Legal provisions of COM(2018)110 - Facilitating cross-border distribution of collective investment funds - Main contents

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dossier	COM(2018)110 - Facilitating cross-border distribution of collective investment funds.
document	COM(2018)110
date	June 20, 2019

Article 1

Subject matter

This Regulation establishes uniform rules on the publication of national provisions concerning marketing requirements for collective investment undertakings and on marketing communications addressed to investors, as well as common principles concerning fees and charges levied on managers of collective investment undertakings in relation to their cross-border activities. It also provides for the establishment of a central database on the cross-border marketing of collective investment undertakings.

Article 2

Scope

This Regulation shall apply to:

(a)	alternative investment fund managers;

(b)	UCITS management companies, including any UCITS which has not designated a UCITS management company;

(c)	EuVECA managers; and

(d)	EuSEF managers.

Article 3

Definitions

For the purposes of this Regulation, the following definitions apply:

(a)	‘alternative investment funds’ or ‘AIFs’ means AIFs as defined in point (a) of Article 4(1) of Directive 2011/61/EU, and include EuVECA, EuSEF and ELTIF;

(b)	‘alternative investment fund managers’ or ‘AIFMs’ means AIFMs as defined in point (b) of Article 4(1) of Directive 2011/61/EU and authorised in accordance with Article 6 of that Directive;

(c)	‘EuVECA manager’ means a manager of a qualifying venture capital fund as defined in point (c) of the first paragraph of Article 3 of Regulation (EU) No 345/2013 and registered in accordance with Article 14 of that Regulation;

(d)	‘EuSEF manager’ means a manager of a qualifying social entrepreneurship fund as defined in point (c) of Article 3(1) of Regulation (EU) No 346/2013 and registered in accordance with Article 15 of that Regulation;

(e)	‘competent authorities’ means competent authorities as defined in point (h) of Article 2(1) of Directive 2009/65/EC or in point (f) of Article 4(1) of Directive 2011/61/EU or competent authorities of the EU AIF as defined in point (h) of Article 4(1) of Directive 2011/61/EU;

(f)	‘home Member State’ means the Member State in which the AIFM, the EuVECA manager, the EuSEF manager or the UCITS management company has its registered office;

(g)	‘UCITS’ means a UCITS authorised in accordance with Article 5 of Directive 2009/65/EC;

(h)	‘UCITS management company’ means a management company as defined in point (b) of Article 2(1) of Directive 2009/65/EC.

Article 4

Requirements for marketing communications

1. AIFMs, EuVECA managers, EuSEF managers and UCITS management companies shall ensure that all marketing communications addressed to investors are identifiable as such and describe the risks and rewards of purchasing units or shares of an AIF or units of a UCITS in an equally prominent manner, and that all information included in marketing communications is fair, clear and not misleading.

2. UCITS management companies shall ensure that marketing communications that contain specific information about a UCITS do not contradict or diminish the significance of the information contained in the prospectus referred to in Article 68 of Directive 2009/65/EC or the key investor information referred to in Article 78 of that Directive. UCITS management companies shall ensure that all marketing communications indicate that a prospectus exists and that the key investor information is available. Such marketing communications shall specify where, how and in which language investors or potential investors can obtain the prospectus and the key investor information and shall provide hyperlinks to or website addresses for those documents.

3. Marketing communications referred to in paragraph 2 shall specify where, how and in which language investors or potential investors can obtain a summary of investor rights and shall provide a hyperlink to such a summary, which shall include, as appropriate, information on access to collective redress mechanisms at Union and national level in the event of litigation.

Such marketing communications shall also contain clear information that the manager or management company referred to in paragraph 1 of this Article may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU.

4. AIFMs, EuVECA managers and EuSEF managers shall ensure that marketing communications comprising an invitation to purchase units or shares of an AIF that contain specific information about an AIF do not contradict the information which is to be disclosed to the investors in accordance with Article 23 of Directive 2011/61/EU, with Article 13 of Regulation (EU) No 345/2013 or with Article 14 of Regulation (EU) No 346/2013, or diminish its significance.

5. Paragraph 2 of this Article shall apply mutatis mutandis to AIFs which publish a prospectus in accordance with Regulation (EU) 2017/1129 of the European Parliament and of the Council (13), or in accordance with national law, or apply rules on the format and content of the key investor information referred to in Article 78 of Directive 2009/65/EC.

