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AIFM - 17. Marketing of EU AIF by EU AIFM in the European Union

AIFM

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Marketing in the home Member State of the AIFM

Pursuant to Article 31(1), once an AIFM has been authorised that AIFM may market shares or units of any EU AIF that it manages to professional investors in its home Member State subject to the AIFM, and any AIF that it intends to market, meeting initial and ongoing notification and disclosure requirements. If an EU AIF is a feeder AIF, this right is subject to the condition that the master AIF is also an EU AIF which is managed by an authorised AIFM. The notification requirements are set out in Article 31(2) and Annex III. Article 31(2) requires the AIFM to provide the competent authorities in its home Member State with details of each EU AIF that it intends to market. Such details comprise:

  • a notification letter identifying the AIF it intends to market and information on that AIF's place of establishment;
  • the rules or instrument of incorporation of the AIF;
  • the name of the depositary of the AIF;
  • a description of, or any information on, the AIF available to investors (e.g. an offering memorandum);
  • if a feeder AIF, information on the place of establishment of the master AIF;
  • any additional information required pursuant to Article 23 (Disclosure to investors); and
  • if relevant, information on the arrangements in place to prevent shares or units in the AIF from being marketed to retail investors.

Article 31(3) provides that within twenty working days of receipt of a complete notification file (for an AIF that it manages), the competent authorities in the AIFM's home Member State must advise the AIFM whether or not it may start marketing that AIF. The competent authorities may only prevent the marketing of the AIF if the AIFM or the AIFM's management of the AIF is not in accordance with the Directive.

Pursuant to Article 31(4), an AIFM must give advance notice of at least one month to its home competent authorities before effecting any planned material change that would affect the particulars contained in a notification under Article 31(2). If an unplanned event occurs resulting in a material change in the particulars contained in a notification, an AIFM must immediately notify its home competent authorities.

If a planned change occurs or is effected that results in the AIFM no longer being compliant with the Directive, the home competent authorities may use any of its powers under Article 46 (Powers of competent authorities) including prohibiting the marketing of the relevant AIF.

To ensure consistency of application between Member States, Article 31(5) provides that ESMA may determine specific requirements in relation to the form and content of a standard model notification letter (as required by Article 31(2)) or a written notice (as required by Article 31(4)).

Marketing by investment firms

Recital (9) makes it clear that an investment firm authorised under MiFID (and which is not also an AIFM) may continue to promote units or shares in an AIF to EU investors. It will only be able to do so however where the units or shares are also capable of being marketed under the Directive.

EU AIFM managing EU AIF established in other Member States

Pursuant to Article 32(1), an authorised EU AIFM may manage EU AIF established in another Member State, provided that AIF is of the type that the AIFM is authorised to manage. Prior to doing so, it is required under Article 32(2) to provide the competent authorities of its home Member State with details of the AIF it intends to manage and the activities that the AIFM proposes to undertake. If the AIFM intends to manage an AIF in a Member State other than its home Member State by establishing a branch, Article 33(3) provides that it must provide its home competent authorities with information in relation to that branch.

Pursuant to Article 33(4), the competent authorities of the AIFM's home Member State must transmit the documentation received pursuant to Article 33(2) to the relevant host Member State within one month (or two months if the AIFM intends to establish a branch) of receiving complete documentation. The competent authorities of the AIFM's home Member State must also make an attestation to the effect that the AIFM is authorised by them.

Article 33(5) confirms that there is no scope for the host Member State to impose any additional requirements relating to the Directive on the AIFM.

Pursuant to Article 33(6), an EU AIFM must give advance notice of at least one month to its home competent authorities before effecting any planned material change that would affect the particulars contained in a notification under Article 33(2) and Article 33(3). If an unplanned event occurs resulting in a material change in the particulars contained in a notification, an AIFM must immediately notify its home competent authorities.

If a planned change occurs or is effected that results in the AIFM no longer being compliant with the Directive, the home competent authorities may use any of its powers under Article 46 (Powers of competent authorities) including prohibiting the marketing of the relevant AIF.

To ensure consistency of application between Member States, Article 33(7) and Article 33(8) provide that ESMA may determine specific requirements in relation to the form content and procedures for the communication notices (as required by Article 33(2) or Article 33(3)) which may be adopted by the Commission.

Passporting for EU AIFM marketing EU AIF

One of the fundamental aims of the Directive is to allow an AIFM authorised in one Member State to "passport" its authorisation to any other Member State. Passporting AIFM authorised in one Member State to perform services under the Directive in all Member States.

An EU-level supervisory authority has been established by EU regulation and called the European Markets and Securities Authority ("ESMA").1 ESMA will keep a central public register in electronic format identifying the competent supervisory authority for each AIFM under regulation of the Directive. Competent authorities of each Member States must inform ESMA on a quarterly basis of all authorisations granted or withdrawn under Article 7(5).

Pursuant to Article 32(1), an AIFM authorised in one Member State may market shares or units in AIF that it manages to professional investors in other Member States, subject to the AIFM and the relevant AIF meeting initial and ongoing notification requirements. If an EU AIF is a feeder AIF, this right is subject to the condition that the master AIF is also an EU AIF which is managed by an authorised EU AIFM. The notification requirements that the EU AIFM is required to make to its home competent authorities are set out in Article 32(3) and Annex IV. Such details comprise:

  • a notification letter identifying the AIF it intends to market and information on that AIF's place of establishment;
  • the rules or instrument of incorporation of the AIF;
  • the name of the depositary of the AIF;
  • a description of, or any information on, the AIF available to investors (e.g. an offering memorandum);
  • if a feeder AIF, information on the place of establishment of the master AIF;
  • any additional information required pursuant to Article 23 (Disclosure to investors); and
  • if relevant, information on the arrangements in place to prevent shares or units in the AIF from being marketed to retail investors.

Pursuant to Article 32(3), the competent authorities are required within 20 working days of receipt of a complete notification file for an AIF to transmit the complete notification file to the competent authorities in the Member States where that AIF is intended to be marketed. The home competent authorities are also required to make an attestation to the competent authorities in the Member States where the AIF is to be marketed that the EU AIFM is authorized to manage AIF with that particular investment strategy.

Article 32(4) provides that the EU AIFM may market the shares or units in that EU AIF in the intended Member States once it has received confirmation from its home competent authorities that they have transmitted the notification to the competent authorities of the relevant host Member States.

Article 32(7) requires that an EU AIFM must give advance notice of at least one month to its home competent authorities before effecting any planned material change that would affect the particular contained in a notification under Article 32(2). If an unplanned event occurs resulting in a material change in the particulars contained in a notification, an AIFM must immediately notify its home competent authorities.

If a planned change occurs or is effected that results in the AIFM no longer being compliant with the Directive, the home competent authorities may use any of its powers under Article 46 (Powers of competent authorities) including prohibiting the marketing of the relevant AIF. If the changes are acceptable, the competent authorities of the AIFM's home Member State are required to inform the competent authorities of the relevant host Member States without delay. To ensure consistency of application between Member States, Article 32(8) provides that ESMA may determine specific requirements in relation to the form and content of a standard model notification letter (as required by Article 32(2)) or a written notice (as required by Article 32(7)).

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Footnotes: 1. Regulation (EU) No. 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority) amending Decision No. 716/2009/EC and repealing Commission Decision 2009/77/EC. http://www.esma.europa.eu/popup2.php?id=7331

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