AIFMD – clarity on pre-marketing?
On March 12th, the European Commission published a proposal for amendments to the AIFMD and EuVECA regulation. It stipulates conditions for pre-marketing of alternative investment funds to professional investors domiciled in the EU.
The proposal forms part of the Commission’s “Capital Markets Union action plan, which intends to improve cross-border capital investment flow in the EU, aiming on making it easier for AIF- and EuVECA-managers ability to raise cross-border capital from EU investors.
The current AIFMD and EuVECA-regulation defines and sets out conditions for marketing, and the term pre-marketing was immediately born. Since implementation in 2013 EU member states have taken different views on the term, and left the question of how, if at all, fund managers may address potential investors about their operation and the possibility of a new fund, unclear. To address this, the Commission now propose a harmonised definition of pre-marketing:
“Pre-marketing means a direct or indirect provision of information of investment strategies or investment ideas by an AIFM or on its behalf to professional investors domiciled or registered in the union in order to test their interest in an AIF which is not yet established”.
The Commission states that pre-marketing should concern an investment idea- or strategy without the manager having an actual fund already established. Accordingly, during the course of pre-marketing, investors are unable to subscribe to shares/units of a fund, because the fund does not exist yet, and no offering documents, even in a draft form, should be permitted to be distributed to potential investors during this stage. However, if a manager offers investors to subscribe to shares/units of an established fund, which was pre-marketed to the same investors and the investment idea/strategy of the fund is unchanged, the manager must hold a marketing permission and cannot invoke reverse solicitation for investors who have been subject to pre-marketing efforts.
Permian welcomes the Commission’s proposal for a harmonised treatment of pre-marketing, as it aims on avoiding legal uncertainty for AIF managers. Moreover, Permian’s view is that the proposed treatment of pre-marketing coincides with both established market- and FSA-practice in Norway. However, as mentioned above, EU member states have practised different treatment of marketing and therefore also pre-marketing. Therefore, the proposal may give rise to a stricter treatment of pre-marketing in some EU member states.
The Commission has initiated a consultation-process with external parties on the proposal, and the feedback-period ends on 8 May 2018. Permian will stay updated on the process and inform about the final amendment, as well as the date when it will enter into force and any transposition to Norwegian legislation, as soon as such information is published.
Do not hesitate to contact Permian if you have any questions to this article.
Oslo, 14 March 2018
Espen Iversen Størseth, firstname.lastname@example.org
Axel H. Daasvand, email@example.com