Belgium: Marketing AIFs in Belgium without a Passport to Professional Investors
On 24 February 2017, the Financial Services and Markets Authority ("FMSA") released a Communication on the requirements for EEA AIFMs or non-EEA AIFMs to market units or shares of AIFs in Belgium to professional investors on a private placement basis, i.e. under Article 36 or Article 42 of AIFMD, respectively.
The Communication does not change the requirements for registration under Article 36 or Article 42; however, it does standardise the process for filing a notification. Notifications should be filed using template notification forms which were published by the FSMA as part of the Communication. Provided the conditions are met, the FSMA will then grant the non-EEA AIFM express marketing authorisation.
Ireland: AIFMD Q&A
On 13 March 2017, the Central Bank of Ireland ("CBI") published the 24th edition of its AIFMD Q&A which revises an existing question (ID 1021) on depositary services as a consequence of the publication of the Central Bank (Supervision and Enforcement Act) 2013 (Section 48(1) (Investment Firms) Regulations 2017.
Italy: Regulation on Collective Investment Schemes
On 4 January 2017, the new Regulation on Collective Investment Schemes was published in the Italian Official Gazette. The Regulation prescribes the clearing terms and conditions of direct lending into Italy applicable to EU AIFs and effectively re-establishes equal treatment between Italian and EU AIFs. In particular, the Regulation confirms that an EU AIF intending to grant credit (including the purchase of receivables) in Italy must give prior notice to the Bank of Italy.
The Regulation amongst other things implements Article 46 of the Consolidated Financial Act 58/1998 and Article 17 of Law Decree 18/2016.
UK: Changes to Annex IV Reporting Obligations
As reported in our 1 March 2017 Client Update, the Financial Conduct Authority ("FCA") published amended Annex IV reporting rules on 25 January 2017, which prescribe new reporting requirements applicable to non-EEA AIFMs that have feeder AIFs marketed in the UK under Article 42 of AIFMD. The new rules apply to such non-EEA AIFMs that have quarterly reporting obligations and are to come into effect on 29 June 2017.
UK: FCA Updated NPPR Notification Forms
On 27 March 2017, the FCA published updated NPPR notification forms for EEA AIFMs marketing under Article 36 of AIFMD, non-EEA AIFMs marketing under Article 42 of AIFMD and sub-threshold non-EEA AIFMs. The updated forms are available here.
ESMA Guide on Major Holdings Notifications under Transparency Directive
On 3 February 2017, the European Securities and Markets Authority ("ESMA") released a Practical Guide on national rules across EEA countries identifying major holding notifications required under the Transparency Directive 2004/109/EC.
The first section of the guide contains a fact sheet for each EEA country (with the exception of Liechtenstein) and the second section contains the rules and practices in a series of tables for comparative review.
ESMA intends to update it on an ad hoc basis in response to changes in national rules and practices.
ESMA Supervisory Convergence Work Programme
On 9 February 2017, ESMA released its 2017 Supervisory Convergence Work Programme, which details the supervisory activities and tasks it plans to carry out across the EU. It states that ESMA and national competent authorities ("NCAs") will focus supervisory convergence work on the implementation of MiFID II/MiFIR and MAR, improving the quality of data collected by NCAs, investor protection in the context of cross-border provision of services, and convergence in the supervision of EU CCPs.
CMU Action on Cross-Border Distribution of Funds
As part of this, on 20 January 2017 the European Commission commenced a public consultation on the CMU's mid-term review intended to be published in June 2017. The consultation enabled stakeholders to give targeted input that advances actions put forward in the Action Plan in response to key challenges and closed on 17 March 2017.
Belgium: FSMA Communication on Unfair Contract Terms in Investment Instruments
On 30 January 2017, the FSMA released a Communication on the application of Belgian rules on unfair contract terms (as defined in Article VI.86 of the Economic Law Code) contained in investment instruments offered to consumers in Belgium.
In the Communication, amongst other things the FSMA recommends that where an offer is made on the basis of a prospectus that has been approved by a NCA of another EEA Member State, any unfair contract terms contained therein should be declared in the final terms of the Belgian public offer to not apply. If unfair contract terms are included in the passported prospectus, the related advertisements should identify the unfair contract terms and state that they do not apply.
France: AMF Ban on the Advertising of Risy Products
As outlined in a news release on the website of the Autorité des Marchés Financiers ("AMF") on 10 January 2017, electronic advertising of certain risky financial contracts, namely binary options, CFDs and foreign exchange contracts has been banned in France. This is designed as a consumer protection measure, as retail investors were identified by the AMF as being particularly vulnerable to advertisements on high traffic websites with promises of unrealistic returns. The ban applies to direct or indirect advertising which is likely to affect retail investors.
