EUROPE - The European Parliament's Legal Affairs Committee, otherwise known as JURI, has voted unanimously in favour of proposed amendments to the EU's controversial Alternative Investment Fund Managers (AIFM) Directive.
All 23 members of the JURI committee voted in favour of amendments to strengthen the European Commission's proposed legislation to regulate alternative investment funds, such as hedge fund and private equity managers.
The amendments had been presented earlier by Austrian social democrat MEP Evelyn Regner, the JURI committee's rapporteur (see earlier IPE story: JURI to vote on AIFM amendments), who complained during the vote that hedge funds were continuing to operate "blithely" as thought the financial crisis has not taken place.
She said the legislative package proposed by the European Commission was too weak and advocated the creation of a "tight corset to control the activities of fund managers". She said that the possibility of passing on liability positions encourages "the construction of opaque investment carousels."
The proposal included a number of amendments from Sharon Bowles, liberal democrat MEP for the South East of England, shadow reporter on the Juri Committee and chair of the EU's Economic and Monetary Affairs Committee (ECON).
The ECON Committee was due to discuss the AIFM Directive in relation to pensions and insurance last week, but its meeting has been postponed until May 11, due to recent air travel disruption caused by volcanic ash from Iceland.
Business groups MEDEF and BusinessEurope have written to committee members of both JURI and ECON to vote against the amendments, which they believe will harm European small and medium enterprises (SMEs).
"They would impose significant burdens on companies, including a large number of small innovative companies given the low threshold," wrote Phillipe de Buck of BusinessEurope.
Javier Ecchari, secretary general of the European Private Equity & Venture Capital Association (ECVA), complained that JURI members considered a company with more than 50 employees not to be an SME.
"They would therefore oblige such companies to disclose board-level, commercially-sensitive information on activities and financial affairs without any reference to a level playing field or company law," he said.
Ecchari added: "JURI's failure to exempt private equity and venture capital funds from requirements designed for hedge fund trading risks would, if adopted, have a ruinous effect on the financing market for European innovation and SMEs. A venture capital fund investing in early-stage businesses would face major outlay for entirely useless advisory services such as independent evaluation and depositary."