The Committee on Economic and Monetary Affairs of the European Parliament has published a draft report on the proposal for a directive amending Directive 2009/65/EC (“UCITS Directive”) and Directive 2011/61/EU (“AIFMD”) with regard to cross-border distribution of alternative investment funds (“AIFs”) and undertakings for collective investments in transferable securities (“UCITS”). The envisaged changes aim to simplify cross-border pre-marketing activities by implementing a more practical approach while reverse solicitation shall be obviated.
What is it about?
Definitions of the terms “marketing” and “pre-marketing” of AIFs and UCITS as well as their regulations vary across the European Union (“EU”).
Since barriers in the cross-border distribution of UCITS and AIFs in the European Union were identified, the European Commission and the European Parliament are considering various possible solutions. Key areas that are aimed to be simplified are the different marketing requirements in the EU Member States (“Member States”), increased transparency as regards fees set by the responsible authorities in the Member States, and the possibility of pre-marketing AIFs that have not yet been established across borders.
One of the key areas under review is the substantial facilitation of marketing of AIFs and UCITS in all Member States. This is to be achieved by prohibiting Member States from requiring a physical presence on their territory of such funds intending to market there.
What are the proposed amendments?
The Committee on Economic and Monetary Affairs of the European Parliament (the “Parliament”) is now proposing some amendments to the Commission proposal. Some of the changes proposed are of a technical nature. However, other proposed amendments are potentially substantial.
For instance, the Parliament is proposing to limit pre-marketing activities to a time frame of 18 months. Within 18 months of being contacted as part of pre-marketing, investors should be allowed only to acquire units or shares in an alternative investment fund under marketing provisions.
Further, the Parliament suggests that pre-marketing activities need to be documented and the documents provided upon request to the competent authorities.
In addition, the proposal intends to simplify the cessation of marketing, provided the protection of investors is ensured.
What’s next?
The European Parliament now calls on the Commission to refer the matter back to the Parliament if it replaces, substantially amends or intends to substantially amend its proposal. The position has been forwarded to the European Council, the Commission and the national parliaments of the Member States.
Summary
- Simplification of marketing of UCITS and AIFs in the EU under discussion
- Pre-marketing activities to be simplified as well
- Details yet to be determined
