Marketing and distribution of units or shares is central to the life of an investment fund, Directive 2011/61/EU of 8 June 2011 on alternative investment fund managers (“AIFMD”), as transposed into Luxembourg law by the Law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”) details the requirements around marketing and distribution of alternative investment funds (“AIFs”).
In order to limit the divergence in approaches by Member States, and to allow for universal recognition of the concept of pre-marketing, the EU legislator issued directive (EU) 2019/1160 of 20 June 2019 amending the directive 2009/65/EC (relating to undertakings for collective investment in transferable securities (“UCITS”)) and AIFMD with regard to cross-border distribution of collective investment undertakings (the “Cross-Border Distribution Directive”) with the aim to facilitate cross-border distribution of investment funds and to enhance the regulatory framework governing the distribution of UCITS and AIFs across the EU.
The Cross-Border Distribution Directive introduces uniform EU rules applicable to both UCITS and AIFs, in particular by regulating the provision of local facilities for UCITS and AIFs being marketed to retail investors, the de-notification procedure for discontinuing the marketing of UCITS and AIFs in a host Member States, and also provisions regarding reverse solicitation. However, this article focuses on the pre-marketing of AIFs angle as well as the impact of these new principles concerning the marketing and distribution of AIFs in the EU. It is written by Vincent Cossavella, Junior Associate, Wildgen S.A., under the supervision of Mark Shaw, Partner.