On December 6th 2018, the Committee on Economic and Monetary Affairs (the “Committee”) adopted the report issued by Wolf KLINZ on the proposal for a directive of the European Parliament and of the Council amending Directive 2009/65/EC of the European Parliament and of the Council and Directive 2011/61/EU of the European Parliament and of the Council with regard to cross-border distribution of collective investment funds (the “Proposal”).
As mentioned in our newsletter dated April 2018, the Proposal amends certain provisions in order to remove the regulatory barriers that currently restrict the cross-border distribution of investment funds in order to make their cross-border distribution simpler, faster and cheaper.
The amended proposal for approval by the European Parliament contains the following changes from the initial proposal:
Support for local investors (facilities)
The Proposal establishes rules to modernise and specify the requirements for providing facilities to retail investors.
Under the amended text, Member States shall ensure that the UCITS management company offers, in each Member State where it intends to market units of a UCITS, facilities to perform the following tasks: process subscription; repurchase and redemption orders and make other payments to unit-holders relating to the units of the UCITS; provide investors with information on how orders can be made and how repurchase and redemption proceeds are paid; make available to investors (by way of inspection or by requesting for copies of) the latest published annual report of the UCITS and the latest published half-yearly report if more recent; the prospectus of the UCITS; the most up-to-date key investor information document for the UCITS.
Withdrawal of notifications related to the use of the marketing passport
The competent authorities of the UCITS home Member State shall ensure that UCITS may proceed to the de-notification of the marketing activities of its units in a host Member State provided it offers to repurchase all units held by investors in such jurisdiction.
The notice sent to investors shall make clear the consequences for investors if they do not accept the offer to repurchase their units.
As long as investors remain invested in the UCITS after marketing is discontinued, the UCITS shall provide them, and the competent authorities of the Member State where the marketing has been discontinued, with the information required under the UCITS Directive.
Similar provisions are proposed with respect to the de-notification of marketing of units or shares of an EU AIF provided that it is not required to offer to repurchase units of closed-ended AIFs and European long term investment funds (ELTIFs).
Conditions for pre-marketing in the Union by an EU-based AIFM
In order to ensure that national competent authorities can exercise their control over pre-marketing activities, the AIFMs should send an informal letter or e-mail to (i) the competent authorities of their home Member State, and (ii) the competent authorities of the Member State or Member States where they intend to engage in pre-marketing activities, indicating in which Member State or Member States they intend to conduct pre-marketing activities.
AIFMs shall ensure that their pre-marketing activities are appropriately documented and made available, upon request, to the relevant national competent authorities. Such information should include a reference to the Member States and the period of time in which the pre-marketing activities took place as well as a description of the investment strategies or investment ideas presented during the course of the pre-marketing activities.
Subscriptions by investors that were subject to pre-marketing, within 18 months of the AIFM becoming engaged in pre-marketing shall be considered the result of marketing and shall be subject to the applicable notification procedures.
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