Alternative investment fund managers (“AIFMs”) that wish to examine to what extent investors are open to a certain investment idea or investment strategy were until recently faced with a divergent approach to pre-marketing in the various national legal systems within the European Union.
The European legislator aimed to address this by introducing Directive 2019/1160[1] and Regulation 2019/1156[2] (as transposed into Belgian law[3]), which became effective as of 2 August 2021. At European level, a unified definition of “pre-marketing” is provided and the conditions for pre-marketing are set out. This will allow AIFMs to ‘test the market’ without having to fulfil the formalities and obligations normally required in the preparatory phase.
Definition of pre-marketing
Pre-marketing is defined as follows:
- the provision of information or communication, direct or indirect, on investment strategies or investment ideas;
- by an EU AIFM or on its behalf;
- to potential professional investors domiciled, or with a registered office, in the Union;
- in order to test their interest in an alternative investment fund (“AIF”) or a compartment which is not yet established, or which is established but not yet notified for marketing in accordance with the AIFM Directive[4], in the Member State in which the potential investors are domiciled or have their registered office; and
- which in each case does not amount to an offer or placement to the potential investors to invest in the units of that AIF or compartment.
Conditions for pre-marketing
An AIFM may engage in pre-marketing of units of an AIF, but the information provided must not:
- be sufficient to allow investors to acquire units; or
- amount to subscription forms or similar documents (in draft or final form); or
- amount to constitutional documents, a prospectus or offering documents of a not-yet-established AIF in a final form.
Moreover, where a draft prospectus or offering documents are provided, they must not contain sufficient information to allow investors to take an investment decision and must clearly state that (i) they do not constitute an offer or an invitation to subscribe for units of an AIF, and (ii) the information presented therein should not be relied upon because it is incomplete and may be subject to change.
In addition, AIFMs must ensure that investors do not acquire units in an AIF through pre-marketing and that investors contacted as part of pre-marketing may only acquire units in that AIF through marketing permitted under the AIFM Directive.
However, if within the first 18 months of the AIFM’s pre-marketing a subscription is made for units of an AIF referred to in the pre-marketing information, or an AIF established as a result of the pre-marketing, the subscription will be considered to be the result of marketing and will be subject to the applicable notification procedures (as set out in the AIFM Directive).
Notification to the regulator
An AIFM must inform the FSMA within two weeks of commencing pre-marketing, whereupon the FSMA will inform the competent authorities of the Member States in which the AIFM is or was engaged in pre-marketing.
Our Banking & Finance team is at your disposal to assist you in this respect.
Benoît Vandervelde, Partner, Brussels
Florence Berchem, Junior Associate, Brussels
Anaïs Casteur, Junior Associate, Brussels
[1] Directive (EU) 2019/1160 of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU with regard to cross-border distribution of collective investment undertakings.
[2] Regulation (EU) 2019/1156 of 20 June 2019 on facilitating cross-border distribution of collective investment undertakings. This Regulation will not be discussed in this newsletter but is mentioned for the sake of completeness.
[3] Law of 4 July 2021 on the transposition of European directives and implementation of European regulations on financial matters (I).
[4] Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) nr. 1060/2009 and (EU) nr. 1095/2010.
