AIFMD Compliance for Dutch Asset Managers: A Practical Guide

The Alternative Investment Fund Managers Directive (2011/61/EU) — AIFMD — regulates managers of alternative investment funds across the EU. In the Netherlands, it is implemented through the Wft and supervised by the AFM (conduct) and DNB (prudential). If you manage or market any investment fund that is not a UCITS, you fall within scope.

This article is for compliance officers, COOs, and board members at Dutch AIFMs who need to understand what a robust AIFMD compliance framework looks like in practice — and what is changing under AIFMD II (Directive 2024/927/EU), which member states must transpose by 16 April 2026.

Who falls within scope?

AIFMD applies to managers of alternative investment funds (AIFs) — a deliberately broad category that captures any collective investment undertaking that raises capital from investors to invest it in accordance with a defined investment policy, and that is not authorised as a UCITS. This includes private equity funds, hedge funds, real estate funds, infrastructure funds, fund-of-funds, and many special purpose vehicles.

There are two thresholds for the regulatory regime:

• Full-scope AIFM — manages AIFs with total assets above €100 million (leveraged) or €500 million (unleveraged, no redemption rights for 5 years). Must hold an AFM licence and comply with all AIFMD requirements.
• Sub-threshold AIFM (registratie-regime) — below those thresholds. Subject to registration with the AFM and a lighter regulatory regime, but still with reporting obligations and conduct requirements.

The threshold calculation is not as straightforward as it appears. You must include all AIFs managed (including those domiciled outside the Netherlands), and the calculation method for leverage follows the commitment approach or the gross method, depending on the fund's strategy. Getting this wrong means either operating without authorisation or over-complying unnecessarily.

1. Authorisation and ongoing requirements

A full-scope AIFM in the Netherlands needs authorisation from the AFM under Article 2:65 Wft. The application process requires demonstrating:

• Initial capital and own funds — minimum initial capital of €125,000, plus additional own funds equal to 0.02% of AUM above €250 million (capped at €10 million). Under AIFMD II, the minimum will increase and the surcharge calculation changes for loan-originating funds.
• Professional indemnity insurance or additional own funds — to cover professional liability risks, as specified in Commission Delegated Regulation 231/2013.
• Fitness and propriety — all directors and persons who effectively conduct business must pass AFM/DNB assessment. The four-eyes principle applies.
• Programme of operations — describing the fund strategies, organisational structure, internal controls, valuation procedures, delegation arrangements, and risk management framework.
• Substance requirements — the AFM assesses whether the AIFM has genuine decision-making in the Netherlands. Post-Brexit, this scrutiny intensified significantly for UK-linked structures.

Authorisation is not a one-off event. The AIFM must notify the AFM of material changes to its programme of operations, maintain adequate own funds on an ongoing basis, and comply with all organisational and conduct requirements continuously.

2. Organisational requirements

AIFMD imposes specific organisational requirements that go beyond general good governance. The key ones for Dutch AIFMs are:

Risk management

The risk management function must be functionally and hierarchically separated from the portfolio management function. This separation requirement is strictly interpreted by the AFM — the same person cannot make investment decisions and independently assess the risks of those decisions. For smaller AIFMs, this creates practical challenges in staffing.

The risk management system must cover at least: market risk, credit risk, liquidity risk, counterparty risk, and operational risk. For each AIF, the AIFM must set and implement quantitative and qualitative risk limits, and monitor adherence on an ongoing basis.

Liquidity management

For each AIF that is not an unleveraged closed-ended fund, the AIFM must implement an appropriate liquidity management system with procedures for monitoring liquidity risk and ensuring alignment between the fund's investment strategy, liquidity profile, and redemption policy. Stress testing is mandatory — at least annually, and more frequently for funds with complex liquidity profiles.

AIFMD II introduces significant new requirements here. AIFMs must select at least one liquidity management tool (LMT) from a prescribed list for each open-ended AIF, and activate it when necessary. The available tools include redemption gates, notice periods, swing pricing, anti-dilution levies, and side pockets. The choice must be disclosed in the fund documentation.

Valuation

The AIFM must establish appropriate and consistent valuation procedures for each AIF. NAV calculation must occur at least annually, and more frequently for open-ended funds (typically daily or monthly depending on redemption frequency).

