Not all European countries have implemented the AIFMD, and those that have vary in their transitional provisions. Glynn Barwick outlines the approaches
The implementation date was officially 22 July 2013, but no European directive has any effect on a fund or a manager until it has been transposed by each member state into its own law so it is important to know which countries have done so or are close to doing so.
The current position is that most major EU countries have implemented AIFMD, but some countries such as Spain, Italy, Finland, and Norway have not.
Countries that have not implemented the directive will continue to use the existing private-placement regimes, and none of the AIFMD provisions will apply until implementation. It is possible that late-implementing countries could back-date their law to 22 July.
The AIFMD contains a transitional period of one year for existing managers who were performing management activities at 22 July 2013. EU countries have implemented this requirement differently, however, so it is important to know what each country’s transitional provision is. There are four different regimes applicable to non-EU managers:
• Existing managers that have marketed any fund anywhere in the EU. This is the most liberal approach and will allow existing managers to benefit from the transitional regime for both funds that existed prior to 22 July and to new funds established during the transitional year. Only the UK has adopted this approach;
• Existing managers that have marketed any fund in the EU country in question. In practical terms, this is not likely to be very different from the UK’s approach since most managers that will wish to market a fund into these countries during the transitional year will already have done so at some point in the past. This regime may be used for both new and existing funds. This approach has, broadly, been taken in Sweden, Denmark, Luxembourg, Ireland and the Netherlands;
• Germany will allow existing managers to benefit, but only in relation to specific funds that have been marketed in Germany by 22 July. By definition, therefore, it may not be used for new funds;
• France and Belgium will not extend the transitional provision to non-EU managers.
Although it is not wholly clear, it seems that Austria will not do so either.
Although registration of the non-EU manager in the countries in which it wishes to market a fund is not mandated by AIFMD, all the main EU countries will require some form of pre-marketing registration or notification. Different countries’ approaches fall into two categories:
• Virtually all the major countries require pre-marketing registration: Austria, Denmark, France, Germany, Luxembourg, the Netherlands, and Sweden. The Netherlands, however, does not require managers to wait for approval by the regulatory authority before commencing marketing; all other countries do require prior approval before marketing can commence;
• The UK merely requires pre-marketing notification from each manager that it will comply with the directive. No other pre-marketing or filing is necessary in the UK.
What about reverse solicitation? The application of the AIFMD is triggered in each country by marketing into it – or, as defined by AIFMD, the “direct or indirect offering or placement at the initiative of the [manager] of units or shares in a [fund]”. Where there is no marketing into the EEA, AIFMD will not apply. This means that old, closed funds, for example, will not fall within the AIFMD even where they have European investors. There is very little guidance from national regulators as to how they propose dealing with reverse solicitation, except for the following:
• The FCA in the UK has given formal guidance saying that confirmation from the investor that the offering or placement of units of shares of the AIF was made at its initiative, should normally be sufficient to demonstrate that this is the case, provided this is obtained before the offer or placement takes place and provided the manager is not attempting to circumvent the requirements of the directive;
• In France, the reverse solicitation should refer to the specific fund being reverse-solicited.
This suggests that the approach taken by some investors of requesting all details of all funds from the manager may not work in France.
Given that there is so little guidance, it is worth having a look at a few scenarios, in ascending order of complexity that should then be valid throughout Europe:
• Where an investor approaches the manager ‘out of the blue’ will be reverse solicitation;
• It should also be a valid reverse solicitation where the manager explains to existing investors in its fund that it will not be able to market funds in the future and explains that any future contact must come from the investor;
• With a small number of institutional investors that have negotiated with the manager the setting up of the fund at the earliest stages, reverse solicitation probably also works for the final offer and subscription documents to those investors;
• It is doubtful that reverse solicitation works where investors are generally ‘soft marketed’ to with draft documents first and then invited to solicit the manager for the final documents. This looks too much like soliciting the reverse solicitation.
Glynn Barwick is a counsel at Goodwin Procter