6. By 2 August 2021, ESMA shall issue guidelines, and thereafter update those guidelines periodically, on the application of the requirements for marketing communications referred to in paragraph 1, taking into account on-line aspects of such marketing communications.

Article 5

Publication of national provisions concerning marketing requirements

1. Competent authorities shall publish and maintain on their websites up-to-date and complete information on the applicable national laws, regulations and administrative provisions governing marketing requirements for AIFs and UCITS, and the summaries thereof, in, as a minimum, a language customary in the sphere of international finance.

2. Competent authorities shall notify to ESMA the hyperlinks to the websites of competent authorities where the information referred to in paragraph 1 is published.

Competent authorities shall notify ESMA of any change in the information provided under the first subparagraph of this paragraph without undue delay.

3. ESMA shall develop draft implementing technical standards to determine standard forms, templates and procedures for the publications and notifications under this Article.

ESMA shall submit those draft implementing standards to the Commission by 2 February 2021.

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

Article 6

ESMA central database on national provisions concerning marketing requirements

By 2 February 2022, ESMA shall publish and maintain on its website a central database containing the summaries referred to in Article 5(1), and the hyperlinks to the websites of competent authorities referred to in Article 5(2).

Article 7

Ex-ante verification of marketing communications

1. For the sole purpose of verifying compliance with this Regulation and with national provisions concerning marketing requirements, competent authorities may require prior notification of marketing communications which UCITS management companies intend to use directly or indirectly in their dealings with investors.

The requirement for prior notification referred to in the first subparagraph shall not constitute a prior condition for the marketing of units of UCITS and shall not be part of the notification procedure referred to in Article 93 of Directive 2009/65/EC.

Where competent authorities require prior notification as referred to in the first subparagraph, they shall, within 10 working days of receipt of marketing communications, inform the UCITS management company of any request to amend its marketing communications.

The prior notification referred to in the first subparagraph may be required on a systematic basis or in accordance with any other verification practices and shall be without prejudice to any supervisory powers to verify marketing communications ex-post.

2. Competent authorities that require prior notification of marketing communications shall establish, apply, and publish on their websites, procedures for such prior notification. The internal rules and procedures shall ensure transparent and non-discriminatory treatment of all UCITS, regardless of the Member States in which the UCITS are authorised.

3. Where AIFMs, EuVECA managers or EuSEF managers market units or shares of their AIFs to retail investors, paragraphs 1 and 2 shall apply mutatis mutandis to those AIFMs, EuVECA managers or EuSEF managers.

Article 8

ESMA report on marketing communications

1. By 31 March 2021 and every second year thereafter, competent authorities shall report the following information to ESMA:

(a)	the number of requests for amendments of marketing communications made on the basis of ex-ante verification, where applicable;

(b)	the number of requests for amendments and decisions taken on the basis of ex-post verifications, clearly distinguishing the most frequent breaches, including a description and the nature of those breaches;

(c)	a description of the most frequent breaches of the requirements referred to in Article 4; and

(d)	one example of each of the breaches referred to in points (b) and (c).

2. By 30 June 2021 and every second year thereafter, ESMA shall submit a report to the European Parliament, the Council and the Commission which presents an overview of marketing requirements referred to in Article 5(1) in all Member States and contains an analysis of the effects of national laws, regulations and administrative provisions governing marketing communications based also on the information received in accordance with paragraph 1 of this Article.

Article 9

Common principles concerning fees or charges

1. Where fees or charges are levied by competent authorities for carrying out their duties in relation to the cross-border activities of AIFMs, EuVECA managers, EuSEF managers and UCITS management companies, such fees or charges shall be consistent with the overall cost relating to the performance of the functions of the competent authority.

2. For the fees or charges referred to in paragraph 1 of this Article, competent authorities shall send an invoice, an individual payment statement or a payment instruction, clearly setting out the means of payment and the date when payment is due, to the address referred to in the third subparagraph of Article 93(1) of Directive 2009/65/EC or point (i) of Annex IV of Directive 2011/61/EU.

