The resolutions introduce a concept of ‘pre-marketing’ for alternative investment funds (AIFs) sold in Europe .
The pre-marketing AIF concept means that fund managers can provide information to professional investors about an idea or strategy in respect of an AIF yet to be established or an established AIF but not marketed under the Alternative Investment Fund Managers Directive, but no distribution of subscription forms or similar documents is allowed, and investors will be unable to acquire shares in the fund.
Fund managers will have to tell their regulators about their pre-marketing activities within two weeks of starting the process.
Investment funds expert Aongus McCarthy of Pinsent Masons, the law firm behind Out-Law.com, said fund managers would be enthusiastic about the changes.
“The AIF ‘pre-marketing’ concept will be a welcome development for EU AIF managers (AIFMs) looking to test the waters in a EU member states with professional investors under a harmonised framework, as opposed to dealing with different national legal systems where conditions applicable to the treatment of pre-marketing activities vary significantly or there is no pre-marketing concept available,” McCarthy said.
The revisions will also see a number of other changes to funds regulations, including clarifying the requirements for marketing communications for AIFs and UCITS funds. National regulators will have to publish summaries of local laws on the marketing of investment funds in “a language customary in the sphere of international finance”, while the European Securities and Markets Authority (ESMA) will have to issue guidance on the application of requirements for marketing communications.
ESMA will also have to set up a notification portal for national regulators to upload all documents regarding the cross-border distribution of UCITS and AIFs.
Meanwhile fund managers will no longer have to have a presence in another EU member state or appoint a third party as a local representative, cutting the costs and administrative effort of selling their funds outside their home jurisdiction.
“Other harmonising proposals, such as in relation to the ex-ante verification of marketing communications, co-ordinated procedures and conditions for the discontinuation of marketing and the removal of the restriction on EU regulators requiring a physical local presence in the member states where UCITS are marketed, will be welcomed by asset managers,” said McCarthy.
McCarthy said managers marketing UCITS products would need to make sure they were aligned with the new regulations as they introduced more stringent requirements to that sector.
“Increased obligations in relation to notification of updated information to EU host regulators related to UCITS products will need to be borne in mind by UCITS asset managers once effective, as the new rules and timelines are aligned to the stricter requirements under the AIFM directive and will require forward planning,” McCarthy said.