EUROPE - The European Parliament and the Council of the EU have cleared the Alternative Investment Fund Managers (AIFM) directive at a closed meeting today.

The legislation - which has passed through the Brussels machinery for more than 18 months - now only needs a vote of approval at the Parliament's plenary session in Strasbourg on 11 November.

In a press release, the Parliament said three key problems had been resolved involving agreements on a passport for non-EU alternative investment fund managers, the combating of asset stripping and "tough rules" on depositary liability.

It said today's agreement would enable non-EU managers to market to investors across the EU without first having to seek permission from each member state and comply with different national laws.

This had been a bone of contention between Parliament and some countries, with the former pushing for a marketing passport to be granted to non-EU players.

Parliament said it had "allayed" these fears by proposing the provisions now in the text, whereby managers will obtain passports only if the non-EU country in which they are located meets minimum regulatory standards and has agreements in place with member states to allow information sharing.

Initially, only EU managers will be able to obtain a passport, with those based outside the EU having to market through the current national private placement regimes.

Furthermore, national private placement regimes will not end automatically with the extension of the passport system. Instead a period of co-existence will be in place that will only be terminated after the Commission adopts another delegated act to this effect.

On the subject of asset stripping, the Parliament said the agreement now included a number of provisions limiting the distribution of capital within the first years a company is taken over by a private equity investor.

It has also inserted a clause stating that if a depositary legally delegates its talks to others, it must provide a contract that allows the fund or the fund manager to claim damages against the entity that received the delegation. The aim, it said, is to ensure liability cannot be lost in a chain of deals.

Didier Reynders, Belgian head of the EU presidency, said few changes had been made to the AIFM directive - "except for some crossing of t's and dotting of i's" - since the Economic and Monetary Affairs Committee cleared it earlier this month.

Chantal Hughes, spokeswoman for commissioner Michel Barnier, told IPE the entire package was likely to be in force across the EU from the beginning of 2013.