Marketing under AIFMD – The Final Countdown Series/media/Files/Training/2014/AIFMD Countdown...
Transcript of Marketing under AIFMD – The Final Countdown Series/media/Files/Training/2014/AIFMD Countdown...
Marketing under AIFMD – The Final Countdown Series
Practical implications for US and non-EU Managers Sarah Bowles Simon Whiteside Simmons & Simmons Robert Van Grover Seward & Kissel
Friday 13 June 2014
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
What we will cover today
Marketing strategy
Practical steps on reverse enquiry
Road map to EU marketing – what you need to do
“Form EU” – Annex IV vs Form PF
AIFMD delegation and the impact on non-EU delegates
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Formulating your marketing strategy – reverse enquiry or Article 42
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Recap: reverse enquiry vs marketing
Marketing, for AIFMD purposes, is equivalent to private placement – “a direct or indirect offering or placement at the initiative of the AIFM” – will include any offer to an institutional investor to subscribe for shares in a
fund other than in response to the initiative of the investor (reverse enquiry)
AIFMD Article 42 has replaced national private placement regimes
No passport for non-EU managers before 2015/16 at earliest
Early promotional activity may not be ‘marketing’ but will eliminate reverse enquiry
Jurisdiction specific
See our slides from our call on 30 May on elexica.com
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Reverse enquiry – some practical issues
Do not give out information on your funds on an unrequested basis – Segregation and password protection of website – Funds details on your ADV? – SEC requirement to send to investors summaries of material change to ADV
Part 2
Investor newsletters and calls – Fund by fund only – Do not introduce new fund launches – Inform on new openings of existing fund? – Contractual rights?
Consultants and aggregators? Cap intro events?
Funds of funds? Reference funds?
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Marketing road map #1: Article 42 requirements
AIFM comply with AIFMD requirements on – pre-investment disclosure – article 23 – reporting to regulators – article 24 – annual report requirements – article 22 – Application of ‘private equity rules’ Articles 26-30
Check co-operation arrangements are in place – between EU member state and supervisory authorities of AIF and AIFM – ESMA table last updated 20 February – check on country by country basis
Country of AIF or AIFM not a FATF non-co-operative country
Other gold-plating – see our call on 6 June 2014
Timing (marketing black-outs)
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Road map #2: pre-investment disclosure
Article 23 content requirements – Leverage – Risk profile and risk management – Preferential treatment/ side letters – NAV and historic performance
Wrapper or prospectus update? – US manager trend for wrapper
Working with your usual funds counsel
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Road map #3 – ‘Private equity rules’
Article 42 brings in private equity rules of AIFMD – Where AIF acquires interest in or control of an EU non listed company
(individually or jointly) or, for some rules, control of an EU listed issuer – Excludes SMEs
Notify if interest in non listed company reaches, exceeds or falls below 10%, 20%, 30%, 50% and 75%
If control (>50% for unlisted; takeover directive threshold for public issuers) acquired – notification of voting rights and how held – Board to notify employees of same information – AIFM to make available to company and employee representatives
– Policy for managing conflicts – Intentions regarding future business (non-listed companies only)
Asset stripping - limit on distributions or capital reductions where insufficient distributable reserves – also extends to public issuers
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Road map #4 – reporting to regulators: Annex IV
Article 24 and Annex IV (“Form EU”) – ESMA reporting guidelines – What must be reported – Frequency of reporting – and for how long….
In summary: – AIFM general information - will include business and AUM not just re fund being
marketed – AIF specific information re fund being marketed – detail of strategies,
geographical focus, principal markets, investor concentration, instruments and exposures, turnover in reporting period, currency, counterparty risks, liquidity, etc
Comparison with Form PF
Practicalities
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Road map #5 – annual report
Article 22 content requirements – Balance sheet – Income and expenditure – Report on activities – Material changes – would make an investor reconsider investment decision – Remuneration – see next slide
Relevant accounting standards
To investors on request and make available to national regulators
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Road map #5 annual report: remuneration
More level playing field with EU managers?
Remuneration disclosure requirement – Total remuneration for the FY, split into fixed and variable, paid by AIFM,
number of beneficiaries, include carried interest where relevant – Aggregate remuneration split by senior management and risk takers
Proportion attributable to the AIF being marketed
General information on financial and non-financial criteria of remuneration policies and practices
ESMA Guidelines
Owner distributions v. remuneration
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
EU fund platforms – an AIFMD-lite EU access method?
EU AIFM of EU AIF platform - non-EU manager as delegate of an EU AIFM
AIFMD requirements imposed on manager of platform
Requirements imposed on delegate? – Remuneration “look through” – All other requirements of AIFMD?
Detailed Article 20 and Level 2 rules on delegation of portfolio management – Right of inspection and investigation including for auditors and home
regulator – Written agreement to impose disaster recovery and confidentiality – impose best execution and other order handling requirements – leverage limits/ portfolio restrictions
Not AIFMD-zero - but sub-IMAs open for negotiation
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Simmons & Simmons article 42 registration service
Differing levels of article 42 support
Support for those making their own article 42 submissions
Collaborative projects to assist with making submissions
Full outsourcing service with Simmons & Simmons project managing and facilitating submissions
Find out more
Contact us at [email protected] or come and see us at stand 89 at Fund Forum in Monaco in June
We recognise that each client will need different levels of support when going through the Article 42 process. We have, therefore, devised several ways in which we can assist.
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Simmons & Simmons navigator: funds
Complex regulation made easy
User friendly, easy source of reference
Tracks implementation of the AIFMD
Up-to-date
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Find out more
Contact us at [email protected]
An online service providing access to key regulatory information regarding the marketing and sale of open ended funds on a global basis.
© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
@SandSnavigator simmons-simmons.com elexica.com
Sarah Bowles Partner, Simmons & Simmons +44 20 7825 4429 sarah.bowles @simmons-simmons.com Simon Whiteside Partner, Simmons & Simmons +44 20 7825 4026 simon.whiteside @simmons-simmons.com Robert Van Grover Partner, Seward & Kissel +1 21 2574 1205 [email protected]
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