Article 10

Publication of national provisions concerning fees and charges

1. By 2 February 2020, competent authorities shall publish and maintain up-to-date information on their websites listing the fees or charges referred to in Article 9(1), or, where applicable, the calculation methodologies for those fees or charges, in, as a minimum, a language customary in the sphere of international finance.

2. Competent authorities shall notify to ESMA the hyperlinks to the websites of competent authorities where the information referred to in paragraph 1 is published.

3. ESMA shall develop draft implementing technical standards to determine the standard forms, templates and procedures for the publications and notifications under this Article.

ESMA shall submit those draft implementing standards to the Commission by 2 February 2021.

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

Article 11

ESMA publication on fees and charges

1. By 2 February 2022, ESMA shall publish on its website hyperlinks to the websites of competent authorities as referred to in Article 10(2). Those hyperlinks shall be kept up to date.

2. By 2 February 2022, ESMA shall develop and make available on its website an interactive tool publicly accessible in, as a minimum, a language customary in the sphere of international finance that provides an indicative calculation of the fees or charges referred to in Article 9(1). That tool shall be kept up to date.

Article 12

ESMA central database on cross-border marketing of AIFs and UCITS

1. By 2 February 2022, ESMA shall publish on its website a central database on cross-border marketing of AIFs and UCITS, publicly accessible in a language customary in the sphere of international finance, listing:

(a)	all AIFs that are marketed in a Member State other than the home Member State, their AIFM, EuSEF manager or EuVECA manager, and the Member States in which they are marketed; and

(b)	all UCITS that are marketed in a Member State other than the UCITS home Member State as defined in point (e) of Article 2(1) of Directive 2009/65/EC, their UCITS management company and the Member States in which they are marketed.

That central database shall be kept up to date.

2. The obligations in this Article and in Article 13 related to the database referred to in paragraph 1 of this Article shall be without prejudice to the obligations related to the list referred to in the second subparagraph of Article 6(1) of Directive 2009/65/EC, to the central public register referred to in the second subparagraph of Article 7(5) of Directive 2011/61/EU, to the central database referred to in Article 17 of Regulation (EU) No 345/2013 and to the central database referred to in Article 18 of Regulation (EU) No 346/2013.

Article 13

Standardisation of notifications to ESMA

1. On a quarterly basis, competent authorities of home Member States shall communicate to ESMA the information which is necessary for the creation and maintenance of the central database referred to in Article 12 of this Regulation regarding any notification, notification letter or information referred to in Article 93(1) and Article 93a(2) of Directive 2009/65/EC and in Article 31(2), Article 32(2) and Article 32a(2) of Directive 2011/61/EU, and any changes to that information, if such changes would result in a change to the information in that central database.

2. ESMA shall establish a notification portal into which each competent authority shall upload all documents referred to in paragraph 1.

3. ESMA shall develop draft implementing technical standards to specify the information to be communicated, as well as the forms, templates and procedures for communication of the information by the competent authorities for the purposes of paragraph 1, and the technical arrangements necessary for the functioning of the notification portal referred to in paragraph 2.

ESMA shall submit those draft implementing technical standards to the Commission by 2 February 2021.

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph of this paragraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

Article 14

Powers of competent authorities

1. Competent authorities shall have all supervisory and investigatory powers that are necessary for the exercise of their functions pursuant to this Regulation.

2. The powers conferred on competent authorities pursuant to Directives 2009/65/EC and 2011/61/EU, Regulations (EU) No 345/2013, (EU) No 346/2013 and (EU) 2015/760, including those related to penalties or other measures, shall also be exercised with respect to the managers referred to in Article 4 of this Regulation.

Article 15

Amendments to Regulation (EU) No 345/2013

Regulation (EU) No 345/2013 is amended as follows:

(1)

in Article 3, the following point is added:

‘(o)

“pre-marketing” means provision of information or communication, direct or indirect, on investment strategies or investment ideas by a manager of a qualifying venture capital fund, or on its behalf, to potential investors domiciled or with a registered office in the Union in order to test their interest in a qualifying venture capital fund which is not yet established, or in a qualifying venture capital fund which is established, but not yet notified for marketing in accordance with Article 15, in that Member State where 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 investor to invest in the units or shares of that qualifying venture capital fund.’;

(2)

the following Article is inserted:

‘Article 4a

1. A manager of a qualifying venture capital fund may engage in pre-marketing in the Union, except where the information presented to potential investors:

(a)	is sufficient to allow investors to commit to acquiring units or shares of a particular qualifying venture capital fund;

(b)	amounts to subscription forms or similar documents whether in a draft or a final form; or

(c)	amounts to constitutional documents, a prospectus or offering documents of a not-yet-established qualifying venture capital fund in a final form.

