EU fund marketing: pre-marketing, notices and fund names

The AIF is not yet notified for marketing in that Member State. No prior notice is required, but pre-marketing is documented (Art 30a(1) and (4)).

At a glance in full: AIFMD only: an authorised EU AIFM, or for it four authorised entity types or a tied agent. Nothing enough to commit, no subscription forms, no final documents for an unestablished AIF, warnings on drafts.

Not allowed: information enough for an investor to commit to a particular AIF, or subscription forms, draft or final. Nor final-form constitutional, prospectus or offering documents of a not-yet-established AIF (Art 30a(1)). Draft prospectus or offering documents may be shown if they are not enough to decide on, and carry both statements Article 30a(1) requires. The third party may be an authorised investment firm, credit institution, UCITS management company or AIFM, or a tied agent (Art 30a(3)). Pre-marketing is adequately documented (Art 30a(4)).

Under the AIFMD, "marketing" is an offering or placement to investors in the EU. It is made at the initiative, or on behalf, of the AIFM (AIFMD Art 4(1)). The Directive sets no separate reverse-solicitation rule; the Cross-Border Distribution Regulation asked the Commission for a report on it by 2 August 2021 (Regulation 2019/1156, Art 18).

A third party that pre-markets for the AIFM is subject to the same Article 30a conditions (AIFMD Art 30a(3)). For UCITS, the Cross-Border Distribution Directive asked only for a Commission report, by 2 August 2023, on harmonising how UCITS managers test investor appetite (Directive 2019/1160, Art 5).

At a glance in full: a professional investor subscribing within 18 months of the start is treated as marketed to. This covers the AIF pre-marketed or one set up as a result.

The informal letter may be on paper or electronic. It covers the Member States, the periods, a description including the strategies presented, and, where relevant, the AIFs and compartments concerned. Such subscriptions need notification.

The AIFM ensures investors do not acquire units or shares through pre-marketing itself (AIFMD Art 30a(2)). The letter lists the Member States and periods of the pre-marketing, and briefly describes it, including the strategies presented. Where relevant, it lists the AIFs and compartments pre-marketed (Art 30a(2)).

The AIF home regulator transmits a complete file within 20 working days, if the compliance conditions are met. The triggers and recipients of a change notice differ, as in the table. An authorised EU AIFM may market an EU AIF to professional investors in another Member State. A feeder needs an EU master managed by an authorised EU AIFM (AIFMD Art 32(1)). The UCITS planned-change notice is written and goes to home and host regulators at least one month before. The AIF notice is written and goes to the home regulator at least one month before; an unplanned change is notified immediately after it occurs. A planned change may cause non-compliance. The home regulator then tells the UCITS or AIFM not to implement it, within 15 working days of receiving all information (Art 93(8); Art 32(7)).

The UCITS change notice covers any change to the notification letter or to the share classes to be marketed (UCITS Art 93(8)). The AIF change notice covers a material change to the particulars communicated under Article 32(2) (AIFMD Art 32(7)). Each regulator publishes its national marketing rules and fees; ESMA keeps a central database of the summaries and links (Regulation 2019/1156, Arts 5, 6 and 10). Where a regulator charges fees for duties relating to managers' cross-border activities, they are consistent with its overall cost of those functions (Art 9(1)).

The redemption offer is free of charges or deductions, for all units held by investors in that state, public for at least 30 working days, addressed individually to known investors. Under the AIFMD only, closed-ended AIFs and ELTIFs are exempt (Art 93a(1); Art 32a(1)). The public notice is in a medium customary for marketing and suitable for a typical investor. For a UCITS, the notice and the offer describe the consequences for investors who do not accept. Arrangements with intermediaries and delegates are modified or terminated to prevent any further offering or placement. Remaining investors and the home regulator keep receiving the information due. For UCITS that is Arts 68 to 82 and 94; for AIFs, Arts 22 and 23 (Art 93a(4); Art 32a(4)).

The 36-month bar runs from the de-notification date. That is when intermediary and delegate arrangements are modified or terminated to stop further offers, and applies only under the AIFMD (AIFMD Art 32a(3)). The UCITS Directive's de-notification article has no equivalent bar (UCITS Art 93a). Communications covered by Article 4(2) say that the manager may terminate marketing arrangements under these articles (Regulation 2019/1156, Art 4(3)).

