Regulatory Updates of Particular Notice

Author: Clerkin Lynch LLP

Date Published 17/11/2021

New EU cross-border fund distribution rules become effective

Key provisions of the EU’s new Cross-Border Distribution of Funds (“CBDF”) legislation came into effect on 2 August 2021. This legislation is designed to reduce barriers to cross-border marketing and sales of funds in the EU. It includes a Directive amending AIFMD and a directly effective EU Regulation which will be supplemented by ESMA Level 3 guidelines.

While there are numerous elements to the CBDF, some key aspects for the purposes of the ICAV are the provisions relating to enhanced marketing disclosure requirements and those relating to pre-marketing of AIFs. In this latter regard the new pre-marketing rules provide for a new harmonised definition of “pre-marketing” and related rules which will apply to providing information to prospective professional investors in markets where the AIF has not yet been registered to market cross-border. The obligation will be to provide a notification to the AIFM’s home authority (the Central Bank of Ireland) within two weeks of any pre-marketing. Only duly authorised entities such as a MiFID investment firm, EU credit institution, UCITS manager, AIFM or tied agent of an AIFM will be permitted to engage in pre-marketing activities on behalf of the AIFM.

With regard to the requirements pertaining to actual marketing, the CBDF provides for new uniform requirements pertaining to marketing communications. See also the article below “Central Bank publishes website guidance related to Articles 1 and 2 of the Commission Implementing Regulation (EU) 2021/955” which include details of the implementation of a specific aspect of this and the article “ESMA publishes first overview of national rules governing fund marketing”

Action: it is now necessary to ensure the requirements of this new regime are observed. This will have implications for marketing and related notifications.