Valuation can be performed internally — by the AIFM itself — or by an external valuer. If internal, the valuation function must be independent of portfolio management and the remuneration policy must not create conflicts. If external, the valuer must be registered and be subject to mandatory professional registration or legal rules providing sufficient independence guarantees.

Delegation

AIFMD permits delegation of functions to third parties, but with strict conditions. The AIFM must not become a letter-box entity — it must retain sufficient expertise and resources to supervise delegated activities effectively and to revoke the delegation at any time.

Specific requirements include: the delegate must have sufficient expertise and resources; the AIFM must be able to demonstrate objective reasons for the delegation; the AIFM must supervise the delegate effectively; and the delegation must not prevent effective supervision by the AFM or DNB.

The AFM pays particular attention to delegation arrangements where portfolio management is delegated to entities outside the EU. Post-Brexit, substance assessments became more rigorous for structures where Dutch-licenced AIFMs delegate investment management to London.

3. Depositary requirements

Every AIF managed by an authorised AIFM must appoint a single depositary. The depositary must be a credit institution, investment firm with minimum capital requirements, or another eligible entity. For AIFs marketed to retail investors in the Netherlands, the depositary must be a credit institution established in the Netherlands.

The depositary's duties include:

• Safekeeping of assets — financial instruments held in custody must be kept in segregated accounts. Other assets must be verified as owned by the AIF. The depositary is strictly liable for loss of financial instruments in custody.
• Cash flow monitoring — monitoring all cash flows of the AIF and ensuring that investor payments, subscription and redemption proceeds, and fund income are handled correctly.
• Oversight duties — verifying that NAV calculations, share price calculations, and compliance with investment restrictions are performed correctly.

The depositary liability regime under AIFMD is strict — the depositary is liable for loss of financial instruments held in custody unless it can prove the loss resulted from an external event beyond its reasonable control. This applies even when custody is delegated to a sub-custodian, which creates significant commercial tension in delegation chains.

4. Transparency and reporting

AIFMD imposes layered transparency requirements: to investors, to regulators, and to the public.

Investor disclosure

Before investment, investors must receive information about the fund's strategy, risks, fees, liquidity terms, valuation procedures, and leverage policy. This is typically provided through the offering memorandum or prospectus. Material changes must be disclosed before they take effect.

Ongoing periodic disclosure to investors includes: the percentage of assets that are illiquid, the current risk profile, any new arrangements for managing fund liquidity, and the total amount of leverage employed by the fund.

Annex IV reporting to regulators

This is the most operationally intensive transparency requirement. AIFMs must report to the AFM and DNB using the Annex IV reporting template, which covers:

• Principal exposures and concentrations — the fund's largest exposures by asset type, geography, and counterparty
• Instruments traded and individual exposures — broken down by asset class, with gross and net values
• Risk profile — market risk, credit risk, counterparty risk, liquidity risk measures
• Leverage — calculated using both the gross method and the commitment method
• Stress test results — market risk, counterparty risk, liquidity risk stress scenarios

Reporting frequency depends on AUM: quarterly for large AIFMs, semi-annually for mid-sized, annually for smaller ones. The data quality expectations have increased over time — DNB cross-checks submissions and will query inconsistencies.

AIFMD II expands reporting requirements further. The revised Annex IV template includes additional data points on delegation arrangements, fees borne by investors, and liquidity management tool activation. AIFMs should budget for systems and process changes to accommodate the expanded template.

Annual report

For each AIF, an annual report must be made available to investors within 6 months of the financial year-end. The report must include audited financial statements, a report on the fund's activities, material changes during the year, and remuneration disclosures for the AIFM's staff.

5. Remuneration

AIFMD requires AIFMs to implement a remuneration policy that promotes sound risk management and does not encourage risk-taking inconsistent with the risk profiles of the AIFs they manage. The policy applies to identified staff — those whose professional activities have a material impact on the risk profiles of the AIFM or the AIFs.

