The Dutch Ministry of Finance unofficially confirmed that a bill has been drafted which would allow fund managers (AIFMs) with a European passport for marketing to professional investors to market investment funds to non-professional investors in the Netherlands.
The bill calls for allowing fund managers (AIFMs) with a European passport for marketing to professional investors to also market to non-professional investors in the Netherlands. The bill is important for fund managers which currently market investment funds to non-professional investors in the Netherlands from countries such as Luxembourg and Ireland without having the benefit of a UCITS licence. These managers currently rely on the Dutch “designated countries regime”. However, that regime ends on 22 July 2014 for managers based in EEA countries. Without an amendment to the current legislation, the marketing of non-UCITS to non-professional Dutch investors by these managers would no longer be allowed.
The proposed regime allows fund managers licensed as AIFMs in their home country to market to non-professional investors in the Netherlands without the need for an additional licence. As regards investment funds marketed in the Netherlands, they would need to comply with a number of “top-up retail rules”. These rules include:
- the fund manager must have sound and controlled business operations. Rules ensuing from this include that (i) the fund manager must have procedures and measures in place to safeguard the confidentiality and integrity of information and the availability and protection of automated data processing on an on-going basis, and (ii) the fund manager at the request of the Dutch supervisory authority (AFM) must examine whether its records contain persons or institutions that, in connection with suspected terrorist activity or related activities, can harm the integrity of the financial sector
- employees of the fund manager and other persons responsible for the management of the investment funds have the necessary skills and expertise to carry out their responsibilities
- a fund manager must have procedures and measures in place to ensure (a) a functional separation between, on the one hand, portfolio management and other acts of disposal of fund assets and, on the other hand, the control and administration of these acts; (b) the calculation of the net asset value is in line with the financial administration; and (c) as far as possible, a systematic, accessible and up-to-date administration of investors of the investment funds is available from which, as far as applicable, also the agreements with investors are made sufficiently clear
- the fund manager must ensure adequate treatment of complaints from non-professional investors. To this end, the fund manager must have a complaint handling procedure in place directed towards the fast and proper handling of complaints from investors. Furthermore, a fund manager must be registered with the Financial Services Complaints Institute (Klachteninstituut Financiële Dienstverlening), a qualified dispute settlement authority which handles complaints from Dutch consumers concerning financial services or financial products
- the fund manager must treat investors in similar circumstances equally
- the fund manager must have a website on which certain prescribed information is made available, including its licence, the depositary agreement, the net asset value for the units of each investment fund and the applicable terms and conditions that apply between each investment fund and its investors. Additional obligations apply if changes are made to the terms and conditions
- The fund manager must have a prospectus available in which, in addition to the information resulting from the AIFMD, additional prescribed information must be included
- the fund manager must have a key investor information document (KIID) available on its website for each investment fund with non transferable units and for each open ended investment fund
- if and to the extent the fund manager also manages investment funds other than closed-ended investment funds of which the units are admitted to trading on a regulated market in the Netherlands, the fund manager and the depositary must submit their annual accounts no later than six months after the end of the financial year. These accounts must be made simultaneously available on the website.
If enacted, the bill would form part of the Amendment Act Financial Markets 2015 which is expected to come into force on 1 January 2015. The Dutch regulator has unofficially indicated that it will grandfather EEA managers that have relied on the designated countries regime. As a result, these managers will be allowed to continue marketing from 22 July 2014 until the bill comes into force.
It is expected that fund managers from Guernsey, Jersey and the US, if subject to SEC registration, may continue to rely on the existing designated countries regime until 22 July 2018. After 22 July 2018, these fund managers will likely become subject to the third country regime under the AIFMD.