Cross-border distribution of funds: Regulation (EU) 2019/1156 and Directive (EU) 2019/1160
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The 2019 package sets common rules for marketing UCITS and AIFs across EU borders. The Regulation covers marketing material, regulator fees and ESMA's databases, and binds fund managers directly. The Directive works through the UCITS Directive and AIFMD. It added a common pre-marketing regime for AIFs, a way to stop marketing in a state and a rule on local facilities. The Official Journal texts linked here are the authentic versions.
Scope and the core mechanism
The Regulation binds four kinds of manager. Article 2 lists AIFMs, UCITS management companies (including a UCITS that has not designated one), EuVECA managers and EuSEF managers. Article 3(b) limits "AIFM" to managers authorised under Article 6 of AIFMD, so a registered manager is not caught as an AIFM.
It applied from 1 August 2019. Under Article 19, some parts started later, on 2 August 2021. They are the marketing rules in Article 4(1) to (5), Article 5(1) and (2) and the EuVECA and EuSEF pre-marketing articles. That is also the date by which member states had to apply the Directive's changes, under Article 3 of Directive 2019/1160.
Each regulator must also publish its national marketing rules, with summaries, in a language customary in international finance (Article 5). The split between the two acts decides where a rule is found. Marketing material, fees and databases sit in the Regulation and read the same in every state. AIF pre-marketing, de-notification and facilities sit in the national laws that transpose the UCITS Directive and AIFMD. EuVECA and EuSEF pre-marketing is the exception: Articles 15 and 16 wrote it into those directly applicable Regulations.
In practice: under Article 4(3), the UCITS marketing communications it covers must state clearly that the manager may end its marketing arrangements under the de-notification articles. The duty applies to those communications from the outset, whether or not an exit is planned.
Key provisions
| Provision | What it says | The practical point |
|---|---|---|
| Marketing communications (Reg. Art. 4) | Each communication is identifiable as such, gives risks and rewards equal prominence and is fair, clear and not misleading. A UCITS communication must not contradict the prospectus or key investor information. | It says that a prospectus exists and the key investor information is available, and where, how and in which language to get them, with hyperlinks or website addresses. A summary of investor rights needs a hyperlink (Art. 4(2) and (3)). |
| Ex-ante review (Reg. Art. 7) | A regulator may require prior notification of UCITS marketing communications. It must raise any request to amend within 10 working days of receiving them. | Prior notification is not a condition for marketing. The same applies to AIFs marketed to retail investors (Art. 7(3)). |
| Regulator fees (Reg. Arts 9 and 10) | Fees for cross-border activity must be consistent with the regulator's costs. Regulators had to publish their fees or methods by 2 February 2020. | Invoices go to the address given in the marketing notification, now a required field under the Directive. |
| ESMA databases (Reg. Arts 6, 11 and 12) | By 2 February 2022 ESMA had to publish the national marketing rules and a fee tool. Its database lists each UCITS marketed outside the UCITS home state, and each AIF marketed outside its manager's home state (Art. 3(f)). | Each entry names the manager and the states of marketing. Regulators feed it quarterly through an ESMA portal (Art. 13). |
| AIF pre-marketing (Dir. Art. 2(2), new AIFMD Art. 30a) | An authorised EU AIFM may test professional investors' interest with no advance notice of content or addressees. Excluded are material enough to commit, subscription forms in draft or final form, and final offering documents of a not-yet-established AIF. | An informal letter goes to the home regulator within two weeks of starting. Subscriptions within 18 months to an AIF named in the pre-marketing, or set up from it, count as marketing. |
| De-notification (Dir. Arts 1(6) and 2(4): UCITS Art. 93a, AIFMD Art. 32a) | Three conditions apply: a free redemption offer open for 30 working days and sent to each known investor, public notice of the exit, and an end to distribution contracts. The manager then notifies its home regulator. | Closed-ended AIFs and ELTIFs are spared only the offer. An AIFM may not pre-market the same or similar strategies in that state for 36 months. |
| Changes to a notification (Dir. Art. 1(5), UCITS Art. 93(8)) | A UCITS gives written notice to both home and host regulators at least one month before changing notified details, including share classes to be marketed. | The home regulator has 15 working days from receiving all the information to stop a change that would breach the UCITS Directive. |
| Facilities (Dir. Arts 1(4) and 2(6): UCITS Art. 92, AIFMD Art. 43a) | Local facilities handle orders, investor information and contact with the regulator. AIFMD Article 43a applies to retail marketing. | A state may not require a physical presence or a third-party appointment to provide these facilities. |
Amendment history
| Date | Instrument | What changed |
|---|---|---|
| 20 Jun 2019 | Regulation (EU) 2019/1156 | Adopted. It also added pre-marketing to the EuVECA and EuSEF Regulations (Arts 15 and 16) and moved PRIIPs dates (Art. 17). |
| 20 Jun 2019 | Directive (EU) 2019/1160 | Amended the UCITS Directive (Art. 1) and AIFMD (Art. 2); transposition and application by 2 August 2021 (Art. 3). |
What it works with
The Directive changes live inside the UCITS Directive and AIFMD. Luxembourg transposed the Directive by the Law of 21 July 2021, per the CSSF communication. The base laws are the 2010 UCI Law (summary) and the AIFM Law (summary). In Ireland the base laws are S.I. 352/2011 (summary) and S.I. 257/2013 (summary). Article 17 of the Regulation moved the UCITS exemption and review dates in PRIIPs. As made, AIFMD Article 43a applied without prejudice to Article 26 of the ELTIF Regulation. Regulation (EU) 2023/606 deleted that article from 10 January 2024, subject to its transitional rules (Arts 1(16) and 2). ELTIFs and Part II funds are compared on ELTIF 2 versus Part II UCI.
Small managers sit partly outside the package. The Regulation's AIFM definition and AIFMD Article 30a both refer to authorised managers. A manager registered only under the AIFMD small-manager regime is therefore outside them. Registered EuVECA and EuSEF managers stay inside, under Article 3(c) and (d). See sub-threshold AIFM registration by jurisdiction.
In practice: pre-marketing records matter after the event. AIFMD Article 30a(2), inserted by Directive 2019/1160, looks back 18 months. A professional investor's subscription in that window counts as marketing if it is to an AIF named in the pre-marketing or set up as a result of it. That subscription then follows the Article 31 or 32 notification procedure, and Article 30a(4) requires the pre-marketing to be documented.
To verify
- Later amendments: whether any act has amended Regulation 2019/1156 since 2019, per its EUR-Lex consolidated versions.
- ESMA guidelines: the current ESMA guidelines on marketing communications issued under Article 4(6), and their application date.
- Commission evaluation: the outcome of the evaluation due by 2 August 2024 under Article 18, and of the reverse solicitation report.
- Prior notification states: which regulators require ex-ante filing under Article 7, per their published procedures.
- Irish transposition: the Irish statutory instruments that gave effect to Directive 2019/1160, per the Irish Statute Book.
- Registered managers: how each domicile treats pre-marketing by a registered AIFM, per the national law transposing Directive 2019/1160.
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