France: Guide on CIS Marketing Materials and Distribution
On 12 January 2017, the AMF released an updated Guide to drafting CIS marketing materials and distributing CISs. It sets out the prescribed behaviours and prohibited bad practices regarding the making and distribution of promotional material for UCITS and AIFs, including communications on financial and strategy indexes.
Germany: German Investment Tax Act Reform
German investors in collective investment schemes will be subject to new tax rules from 1 January 2018. The current system which is based on tax transparency will be replaced by an opaque taxation system. Certain "special investment funds", with a limited number of investors, may continue to opt for a system of tax transparency. Managers who market their funds in Germany should examine these developments to assess their implications.
Ireland: UCITS Q&A
On 13 March 2017, the CBI published the 16th edition of its UCITS Q&A which revises an existing question (ID 1056) on transitional arrangements as a consequence of the publication of the Central Bank (Supervision and Enforcement Act) 2013 (Section 48(1) (Investment Firms) Regulations 2017).
Liechtenstein: UCITS Notification Procedure
On 18 January 2017, the Financial Market Authority ("FMA") released Instructions on marketing UCITS in Liechtenstein and other EEA Member States. They provide an overview of the passport notification procedure, the documents to be submitted, the fees and charges payable, and the procedure for notifying changes and updating documents with the FMA. In particular, Section 4.3 contains updated instructions on the payment of the administration fee for an EEA UCITS carrying out a passport notification to market into Liechtenstein.
UK: Review of Effectiveness of Primary Markets
On 14 February 2017, the FCA released a statement inviting comments to its Discussion Paper on the effectiveness of the UK primary markets landscape. In particular, the paper covers the structure of the listing regime and other areas that may not be properly accommodated by the current market framework.
The FCA have simultaneously released a Consultation Paper inviting responses on certain technical enhancements to the listing rules, namely premium listing eligibility requirements, the classification of transactions by premium listed issuers, and the FCA's approach to suspending an issuer's listing when a reverse takeover has been announced or leaked.
The deadline for submission of comments was 14 May 2017.
Hong Kong: Amendments to the Securities and Futures (Professional Investor) Rules
On 1 March 2017, the Securities and Futures Commission ("SFC") issued a Consultation Paper containing proposals to amend the Securities and Futures (Professional Investor) Rules (Cap. 571D) ("Professional Investor Rules"). In summary, the paper proposes to:
- Expand the criteria through which an individual's portfolio may be calculated for the purposes of determining whether they qualify as a high net worth professional investor;
- Expand the criteria through which a corporation may qualify as a high net worth professional investor; and
- Allow alternative forms of evidence to demonstrate qualification as a professional investor.
Market participants and interested parties were invited to submit their comments by 3 April 2017. The SFC has not yet issued the consultation conclusions.
Singapore: Securities and Futures (Amendment) Bill 2016
On 9 January 2017, the Securities and Futures (Amendment) Bill 2016 was passed in the Parliament of Singapore. It aims to enhance protections for retail investors, and introduces changes in the definitions of "accredited investor" and "institutional investor".
On the one hand, the definition of "accredited investor" will be restricted as regards its application to individual investors. Individuals currently qualify as accredited investors if they have more than SGD 2 million of net personal assets. These measures will mean that only SGD 1 million of this threshold amount can be attributed to the net equity of an individual's primary residence, meaning that individuals whose wealth is concentrated in their primary residence will be treated as retail investors. On the other hand, the Bill will also introduce a new avenue for individuals to qualify as accredited investors, i.e. if their financial assets (net of any related liabilities) exceed SGD 1 million in value.
It is intended that the Monetary Authority of Singapore ("MAS") will introduce an opt-in regime for accredited investors. Intermediaries will not be permitted to automatically treat investors who meet the accredited investor criteria, as accredited investors, but instead will be required to inform investors of the consequences of being categorised as an accredited investor, and to obtain their consent to this categorisation.
The definition of "institutional investor" will be amended to encompass a wider range of entities, including financial institutions regulated by a foreign regulator, foreign central governments and sovereign wealth funds.
It is not yet clear when the Bill will come into effect.
UAE: Regulation of Promotions and Introductions
On 10 January 2017, the SCA issued Decision No. 3/R.M of 2017 on the Organization of Promotion and Introduction (the "Promotion and Introduction Regulations" or "PIRs"). These restrict the promotion of foreign securities (including units of investment funds) in the UAE without prior approval of the SCA, and impose additional requirements on the promotion of foreign funds. However, the PIRs do provide a limited exemption allowing private placement of foreign securities to certain categories of "Qualified Investors" who are not natural persons. They entered into force on 1 February 2017 and supplement Decision No. 9/R.M of 2016 concerning the Regulations of Mutual Funds, which entered into force in October 2016.
Please click here for a copy of the Regulation of Promotions and Introductions in English.