By means of this update, we would like to inform you of an important disclosure obligation which will apply as of 1 January 2018 to all managers (AIFMs) of alternative investment funds (AIF) which offer AIFs in the Netherlands and in other jurisdictions of the European Union. Please find below a summary of the key points:
1) AIFMs have to prepare a Key Investor Information Document (KIID) for each new AIF they are marketing after 1 January 2018 (also when the marketing already started prior to 1 January 2018 and continues after 1 January 2018) and provide this to investors prior to investing in the AIF. As a result, in the preparation phase before the marketing a KIID should be prepared by the AIFM.
2) The provision of the KIID to investors may take place by posting the KIID on the website, provided certain conditions are met (e.g. the investors have agreed to this route).
3) Also, existing investors in an AIF which was marketed prior to 1 January 2018 can only transfer their interests in the AIF to another investor in case the AIFM has prepared a KIID. As a result, AIFMs which want to facilitate the transfer of interests between investors after 1 January 2018 should already start preparing a KIID.
4) The obligation to prepare a KIID does not apply if the interests in the AIF are solely marketed or transferred to professional investors within the meaning of the Markets in Financial Instruments Directive (2014/65/EC, MiFID II) (i.e. certain institution investors and large corporations). This means that the obligation to prepare a KIID applies to any marketing of AIFs to non-professional investors, even if the offering is against a counter value of more than EUR 100,000 or to less than 150 persons.
5) The requirement to prepare and provide a KIID applies to all AIFMs: (i) AIFMs which are registered under the small managers regime with the Autoriteit financiële markten (AFM) and (ii) managers which have obtained a full license from the AFM.
6) The KIID has to be prepared on the basis of a standard format, and it should be a maximum of 3 pages. The required form and the content of the KIID are in detail described in the PRIIPs regulation (Regulation (EU) nr. 1286/2014) and the Commission Delegated Regulation (EU) 2017/653.
7) KIIDs should include, amongst others, the following information:
- the name of the product and the identity of the producer;
- the types of investors for whom it is intended;
- the risk and reward profile of the product, which includes a summary risk indicator, the possible maximum loss of invested capital and appropriate performance scenarios of the product;
- the costs investors have to bear when investing in the product;
- information about how and to whom an investor can make a complaint in case there is a problem with the product or person producing, advising on or selling the product.
8) During the lifetime of the AIF, the AIFM should review the information contained in the KIID regularly (i.e. at least every 12 months) and should revise the KIID where the review indicates that changes need to be made.
9) For licensed AIFMs marketing AIFs under the retail top up regimes, and for UCITS managers, there is a transitional regime which provides that until 31 December 2019 the present key investor information document requirements continue to apply.