has, of course, been an abundance of articles on the AIFM Directive recently. The quality of reporting is variable, with some headlines suggesting that it’s all over (see the last Regulatory Roundup for an accurate assessment of the situation).
It would therefore be worth providing a brief explanation of the process that leads to ‘Europe’ deciding what is best for us.
There are three key players in the process:
- the European Commission is the executive body that prepares a proposal
- the European Parliament (composed of elected MEPs) suggests amendments and can accept or reject the proposal
- the European Council (composed of government ministers) which can accept or reject the European Parliament’s amendments – and may put forward their own
Approval by the European Parliament and the European Council is needed before a proposal becomes law. Member states then have to pass legislation to enact the law within their own state.
In the case of the AIFMD, the Commission sent the proposed Directive to both the Parliament and the Council at the same time. Under the ‘co-decision procedure’ the committee representing the Council (Ecofin) and the committee appointed by the European Parliament (ECON) must work together to reach an agreement. The meetings on the 17th and 18th of May, which generated many press articles, were simply Ecofin and ECON agreeing their respective positions.
The ‘first reading’ in the European Parliament is scheduled for July, although the timetable could be pushed back. It is the first time the AIFMD will be put to the vote by the full Parliament. European parliamentary procedure allows for up to three readings.