This guide to the new marketing and pre-marketing rules in the EU (“Guide”) aims to provide practical support for UCITS ManCos and AIFMs updating their policies and processes to comply with the provisions of the Directive1 and the Regulation.2 The provisions of both legislative texts that are discussed in this Guide will enter into application in the EU on 2 August 2021. However, some provisions of the legislation, mainly in relation to the duties of national competent authorities ("NCAs") and the European Securities and Markets Authority, came into force on 1 August 2019.
The Guide covers the application of the rules of the main Member States in which AIMA members are operating or distributing their funds: Austria, Belgium, Cyprus, Czech Republic, Finland, France, Germany, Ireland, Italy, Liechtenstein, Luxembourg, Malta, the Netherlands, Norway, Poland, Spain and Sweden. Because of potential differences in transposition and implementation of the CBDF requirements, outcomes may be different in the Member States not covered in the Guide and care should be taken to check local requirements before proceeding.
Although the Guide has been produced, with the assistance of KPMG and Clifford Chance LLP, in order to be helpful to members considering how best to comply, it is not a substitute for legal advice based on the firm’s own facts and circumstances.
The Guide purposefully does not cover any of the ELTIF, EuVECA and EuSEF related requirements included in the CBDF.
Please contact Marie-Adelaide de Nicolay should you have any questions regarding the Guide.
1 Directive 2019/1160 of the European Parliament and of the Council of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU with regard to cross-border distribution of collective investment undertakings (the "Directive").
2 Regulation 2019/1156 of the European Parliament and of the Council of 20 June 2019 on facilitating cross-border distribution of collective investment undertakings and amending Regulations (EU) No 345/2013, (EU) No 346/2013 and (EU) No 1286/2014 (the "Regulation" and, together with the Directive, "CBDF").
Marie-Adelaide de Nicolay
Head of Brussels Office
Purpose of the new rules
The CBDF was introduced with the purpose of facilitating the cross-border distribution of UCITS and EU AIFs in the EU.
The Directive introduces two key concepts: (i) “pre-marketing”, and (ii) “de-notification” while also clarifying the powers and duties of NCAs with respect to the supervision of marketing activities of UCITS ManCos and AIFMs.
Certain requirements described in the Guide derive from the Directive and can, therefore, be subject to changes (i.e., gold-plating) depending on the national transposition of the rules by each Member State. The country-by-country variations on these general requirements are discussed in Section 7 of the Guide. Each Member State has until 2 August 2021 to complete the transposition of the Directive, although it is possible that some Member States will not have their own framework ready by this date.
The Regulation seeks to enhance the regulatory framework surrounding marketing communications and cross-border distribution of collective investment undertakings with the objectives of improving investor protection and developing the cross-border marketing of UCITS and EU AIFs in the EU. The Regulation is directly applicable (i.e., it does not need to be transposed in local law). However, it is possible that individual Member States may choose to gold-plate one or more requirements of the Regulation as part of their national implementation. Any known country-by-country variations on these requirements are discussed in Section 7 of the Guide.
Coverage of the Guide
The Guide covers matters UCITS ManCos and AIFMs may want to consider when seeking to come into compliance with:
- the regulatory and supervisory requirements governing pre-marketing activities;
- the regulatory and supervisory requirements governing de-notification of UCITS/EU AIFs;
- the requirements governing the establishment of “facilities” in replacement of requirements for local agents;
- the updated marketing communications limitations as per the Regulation and the related Guidelines.
Section 7 of the Guide is a country-by-country review of the specificities of certain Member States’ local implementation.
Determining which requirements apply
The definitions in the Directive and Regulation differ slightly, so determining which parts apply to which types of entities is a little complex and clarification is provided below.
The Directive does not separately define terms, so terms used in the Directive should be interpreted using the defined terms of the relevant underlying directive, i.e., the AIFMD or the UCITS Directive as applicable.
The majority of the provisions of the Directive apply to EU-AIFMs authorised in accordance with Article 6 of the AIFMD ("Authorised EU AIFMs") marketing EU AIFs in the EU (although not all Authorised EU AIFMs will necessarily be affected by all the Directive's requirements). A notable exception, however, is the facilities requirements which will also apply to non-EU AIFMs under certain conditions (as further described in Section 3 of the Guide). Consequently, any national application of the Directive’s requirements (other than the facilities requirements as noted above) to the marketing of EU AIFs or non-EU AIFs by non-EU AIFMs (as well as to the marketing of non-EU AIFs by Authorised EU AIFMs) would thus, at this stage, constitute gold-plating of the Directive’s requirements. Section 2.7 and Section 2.8 of the Guide contain further details in this respect.
Similar to non-EU AIFMs, sub-threshold AIFMs are currently out of scope of the Directive's requirements. As they are not "authorised" but only "registered" as AIFMs under the AIFMD, sub-threshold AIFMs cannot benefit from any of the rights, including the AIFMD marketing passport, available under the AIFMD, unless they choose to opt in so that the requirements under the AIFMD become applicable to them as well. Where sub-threshold AIFMs opt in, the AIFMD does, however, become applicable to them in its entirety as do the requirements of the Directive. Consequently, any national application of the Directive’s requirements to sub-threshold AIFMs which have not chosen to opt in under the AIFMD, would at this stage constitute gold-plating of the Directive’s requirements. Section 2.8 of the Guide contains further details in this respect.
The Directive also applies to UCITS ManCos and UCITS.
According to Articles 2 and 3 of the Regulation, the Regulation rules apply to UCITS ManCos and UCITS which have not designated an external UCITS ManCo, as well as to Authorised EU AIFMs. Non-EU AIFMs and sub-threshold AIFMs are not considered in scope of the Regulation, but they should still check whether the relevant home Member State NCA or host Member State NCA (as applicable) has aligned its own national requirements with the Regulation.At the start of the discussion of each set of CBDF requirements, the specific entities in scope, and the ones that are out of scope, have been identified. Where a Member State’s transposition of the Directive has extended the scope of the requirements, that has been noted. However, the Guide does not reflect information regarding the transposition of the Directive and implementation of the Regulation by all Member States. Even where the Guide includes information regarding a Member State’s transposed/implemented requirements, those may not have been final or may have otherwise changed since the publication of the Guide. The Guide is not meant to be an exhaustive compendium of the requirements and readers are urged to take their own advice.
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For further information, please contact Marie-Adelaide de Nicolay, Head of Brussels Office.