Hedge fund and private equity fund managers could face new restrictions on pay under proposals set to be unveiled this week as European Union countries work on amending legislation that would regulate the alternative investment fund industry across the bloc for the first time.

Swedish diplomats confirmed last night they would attach an annex dealing with remuneration of hedge fund and private equity fund managers when the latest summary of suggested amendments to the draft legislation was made public, possibly as early as Thursday. Sweden holds the rotating EU presidency.