Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 45: To ask the Minister for Finance the meaning of the terms "Head Office" and "Registered Office" in Article 5 of the European Parliament text for the European Commission proposal for the Alternative Investment Fund Manager Directive; if he will confirm that this part of the directive means that an AIFM with a legal personality in an EU jurisdiction can be forced to register with the supervisory authority of the Member State in which the legal personality is established; if he will outline whether this provision requires that the US headquarters of an alternative investment fund with a presence in Europe will have to move to the EU in order to comply with the directive; his views on whether the terms "Head Office" and "Registered Office" should be defined in such a way in the legislation that would not force non EU funds operating in the EU market to have their headquarters in the EU; his further views on whether the European Parliament text in respect of Article 5 is a protectionist measure and should be amended or removed; and if he will make a statement on the matter. [24519/10]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 46: To ask the Minister for Finance his views on Jean Paul Gauzes 66th amendment to Article 17 of the European Commission proposal for the Alternative Investment Fund Manager Directive which will require an Alternative Investment Fund to use a single depository; his views on whether investors may be put at risk by forcing Alternative Investment Funds to put their money into one bank; and if he will make a statement on the matter. [24523/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 45 and 46 together.

The substantial issue raised by the Deputy relates to the extent to which non-EU managers of alternative investment funds are required to register with an EU authority. Article 5 only sets down the rules for EU managers of alternative funds. However, Article 35 and a proposed new Article 39a set down the parameters for non-EU managers. I agree with the Deputy that there could be greater clarity on this issue. While it is not for me to interpret the European Parliament's intentions with regard to their proposed amendments, I think it is reasonable to assume that the proposal would require non-EU firms, which propose to sell funds within the Community, to register with the new European Securities and Markets Authority (ESMA). The EP text would also require agreements between the supervisor of the non-EU fund and the competent authority of the relevant Member State and also between the supervisor of the AIFM and ESMA. This is an issue which will be the subject of further discussions between the Council, Parliament and Commission.

As I have mentioned in previous PQ replies to the Deputy and others, the third country provisions of the proposed Directive were the most contentious issues of the negotiations and I have also stated that the agreement on a general approach which was reached recently at Ecofin, represents a balanced, workable approach. I still believe that the Council's text on Article 35 represents the best solution on this difficult issue.

Although the proposed treatment of depositaries has been an issue of particular concern for Ireland, I would be less concerned about the proposed requirement for an alternative fund to appoint a single depositary. This requirement is already imposed by the Financial Regulator who requires that a single entity is responsible for the safe-keeping of Irish fund assets. However, there is a critical difference insofar as the Financial Regulator permits the depositary to delegate some of its functions to others who provide custodial or safe-keeping services, subject to no dilution of the liability of the depositary.

The draft measures for depositaries remain the biggest concern for Ireland. Depositaries play a critical role in protecting those who invest in funds. It is of course imperative that depositaries should be subject to rigorous regulatory standards to ensure that they fulfil their safe-keeping and custodial obligations. However, the current proposals would impose stricter requirements on depositaries for hedge funds and other alternative funds, which can only be sold to institutional or professional investors, than currently exist in relation to UCITS, which can be sold to retail investors. In my view, this makes little sense and I will continue to raise this point with our European partners in order to seek a balanced solution.