National Private Placement Regimes & Reverse Solicitation
National Private Placement Regimes principally relates to the marketing of non-EEA AIFs and AIFs managed by non-EEA AIFMs. As AIFMD has been implemented in each EU member state there have invariably been differences in approach to certain areas.
The fund registration process therefore varies from country to country and must be considered on an individual basis when making applications to ensure that all the requirements of each member state are met.
The cross border distribution of funds (CBDF) legislation is primarily applicable to EU AIFMs and in particular, the facilitative re-marketing and de-registration processes are available only to EU AIFMs.
Non-EU AIFMs, including UK AIFMs, are dependent on Member States' national private placement regimes or NPPRs facilitating the sale and marketing of AIFs by non-EU AIFMs to EU investors. As such, any impact of the CBDF legislation on non-EU AIFMs will likely only arise to the extent Member States elect to reflect CBDF provisions within their NPPRs.
While certain NPPRs provide relatively straightforward access (the Nordic countries and Ireland for example), others impose a relatively demanding authorisation process and require third party firms marketing to local investors on behalf of the AIFM to be authorised as a MiFID investment firm or EU credit institution. ESMA's Guidelines on marketing disclosures acknowledge this, noting that distributors appointed by AIFMs are generally MiFID investment firms and as such the Guidelines, while not directly applicable to distributors, are aligned with the MiFID rules for investor information to be fair, clear and not misleading.
Notably, the CBDF legislation requires Member State NPPRs not to disadvantage EU AIFMs vis-à-vis non-EU AIFMs. As such, Member States may seek to align NPPRs with the CBDF legislation so that EU AIFMs are not subject to more onerous requirements under the CBDF legislation than those applicable to non-EU AIFMs under Member State NPPRs. To the extent NPPRs are amended to align with the CBDF legislation and if not already provided for under the relevant NPPR, non-EU AIFMs should note that premarketing of AIFs which have either not been established or not yet registered to market cross-border, may only be carried out on behalf of the EU AIFM by a third party authorised as a MiFID investment firm, EU credit institution, UCITS manager, AIFM or a third party acting as a tied agent under MiFID.