In this practice note, Margaret Chamberlain, Jane Tuckley and Tim Lewis, partners in Travers Smith's Financial Services and Markets department, analyse and comment on the key aspects and potential impact of the Swedish Presidency of the Council of the European Union draft compromise proposal for the proposed Alternative Investment Fund Managers Directive (AIFM Directive), the original text of which was published by the European Commission in April 2009.

The legislative process on the AIFM Directive (as with any instrument of this kind) is deeply political and is now potentially fast-moving. The picture could change often and very quickly in the first half of 2010. It is more than unfortunate that a piece of legislation with such significant implications for the future of Europe as a global fund centre should become such a political football.

In this practice note, the authors outline the legislative process for the adoption of the AIFM Directive, and where we currently are in that process. They then describe the draft Council of the European Union compromise text published by the Swedish Presidency in December 2009, highlighting the key elements which have changed from the original proposal, and certain material differences between the compromise text and the position currently being taken by the European Parliament.

For an analysis and commentary on the texts agreed by the Council of the EU and the European Parliament, see Practice note, Fundamental change for the fund industry: the AIFM Directive positions agreed by Council and Parliament.