Where a draft prospectus or offering documents are provided, they shall not contain information sufficient to allow investors to take an investment decision and shall clearly state that:

(a)	they do not constitute an offer or an invitation to subscribe to units or shares of a qualifying venture capital fund; and

(b)	the information presented therein should not be relied upon because it is incomplete and may be subject to change.

2. Competent authorities shall not require a manager of a qualifying venture capital fund to notify the competent authorities of the content or of the addressees of pre-marketing, or to fulfil any conditions or requirements other than those set out in this Article, before it engages in pre-marketing.

3. Managers of qualifying venture capital funds shall ensure that investors do not acquire units or shares in a qualifying venture capital fund through pre-marketing and that investors contacted as part of pre-marketing may only acquire units or shares in that qualifying venture capital fund through marketing permitted under Article 15.

Any subscription by professional investors, within 18 months of the manager of a qualifying venture capital fund having begun pre-marketing, to units or shares of a qualifying venture capital fund referred to in the information provided in the context of pre-marketing, or of a qualifying venture capital fund established as a result of the pre-marketing, shall be considered to be the result of marketing and shall be subject to the applicable notification procedures referred to in Article 15.

4. Within two weeks of having begun pre-marketing, a manager of a qualifying venture capital fund shall send an informal letter, in paper form or by electronic means, to the competent authorities of its home Member State. That letter shall specify the Member States in which and the periods during which the pre-marketing is taking or has taken place, a brief description of the pre-marketing including information on the investment strategies presented and, where relevant, a list of the qualifying venture capital funds which are or were the subject of pre-marketing. The competent authorities of the home Member State of the manager of a qualifying venture capital fund shall promptly inform the competent authorities of the Member States in which the manager of a qualifying venture capital fund is or was engaged in pre-marketing. The competent authorities of the Member State in which pre-marketing is taking or has taken place may request the competent authorities of the home Member State of the manager of a qualifying venture capital fund to provide further information on the pre-marketing that is taking or has taken place on its territory.

5. A third party shall only engage in pre-marketing on behalf of an authorised manager of qualifying venture capital fund where it is authorised as an investment firm in accordance with Directive 2014/65/EU of the European Parliament and of the Council (*1), as a credit institution in accordance with Directive 2013/36/EU of the European Parliament and of the Council (*2), as a UCITS management company in accordance with Directive 2009/65/EC, as an alternative investment fund manager in accordance with Directive 2011/61/EU, or acts as a tied agent in accordance with Directive 2014/65/EU. Such a third party shall be subject to the conditions set out in this Article.

6. A manager of a qualifying venture capital fund shall ensure that pre-marketing is adequately documented.

(*1) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349)."

(*2) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).’."

Article 16

Amendments to Regulation (EU) No 346/2013

Regulation (EU) No 346/2013 is amended as follows:

(1)

in Article 3, the following point is added:

‘(o)

“pre-marketing” means provision of information or communication, direct or indirect, on investment strategies or investment ideas by a manager of a qualifying social entrepreneurship fund, or on its behalf, to potential investors domiciled or with a registered office in the Union in order to test their interest in a qualifying social entrepreneurship fund which is not yet established, or in a qualifying social entrepreneurship fund which is established, but not yet notified for marketing in accordance with Article 16, in that Member State where 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 investor to invest in the units or shares of that qualifying social entrepreneurship fund.’;

(2)

the following Article is inserted:

‘Article 4a

1. A manager of a qualifying social entrepreneurship fund may engage in pre-marketing in the Union, except where the information presented to potential investors:

(a)	is sufficient to allow investors to commit to acquiring units or shares of a particular qualifying social entrepreneurship fund;

(b)	amounts to subscription forms or similar documents whether in a draft or a final form; or

(c)	amounts to constitutional documents, a prospectus or offering documents of a not-yet-established qualifying social entrepreneurship fund in a final form.

