Define: AIFM

What AIFM Means in a Contract

AIFM stands for Alternative Investment Fund Manager, a defined term used in fund documentation to identify the entity that manages an alternative investment fund on behalf of investors. When a contract refers to an AIFM, it is pointing to a specific regulatory concept rooted in the AIFM Directive, which sets out authorization, conduct, and reporting requirements for managers of funds that fall outside the scope of retail investment fund regulation. The term is not a generic description of any fund manager, it carries a precise legal meaning tied to whether the manager and fund fall within the regulatory perimeter established by that Directive and its implementing rules.

In practical terms, a contract that uses the AIFM definition is signaling that the manager in question is subject to a defined compliance regime, most commonly Part 5 of the AIFM Regulations in the jurisdiction governing the contract, or an equivalent regime in another relevant EEA state. This distinction matters because obligations, representations, and warranties in the agreement often hinge on the AIFM status of a party, particularly in fund management agreements, investment management agreements, and side letters between managers and investors.

How AIFM Is Defined or Measured

The definition of AIFM in a contract is typically anchored to the AIFM Directive itself, rather than being independently drafted from scratch. This means the contractual definition incorporates, by reference, the scope and criteria set out in that Directive, including thresholds relating to assets under management, the type of fund being managed, and whether the manager is established within a relevant jurisdiction. Contracts will often state that the AIFM is subject to Part 5 of the AIFM Regulations, which is the domestic mechanism that gives effect to the Directive's requirements.

Because the underlying regulatory framework can evolve, well-drafted contracts include a reference to the AIFM Directive.