AI Summary of Article 12 General principles
The outlined regulatory framework mandates that Alternative Investment Fund Managers (AIFMs) act with integrity, diligence, and in the best interests of the funds and their investors. AIFMs are entrusted to manage resources effectively, avoid conflicts of interest, and comply with all applicable regulations to uphold market integrity.
Furthermore, a critical focus is placed on ensuring fair treatment of investors, with any preferential terms clearly disclosed. In anticipation of addressing investor costs, ESMA is tasked with reporting on AIFM charges by October 2025, aiming to enhance transparency and equitable practices within the industry.
Article 12 General principles
1. Member States shall ensure that, at all times, AIFMs:
(a) act honestly, with due skill, care and diligence and fairly in conducting their activities;
(b) act in the best interests of the AIFs or the investors of the AIFs they manage and the integrity of the market;
(c) have and employ effectively the resources and procedures that are necessary for the proper performance of their business activities;
(d) take all reasonable steps to avoid conflicts of interest and, when they cannot be avoided, to identify, manage and monitor and, where applicable, disclose, those conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their investors and to ensure that the AIFs they manage are fairly treated;
(e) comply with all regulatory requirements applicable to the conduct of their business activities so as to promote the best interests of the AIFs or the investors of the AIFs they manage and the integrity of the market;
(f) treat all AIF investors fairly.
No investor in an AIF shall obtain preferential treatment, unless such preferential treatment is disclosed in the relevant AIF's rules or instruments of incorporation.