The PRIIPs Regulation1 will enter into effect on 1 January 2018. Asset managers and funds, if they have not already done so, should promptly undertake an assessment of potential compliance measures that will need to be implemented. For further information on the PRIIPs Regulation, please refer to Dechert OnPoint, the Regulation on Key Investor Documents for Packaged Retail and Insurance-Based Investment Products – Key Points for EU and Non-EU Asset Managers.
At this point, Luxembourg has not yet published a law on implementing measures (including, for example, provisions as to competent national authorities and sanctions). However, in light of the pending effectiveness of the PRIIPs Regulation, the CSSF amended its FAQs on the 2013 Law2 (which transposed the AIFMD into Luxembourg law), in order to provide guidance to entities under its supervision3.
The PRIIPs Regulation requires that a key information document be provided to investors who qualify as a “retail investor” under the PRIIPs Regulation (Retail Investors) by entities that: (i) offer a packaged retail investment product (e.g., an investment fund); or (ii) enter into an agreement regarding PRIIPs with a Retail Investor.
Retail Investors, in this context, are investors who do not qualify as per se or opt-up professional investors under annex II of the Directive. Credit institutions, collective investment schemes and certain large undertakings4 will generally qualify as professional investors. Client funds managed under a discretionary mandate by a professional (i.e., an investment firm under MiFID) are in principle not considered as investments by a retail client.
RAIFs, SIFs and SICARs may be invested in by “well-informed investors” as defined in the RAIF Law5, the SIF Law6, and the SICAR Law7, respectively. As the definition of well-informed investor is broader than the definition of professional investor, some well-informed investors might not qualify as professional investors – these investors consequently will qualify as Retail Investors within the meaning of the PRIIPs Regulation, and a key information document will need to be delivered to them commencing in 2018.
The CSSF’s FAQs provide helpful guidance with respect to provisions of the PRIIPs Regulation that are unclear. For example, the FAQs clarify that the PRIIPs Regulation does not apply to non-EU investors, and that existing investors do not need to be provided with a key investor document.