Currently, non-EU fund managers do not have access to an EU marketing passport under the Alternative Investment Fund Managers Directive. They will have to comply with the national private placement regimes if they want to market in the EU. In the course 2015, it was intended that a harmonised passport regime would become available to non-EU fund managers and funds.
The European Securities and Markets Authority was asked for its opinion on the functioning of the EU marketing passport and national private placement regimes, and for its advice on the application of the AIFMD passport to non-EU fund managers and funds. Recently, ESMA published its guidance.
Since the Alternative Investment Fund Managers Directive ("AIFMD") came into force on 22 July 2013, 12 Member States have allowed non-EU AIFMs to market EU AIFs (the Netherlands , the UK, Luxembourg, Portugal, Austria, Ireland, Czech Republic, Bulgaria, Slovakia, Lithuania, Malta and Cyprus), and the same 12 Member States plus Greece and Hungary have allowed EU AIFMs to market non-EU AIFs.
In total, 1,770 non-EU AIFMs market 4,356 AIFs in the EU in accordance with Article 42 of the AIFMD. Another 300 EU AIFMS market 1,146 non EU AIFs in the EU in accordance with Article 36 of the AIFMD.
National private placement regimes
EU AIFMs that have obtained an AIFMD licence are allowed to market in other EU Member States with a marketing passport. The AIFM can obtain such a passport through its home state regulator. Such a marketing passport is not yet available for non-EU AIFMs. They need to comply with the national private placement regime of each of the Member States where the AIFs are marketed or managed.
A non-EU AIFM intending to market an AIF in the Netherlands can make use of the Dutch private placement regime, subject to the following conditions:
- the AIF is marketed to qualified investors only (within the meaning of MiFID);
- the AIFM and AIF are located in countries which have entered into cooperation agreements with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten); and
- these countries are not listed by the Financial Action Task Force as non-cooperative jurisdictions.
The private placement regime rules in the Netherlands result from the implementation of Article 42 of the AIFMD.
It was intended that these national private placement regimes would exist for a five-year transitional period. After two years, a harmonised passport regime would become available to non-EU AIFMs performing management and/or marketing activities within the EU and EU AIFMs managing non-EU AIFs. Then in the following three years, two parallel marketing routes would be available to non-EU AIFMs. In 2018, the national regimes will terminated and only the EU marketing passport will be available.
Recently, ESMA published its opinion on the functioning of the passport for EU AIFMs and the national private placement regimes and its advice on the application of the AIFMD passport to non‑EU AIFMs and AIFs.
ESMA's opinion on the functioning of the EU marketing passport and of the national private placement regimes
As regards the functioning of the EU marketing passport, ESMA expressed some concerns in relation to divergent approaches with respect to marketing rules and the definition of what constitutes a 'professional investor'. In addition, ESMA identified several issues regarding varying interpretations of what activities constitute ‘marketing’ and ‘material changes’ in the Member States. ESMA sees merit in harmonising in the definition of these terms. With respect to the functioning of the national private placement regime, ESMA is of the view that no major issues have raised in terms of the functioning and implementation of the AIFMD framework. However, ESMA did note that the delay in the transposition of the AIFMD made it difficult to arrive at a definitive assessment.
ESMA's advice on the application of the EU marketing passport to non-EU AIFMs and AIFs
In its advice, ESMA considered the potential extension of the EU marketing passport to six non-EU countries: Guernsey, Hong Kong, Jersey, Switzerland, Singapore and the United States.
According to ESMA, the passport can be made available to AIFMs and AIFs in Guernsey and Jersey. ESMA's advice for Switzerland is also positive. No definitive view was expressed with respect to Hong Kong, Singapore and the United States because of concerns related to competition, regulatory issues and insufficient information to properly assess the relevant criteria.
ESMA advised the European Parliament, the Council and the Commission to suspend their decision on the potential application of the EU marketing passport to Hong Kong, Singapore and the US.