The alternative investment funds industry is currently facing significant regulatory and legal challenges and, particularly for fund promoters seeking access to European investors, 2009 may well prove to be a watershed. Traditionally, the European (and U.S.) alternative investment funds industry has embraced the offshore jurisdictions as providers of tax-efficient and regulatory “light-touch” domiciles for fund and management structures. The Cayman Islands, in particular, has become the “path of least resistance.”  However, alternative investment funds have recently become subject to hitherto-unseen levels of scrutiny from regulators, politicians, tax authorities and investors, even though much of the resulting criticism has been unwarranted (other than in terms of underperformance). Few participants in the financial services industry seriously believe that the global financial crisis was caused by hedge funds, and this scepticism has been endorsed by more than one regulator. Nevertheless, certain axes are now being held firmly to the grindstone. In this political climate, the future of the “unregulated” offshore jurisdictions is far from certain, and their role as significant financial centers may be substantially altered by forthcoming legislation and regulation, as well as investor demand.  In a guest article, Simon Thomas and Samuel T. Brooks, Partner and Associate, respectively, at Akin Gump Strauss Hauer & Feld LLP, provide a detailed examination of how hedge fund structures are evolving in response to regulatory change, in particular in the European Union.  In particular, Thomas and Brooks examine: the implications for structuring and operations of the Alternative Investment Fund Managers Directive; considerations in connection with an Undertaking for Collective Investment in Transferable Securities (UCITS) structure; incentives for organizing single-strategy hedge funds in various EU jurisdictions; and listings and permanent capital vehicles.