Where a draft prospectus or offering documents are provided, they shall not contain information sufficient to allow investors to take an investment decision and shall clearly state that:

(a)	they do not constitute an offer or an invitation to subscribe to units or shares of a qualifying social entrepreneurship fund; and

(b)	the information presented therein should not be relied upon because it is incomplete and may be subject to change.

2. Competent authorities shall not require a manager of a qualifying social entrepreneurship fund to notify the competent authorities of the content or of the addressees of pre-marketing, or to fulfil any conditions or requirements other than those set out in this Article, before it engages in pre-marketing.

3. Managers of qualifying social entrepreneurship funds shall ensure that investors do not acquire units or shares in a qualifying social entrepreneurship fund through pre-marketing and that investors contacted as part of pre-marketing may only acquire units or shares in that qualifying social entrepreneurship fund through marketing permitted under Article 16.

Any subscription by professional investors, within 18 months of the manager of a qualifying social entrepreneurship fund having begun pre-marketing, to units or shares of a qualifying social entrepreneurship fund referred to in the information provided in the context of pre-marketing, or of a qualifying social entrepreneurship fund established as a result of the pre-marketing, shall be considered to be the result of marketing and shall be subject to the applicable notification procedures referred to in Article 16.

4. Within two weeks of having begun pre-marketing, a manager of a qualifying social entrepreneurship fund shall send an informal letter, in paper form or by electronic means, to the competent authorities of its home Member State. That letter shall specify the Member States in which and the periods during which the pre-marketing is taking or has taken place, a brief description of the pre-marketing including information on the investment strategies presented and, where relevant, a list of the qualifying social entrepreneurship funds which are or were the subject of pre-marketing. The competent authorities of the home Member State of the manager of a qualifying social entrepreneurship fund shall promptly inform the competent authorities of the Member States in which the manager of a qualifying social entrepreneurship fund is or was engaged in pre-marketing. The competent authorities of the Member State in which pre-marketing is taking or has taken place may request the competent authorities of the home Member State of the manager of a qualifying social entrepreneurship fund to provide further information on the pre-marketing that is taking or has taken place on its territory.

5. A third party shall only engage in pre-marketing on behalf of an authorised manager of a qualifying social entrepreneurship fund where it is authorised as an investment firm in accordance with Directive 2014/65/EU of the European Parliament and of the Council (*3), as a credit institution in accordance with Directive 2013/36/EU of the European Parliament and of the Council (*4), as a UCITS management company in accordance with Directive 2009/65/EC, as an alternative investment fund manager in accordance with Directive 2011/61/EU, or acts as a tied agent in accordance with Directive 2014/65/EU. Such a third party shall be subject to the conditions set out in this Article.

6. A manager of a qualifying social entrepreneurship fund shall ensure that pre-marketing is adequately documented.

(*3) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349)."

(*4) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).’."

Article 17

Amendments to Regulation (EU) No 1286/2014

Regulation (EU) No 1286/2014 is amended as follows:

(1)	in Article 32(1), ‘31 December 2019’ is replaced by ‘31 December 2021’;

(2)

Article 33 is amended as follows:

(a)	in the first subparagraph of paragraph 1, ‘31 December 2018’ is replaced by ‘31 December 2019’;

(b)	in the first subparagraph of paragraph 2, ‘31 December 2018’ is replaced by ‘31 December 2019’;

(c)	in the first subparagraph of paragraph 4, ‘31 December 2018’ is replaced by ‘31 December 2019’.

Article 18

Evaluation

By 2 August 2024 the Commission shall, on the basis of a public consultation and in light of discussions with ESMA and competent authorities, conduct an evaluation of the application of this Regulation.

By 2 August 2021 the Commission shall, on the basis of a consultation of competent authorities, ESMA and other relevant stakeholders, submit a report to the European Parliament and to the Council on reverse solicitation and demand on the own initiative of an investor, specifying the extent of that form of subscription to funds, its geographical distribution, including in third countries, and its impact on the passporting regime. That report shall also examine whether the notification portal established in accordance with Article 13(2) should be developed so that all transfers of documents between competent authorities take place through it.

Article 19

Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 1 August 2019.

However, Article 4(1) to (5), Article 5(1) and (2), Article 15 and Article 16 shall apply from 2 August 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.