On 12 July 2019, the new EU regulation 2019/1156 (the Regulation) and directive 2019/1160 on cross-border distribution (the Directive) were published in the Official Journal of the European Union.
The Directive amends, respectively, the undertakings for collective investment in transferable securities (UCITS) and alternative investment fund managers (AIFMs) directives.
Both the Regulation and Directive aim to coordinate the conditions for fund managers operating in the internal market and facilitate cross-border distribution of the funds they manage. This is achieved by:
- introducing an EU wide ability of AIFMs to engage in pre-marketing to professional investors to test the viability of their investment strategy (a binding offer cannot be made);
- imposing the obligation to comply with the notification procedure where pre-marketing has, in certain circumstances, resulted in a subscription;
- aligning the procedure for notifying competent authorities of changes regarding UCITS with the notification procedure laid down in directive 2011/61/EU;
- including a de-notification procedure for the discontinuation of marketing of UCITS;
- requiring certain facilities to be available to retail investors where Alternative Investment Funds are marketed (similar to that applicable to UCITS);
- further strengthening the principles applicable to marketing communications governed by directive 2009/65/EC and extending the application of those principles to AIFMs, thereby resulting in a high standard of investor protection.
The Directive must be implemented into national law and member states must apply those new provisions by 2 August 2021.
The Regulation also amends the EUVECA, EUSEF and PRIIPS regulations. Certain sections of the Regulation shall be applicable from 1 August 2019, whereas other sections will be applicable from 2 August 2021 (EUVECA and EUSEF ability to pre-market).
The Regulation can be found here.
The Directive can be found here.
See our recent post (29 July 2021) on this topic: ESMA's report on marketing requirements and communications under the regulation on cross-border distribution of funds.