A Member State may not require a physical presence or a third-party appointment. The facilities may be provided electronically, in a local or accepted language. No physical presence or third party may be required. The language is an official language of the host state, or one its regulator approves (Art 92(2) and (3); Art 43a(2) and (3)). The tasks are processing orders and payments, and telling investors how to deal. Investor-rights information, documents, durable-medium information and a regulator contact point complete the list (Art 92(1); Art 43a(1)).

The AIFMD facilities duty applies without prejudice to Article 26 of the ELTIF Regulation (AIFMD Art 43a(1)). A third party performing the tasks is subject to regulation and supervision for them, and is appointed by written contract (UCITS Art 92(3); AIFMD Art 43a(3)).

ESMA's guidelines apply this to all such communications, including social media. The disclaimer points, as applicable, to the prospectus or information document and the KID or KIID. Where the disclaimer does not fit the format, short online formats may use "Marketing Communication" or "#MarketingCommunication". Risks sit beside or right after the rewards. A communication cannot describe only rewards and send readers elsewhere for risks. Nothing is inconsistent with, adds to or diminishes the legal documents; the risk class is the same as the KID or KIID. Past performance covers the whole period offered if shorter, in complete 12-month periods. It is preceded by "Past performance does not predict future returns". A UCITS manager's communications indicate that a prospectus and key information exist, and say where, how and in which language to get them, with links. Communications covered by Article 4(2) also link to a summary of investor rights and say the manager may end marketing.

The guidelines exclude legal and regulatory documents. They also exclude corporate news not about a specific fund, unless the manager runs one or a few funds the news implicitly identifies. They also exclude social media posts that only link to a marketing communication, and pre-marketing information (ESMA34-45-1272, section 1). A fund may be referenced in a press article or advertisement only after any required approval and, where applicable, the host-state marketing notification (para 5). In a video, the disclaimer is embedded, not only shown at the end (para 9).

Where no past performance is available, simulated past performance is limited to two cases. One is a new share class with the same or substantially the same features as the class it is based on. The other is a new feeder fund that holds only master units and ancillary liquid assets. A feeder not differing materially from its master also qualifies (para 49, p.12); paragraphs 44 to 49 apply to it as well (para 50). Expected future performance carries a tax statement, and a scenario warning where it rests on past evidence or current market conditions. It also states that the investment may lead to a loss without a capital guarantee (paras 55 to 57). Sustainability information must not outweigh how far the strategy integrates sustainability, and links to the SFDR website disclosure where relevant (paras 60 and 61). A regulator may ask to see UCITS communications in advance, and those for AIFs marketed to retail investors, to verify compliance only and not as a condition of marketing. It raises any amendment within 10 working days (Regulation 2019/1156, Art 7(1) and (3)).

The extra tests in full. Transition: threshold investments on a clear and measurable path to social or environmental transition (para 21). Impact: threshold investments aim at a positive, measurable social or environmental impact alongside a financial return (para 21). Sustainability: commit to invest meaningfully in SFDR Art 2(17) sustainable investments.

The guidelines apply to UCITS management companies and self-managed UCITS, AIFMs including internally managed AIFs, EuVECA, EuSEF, ELTIF and MMF managers, and regulators (para 1).

The 80% counts investments used to meet the fund's E/S characteristics or sustainable objectives. It follows the binding elements disclosed in the SFDR templates (para 16). "Sustainability" terms are only those derived from "sustainable" (para 15). Where a name combines terms from paragraphs 16 and 17, both apply, except with a transition term, where only paragraphs 16 and 21 apply (para 19). The final text sets no fixed percentage for sustainable investments.

A temporary deviation from the threshold or exclusions is a passive breach, corrected in investors' best interest, provided it is not the manager's deliberate choice (para 22). The fund names page covers the guidelines in full.

The restriction covers communicating an invitation or inducement to participate in a collective investment scheme. Also outside it are cases in a Treasury order (s.238(1), (6)).

A scheme authorised outside the UK is recognised under the Overseas Funds Regime when five further conditions hold. Treasury regulations approve its country. It is of an approved description. Its operator has applied, the FCA has granted the application, and no suspension direction applies (FSMA s.271A(1)). For a complete application, the FCA gives notice within two months (s.271G(5)). On the operator's application, the FCA may individually recognise a scheme managed outside the UK. It must lack section 271A cover and appear to meet section 272(2) to (15) (s.272(1)). The FCA decides a complete application within six months, or an incomplete one within twelve months of first receipt (s.275).