Marketing under AIFMD – The Final Countdown Series/media/Files/Training/2014/AIFMD Countdown 2014... · Marketing under AIFMD – The Final Countdown Series . Practical implications

Marketing under AIFMD – The Final Countdown Series

Practical implications for US and non-EU Managers Sarah Bowles Simon Whiteside Simmons & Simmons Robert Van Grover Seward & Kissel

Friday 13 June 2014

http://www.sewkis.com/

© Simmons & Simmons LLP 2014. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.

What we will cover today

Marketing strategy

Practical steps on reverse enquiry

Road map to EU marketing – what you need to do

“Form EU” – Annex IV vs Form PF

AIFMD delegation and the impact on non-EU delegates



Formulating your marketing strategy – reverse enquiry or Article 42



Recap: reverse enquiry vs marketing

Marketing, for AIFMD purposes, is equivalent to private placement – “a direct or indirect offering or placement at the initiative of the AIFM” – will include any offer to an institutional investor to subscribe for shares in a

fund other than in response to the initiative of the investor (reverse enquiry)

AIFMD Article 42 has replaced national private placement regimes

No passport for non-EU managers before 2015/16 at earliest

Early promotional activity may not be ‘marketing’ but will eliminate reverse enquiry

Jurisdiction specific

See our slides from our call on 30 May on elexica.com


http://www.elexica.com/


Reverse enquiry – some practical issues

Do not give out information on your funds on an unrequested basis – Segregation and password protection of website – Funds details on your ADV? – SEC requirement to send to investors summaries of material change to ADV

Part 2

Investor newsletters and calls – Fund by fund only – Do not introduce new fund launches – Inform on new openings of existing fund? – Contractual rights?

Consultants and aggregators? Cap intro events?

Funds of funds? Reference funds?



Marketing road map #1: Article 42 requirements

AIFM comply with AIFMD requirements on – pre-investment disclosure – article 23 – reporting to regulators – article 24 – annual report requirements – article 22 – Application of ‘private equity rules’ Articles 26-30

Check co-operation arrangements are in place – between EU member state and supervisory authorities of AIF and AIFM – ESMA table last updated 20 February – check on country by country basis

Country of AIF or AIFM not a FATF non-co-operative country

Other gold-plating – see our call on 6 June 2014

Timing (marketing black-outs)



Road map #2: pre-investment disclosure

Article 23 content requirements – Leverage – Risk profile and risk management – Preferential treatment/ side letters – NAV and historic performance

Wrapper or prospectus update? – US manager trend for wrapper

Working with your usual funds counsel



Road map #3 – ‘Private equity rules’

Article 42 brings in private equity rules of AIFMD – Where AIF acquires interest in or control of an EU non listed company

(individually or jointly) or, for some rules, control of an EU listed issuer – Excludes SMEs

Notify if interest in non listed company reaches, exceeds or falls below 10%, 20%, 30%, 50% and 75%

If control (>50% for unlisted; takeover directive threshold for public issuers) acquired – notification of voting rights and how held – Board to notify employees of same information – AIFM to make available to company and employee representatives

– Policy for managing conflicts – Intentions regarding future business (non-listed companies only)

Asset stripping - limit on distributions or capital reductions where insufficient distributable reserves – also extends to public issuers



Road map #4 – reporting to regulators: Annex IV

Article 24 and Annex IV (“Form EU”) – ESMA reporting guidelines – What must be reported – Frequency of reporting – and for how long….

In summary: – AIFM general information - will include business and AUM not just re fund being

marketed – AIF specific information re fund being marketed – detail of strategies,

geographical focus, principal markets, investor concentration, instruments and exposures, turnover in reporting period, currency, counterparty risks, liquidity, etc

Comparison with Form PF

Practicalities



Road map #5 – annual report

Article 22 content requirements – Balance sheet – Income and expenditure – Report on activities – Material changes – would make an investor reconsider investment decision – Remuneration – see next slide

Relevant accounting standards

To investors on request and make available to national regulators



Road map #5 annual report: remuneration

More level playing field with EU managers?

Remuneration disclosure requirement – Total remuneration for the FY, split into fixed and variable, paid by AIFM,

number of beneficiaries, include carried interest where relevant – Aggregate remuneration split by senior management and risk takers

Proportion attributable to the AIF being marketed

General information on financial and non-financial criteria of remuneration policies and practices

ESMA Guidelines

Owner distributions v. remuneration



EU fund platforms – an AIFMD-lite EU access method?

EU AIFM of EU AIF platform - non-EU manager as delegate of an EU AIFM

AIFMD requirements imposed on manager of platform

Requirements imposed on delegate? – Remuneration “look through” – All other requirements of AIFMD?

Detailed Article 20 and Level 2 rules on delegation of portfolio management – Right of inspection and investigation including for auditors and home

regulator – Written agreement to impose disaster recovery and confidentiality – impose best execution and other order handling requirements – leverage limits/ portfolio restrictions

Not AIFMD-zero - but sub-IMAs open for negotiation



Simmons & Simmons article 42 registration service

Differing levels of article 42 support

Support for those making their own article 42 submissions

Collaborative projects to assist with making submissions

Full outsourcing service with Simmons & Simmons project managing and facilitating submissions

Find out more

Contact us at [email protected] or come and see us at stand 89 at Fund Forum in Monaco in June

We recognise that each client will need different levels of support when going through the Article 42 process. We have, therefore, devised several ways in which we can assist.


mailto:[email protected]


Simmons & Simmons navigator: funds

Complex regulation made easy

User friendly, easy source of reference

Tracks implementation of the AIFMD

Up-to-date

Cost-effective

Find out more

Contact us at [email protected]

An online service providing access to key regulatory information regarding the marketing and sale of open ended funds on a global basis.




@SandSnavigator simmons-simmons.com elexica.com

Sarah Bowles Partner, Simmons & Simmons +44 20 7825 4429 sarah.bowles @simmons-simmons.com Simon Whiteside Partner, Simmons & Simmons +44 20 7825 4026 simon.whiteside @simmons-simmons.com Robert Van Grover Partner, Seward & Kissel +1 21 2574 1205 [email protected]

This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of those practices as the context requires. The word “partner” refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP’s affiliated practices. For further information on the international entities and practices, refer to simmons-simmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address.







Documents

Marketing under AIFMD – The Final Countdown Series/media/Files/Training/2014/AIFMD Countdown 2014... · Marketing under AIFMD – The Final Countdown Series . Practical implications