The Financial Conduct Authority (“FCA”) is proposing a number of new notification forms relating to the Alternative Investment Fund Managers Directive (“AIFMD”), as published in its fourth quarterly consultation paper, CP14/4. The consultation period has now ended and it is expected that these will come into force shortly.
Domestic and cross-border marketing form
The FCA proposes to combine the current separate forms for domestic and cross-border marketing of alternative investment funds (“AIFs”) into one form.
The form covers all aspects of the current domestic and cross-border marketing passport forms and more, as explained below, and should be used if:
- a full-scope UK alternative investment fund manager (“AIFM”) wishes to exercise a passport right to provide cross-border services in another EEA State under the AIFMD to market a UK AIF or an EEA AIF to professional clients (cross-border marketing); and/or
- a full-scope UK AIFM wishes to market a UK AIF or an EEA AIF in the UK under the AIFMD to professional and/or retail clients (domestic marketing); or
- a full-scope EEA AIFM wishes to market a UK AIF or an EEA AIF in the UK under the AIFMD to retail clients only (UK domestic marketing – EEA AIFM retail marketing only).
The FCA has also imposed a new requirement to complete and submit a notification letter alongside the notification form, a template of which is provided immediately after the declaration in Section 3 of the notification form. The notification letter should, however, only be completed for AIFMs intending to market on a cross-border basis. If a full-scope UK AIFM or a full-scope EEA AIFM intends to only market within the UK, the notification letter is not required to be completed.
Another significant difference in the notification form is the FCA’s proposed requirement to potentially complete three separate annexes to the notification letter for each AIF the AIFM intends to market on a cross-border basis. This includes the requirement to complete Annex 3 which asks an AIFM to cross refer to pages in certain fund documentation where Article 23/FUND 3.2.2R disclosures are made, such as a description of the investment strategy and objectives of the AIF, and a description of the types of assets in which the AIF may invest. Note that Annex 3 will have to be completed for each AIF or sub-fund/compartment of an AIF unless the cross-reference is applicable to more than one sub-fund or compartment.
The FCA has said that once they notify the relevant competent authorities of the AIFM’s intention to market in their territory, the FCA will confirm that the AIFM can commence cross-border marketing activities within the scope of the notification.
The FCA also proposes that this form be used for notifying material changes to both domestic and cross-border marketing activities. This will include changes that may lead a reasonable investor, becoming aware of such information, to reconsider its investment in the AIF, including such information which could impact an investor’s ability to exercise its rights in relation to its investment, or otherwise prejudice the interests of one or more investors in the AIF.
Draft notification forms
In addition to the above, it is worth noting that the FCA published the following draft forms:
AIFMD new fund under management notification form
This form is for use by a full-scope UK AIFM, small authorised UK AIFM or a small property UK AIFM that wishes to notify the FCA of its intention to establish a new fund, or take over management of an existing fund from another entity (other than for European Social Entrepreneurship Fund(s) (“EuSEF”). Note that information must be provided to the FCA at least one month prior to the date on which the AIFM wishes to start marketing.
Notification of senior person amendments or removal form
This form is for use by firms that are full-scope internally managed UK AIFMs, EuSEF and European Venture Capital fund (“EuVECA”) managers to notify the FCA of amendments to the details of previously notified senior persons and the removal of senior persons.
AIFMD material change notification form
This form should be used by a full-scope UK AIFM that wishes to notify the FCA of, amongst others, the following types of the material changes:
- changes to rules or instruments of incorporation – significant changes to rules or instruments of incorporation for an AIF
- cease management of an AIF – where you have or expect to cease your contractual arrangements to manage an AIF or the AIF is expected to go into liquidation
- fund standing data changes – changes to fund identification data
- changes to master or feeder fund(s) – changes to the master or feeder structure of an AIF
- new investment strategy – changes to the predominant investment strategy of an AIF
- leverage change – a change to the maximum limit of leverage for the AIFs you manage
- depositary change – the appointment or change of function of depositaries
- appointment of external valuer – notifications of addition and removal of external valuers
- material changes to risk management policy and to the arrangements, processes and techniques.
In terms of timing, note that the FCA will inform an AIFM within one month of receiving a notification of material change if they decide to exercise a power to prevent the implementation of, or impose restrictions in relation to, the proposed changes. If not, the change may be implemented.
Notice of sub-threshold AIFM exceeding AuM limit form
This form is only for existing sub-threshold AIFMs who are making a notification in regard to assets under management (“AuM”) exceeding the relevant threshold limit. This form is therefore applicable to small authorised UK AIFMs, small registered UK AIFMsand EuSEF managers and EuVECA managers who may be both a small registered UK AIFM and/or a small authorised UK AIFM where the value of assets under management exceeds:
- €500 million in total in cases where the portfolio of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of five years following the date of initial investment of each AIF or
- €100 million in total in other cases, including any asset acquired through the use of leverage.
Note that strict timelines for notification apply, depending on whether the AuM is temporarily or permanently above the sub-threshold limit.
Small registered AIFM change form
This form is for a small registered UK AIFM to notify the FCA of changes to the AIFM’s registration. This includes registration as a EuSEF manager or EuVECA manager.
EuSEF and EuVECA marketing notifications form
This form is for AIFMs that are registered under the EuSEF or the EuVECA regulation and should be used to notify the FCA of the AIFM’s intention to market a new fund, to market an existing EuSEF or EuVECA fund into a new jurisdiction, to cease managing a EuSEF or EuVECA fund or to notify the FCA of the AIFM’s intention to cease marketing a EuSEF or EuVECA into a particular jurisdiction.
Notice of AIFM delegation form
This form is for firms who are already authorised under Part 4A of FSMA as a full-scope UK AIFM to notify the FCA of delegation and sub-delegation arrangements such as risk management, portfolio management, administration, marketing and other activities related to the assets of the AIF(s).
This consultation closed for comment on 6th May 2014 and we await the finalised forms. The FCA expect to complete this work, subject to comments from respondents, in mid-2014, with a view to updating the Handbook before 22 July 2014. In the meantime, we understand that the FCA is encouraging firms to use the new AIFMD marketing form attached to CP14/4 rather than the forms that are currently published on their website.
Updated AIFMD schedule of AIFs forms
On 8th May 2014 the FCA also published updated versions of the following forms on its webpage for UK AIFMs:
- Schedule of AIFs for full-scope UK AIFMs
- Schedule of AIFs for small registered UK AIFMs
- Schedule of AIFs for small authorised UK AIFMs
The FCA is urging firms submitting an application to be authorised as an AIFM after 8thMay 2014 to provide the latest version of the schedule of AIFs - previous versions will not be accepted.