Key requirements include:

• Variable remuneration deferral — at least 40% of variable remuneration must be deferred over 3-5 years. For particularly high variable amounts, at least 60% must be deferred.
• Instrument alignment — at least 50% of variable remuneration must be paid in units of the relevant AIF (or equivalent non-cash instruments aligned with the fund's interests).
• Performance adjustment — deferred amounts must be subject to malus (reduction) and clawback provisions.
• Proportionality — smaller, simpler AIFMs may disapply certain rules on a proportionate basis, but must justify this in their remuneration policy.

The AFM and DNB have jointly published guidance on proportionality in AIFMD remuneration, but the principle-based nature of the rules means that firms need to make — and document — their own proportionality assessments.

6. Marketing and passporting

One of AIFMD's primary benefits is the marketing passport — once authorised, a Dutch AIFM can market AIFs to professional investors across the EEA through a notification procedure, without needing separate authorisation in each member state.

The marketing passport applies only to marketing to professional investors. Marketing to retail investors remains subject to national regimes and varies significantly across member states. In the Netherlands, additional investor protection requirements apply for retail-accessible AIFs.

AIFMD II introduces changes to the pre-marketing regime and to the conditions for reverse solicitation. The directive also creates a new framework for loan-originating AIFs, which were previously governed by an inconsistent patchwork of national rules. Dutch AIFMs that originate loans through their funds should assess the impact of these new requirements early.

7. What AIFMD II changes — and when to act

Directive 2024/927/EU (AIFMD II) was published in the Official Journal on 26 March 2024, with a transposition deadline of 16 April 2026. Key changes for Dutch AIFMs include:

• Substance and delegation — enhanced requirements for human and technical resources. AIFMs must have at least two natural persons domiciled in the EU who are employed full-time (or who conduct business effectively) to manage the AIFM.
• Liquidity management tools — mandatory selection and disclosure of at least one LMT for open-ended AIFs, as discussed above.
• Loan origination — dedicated framework with leverage caps, retention requirements, and concentration limits.
• Reporting expansion — revised Annex IV with additional data points on delegation, costs, and liquidity.
• Depositary — new provisions for cross-border depositary services (limited initially to small and non-complex AIFs) and clarified depositary liability in insolvency situations.
• Investor notification — stricter requirements for notification of material changes, including the fund's name, investment strategy, and liquidity terms.

The practical timeline for compliance preparation depends on the AIFM's profile. Loan-originating funds and open-ended funds with complex liquidity need to start immediately — the fund documentation changes alone require legal review, investor communication, and systems updates. AIFMs with simpler, closed-ended structures have more time but should still map the reporting changes and assess delegation arrangements.

Common compliance gaps

Based on AIFMD compliance reviews at Dutch AIFMs, the most frequent gaps are:

1. Risk management separation is nominal. The risk management function exists on paper, but in practice the same individuals drive both investment and risk decisions. The AFM has flagged this repeatedly — the separation requirement is not a proportionality waiver away.
2. Delegation oversight is passive. The AIFM delegates portfolio management and then treats the delegate's reporting as sufficient oversight. AIFMD requires active supervision — challenge, independent monitoring, and the demonstrated ability to step in or revoke.
3. Annex IV data quality is poor. Reports are submitted on time but with inconsistent leverage calculations, missing exposure data, or stale stress test results. DNB cross-references and will follow up. Getting the data pipeline right is cheaper than remediation after a supervisory letter.
4. Liquidity stress tests are formulaic. The same three scenarios year after year, disconnected from the fund's actual redemption patterns and market conditions. The AFM expects scenario design to evolve with the market and the fund's investor base.
5. Remuneration proportionality is asserted, not justified. The remuneration policy invokes proportionality but doesn't document the specific analysis. Which rules are disapplied, why, and what safeguards replace them — that's what the AFM wants to see.

Getting from compliant to resilient

Compliance with AIFMD is table stakes — it gets you the licence and keeps the regulators at bay. Resilience goes further. It means the compliance framework works under stress, adapts to change, and supports the business rather than just constraining it.

The AIFMs that achieve this share a few characteristics. They invest in data infrastructure that makes Annex IV reporting a process, not a project. They build risk management into the investment process rather than bolting it on afterward. They treat regulatory change (including AIFMD II) as a strategic input, not just a compliance burden. And they maintain genuine substance in the Netherlands — not as a regulatory obligation, but because that's where the decision-making actually happens.