EUROPE - The Economic and Monetary Affairs Committee (ECON) has postponed its vote on the Alternative Investment Fund Managers (AIFM) Directive for one week to allow time to consider legal opinions.
The ECON committee was meant to meet today to vote on the first reading and adoption of the directive, which has been the subject of continued discussions on compromise amendments. (See earlier IPE article: MEPs press on with AIFM despite EU postponement)
However, at today's meeting the committee stated the vote had been postponed so that "more consideration can be given to the opinion of the Legal Affairs Committee. The vote is now scheduled for next Monday, 17 May 2010."
The postponement comes as the UK's Confederation of British Industry (CBI) is the latest organisation to call on MEPs to vote against parts of the AIFM Directive to prevent an uneven playing field for private equity firms.
The CBI has warned the directive could harm companies already struggling in the economic downturn as it claimed the proposals would force companies owned by private equity investors to disclose commercially sensitive information, including research and development plans, which would discourage innovation.
It also argued the rules would "increase costs and bureaucracy, and prevent a level playing field because other privately-owned companies would not be affected". In particular it has raised concerns about the impacts of the proposed rule on small and medium-sized companies, because under the draft legislation the Directive would affect companies with as few as 50 staff.
John Cridland, CBI deputy director-general, said: "The proposed legislation would damage companies owned by private equity firms, and discourage investment. The additional bureaucracy and forced disclosure of commercially-sensitive information would be a real problem, and impede companies that should be encouraged in order to foster economic recovery."
The organisation also argued that private equity offers firms an important source of capital when bank lending is relatively constrained, and it highlighted a letter sent to MEPs from 700 European countries highlighting potential dangers of the AIFM legislation.
The comments from the CBI follow a similar statement from Uli Fricke, chairwoman elect of the European Private Equity & Venture Capital Association (EVCA) at the European Commission's SME Finance Forum last week.
She warned: "Rushed initiatives such as the AIFM Directive will crush venture and other sources of innovation capital, putting Europe's brightest young companies at a major disadvantage. Everyone calls the AIFMD a ‘Hedge Fund directive', but unless it is changed now, it will be remembered as the ‘SME Directive'."
Meanwhile Javer Echarri, secretary general of the EVCA, added: "The delay will give MEPs time to consider what they really want to achieve from this Directive. A fund management directive drafted to regulate financial trading strategies is no place to address company law."
In addition Echarri suggested there is "fresh hope of constructive debate on the 'third country' issue, governing investment in funds in and out of Europe, beyond the EU's boundaries".
"It's looking more likely that a solution can be found that balances cross-border transparency and cooperation with the economic realities that investors need choice and our fragile economy needs capital," added Echarri.
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