Cross-border distribution: New EU regulation and directive

The new EU regulation and directive on cross-border distribution were published in the Official Journal of the European Union on 12 July 2019.

1. Cross-border distribution directive (EU) 2019/1160 amending the UCITS and AIFM directives

This directive notably includes:

1. - A pre-marketing definition for AIFMs¹ : the new directive allows AIFMs to engage in pre-marketing activities to test an investment idea or an investment strategy with EU professional investors in order to test their interest in an AIF or a compartment which has not yet been established, or which is established, but has not yet been notified for marketing in the Member State where the potential investors are domiciled or have their registered office.
2. Pre-marketing in the EU is, however, not permitted where the information presented to potential professional investors:
   1. (a) is sufficient to allow investors to commit to acquiring units or shares of a particular AIF;
   2. (b) amounts to subscription forms or similar documents whether in a draft or a final form; or
   3. (c) amounts to constitutional documents, a prospectus or offering documents of a not-yet-established AIF in final form.
   4. Specific conditions apply in the case where a draft prospectus or offering documents are provided.
   5. No pre-marketing definition has been provided in the directive for UCITS.
3. - A de-notification process for marketing of units/shares of UCITS and AIFs;
4. - New facilities to be made available to UCITS/AIF retail investors;
5. - New requirements in case of changes to information contained in the marketing notification of UCITS/AIFs.

The directive must be implemented into national law by 2 August 2021 at the latest and Member States must apply those new provisions from the same date, i.e. 2 August 2021.

2. Cross-border distribution regulation (EU) 2019/1156 amending EUVECA, EUSEF and PRIIPS regulations

This regulation notably includes:

1. - A pre-marketing definition for EuVECA/EuSEF (which is the same as the one provided for AIFMs);
2. - New requirements as regards the fees and charges of competent authorities;
3. - The implementation of a new ESMA central database on cross-border marketing of UCITS/AIFs;
4. - The standardisation of notifications to ESMA;
5. - New marketing communication requirements;
6. - An amendment to the PRIIPs Regulation which aims to push back (i) the UCITS exemption to produce a PRIIPs KID to 31 December 2021 and (ii) the EU Commission's review of the PRIIP Regulation to 31 December 2019.

The Regulation will become applicable on 1 August 2019, except for the new requirements for marketing communications and the amendment of the EuVECA and EuSEF Regulations which shall apply from 2 August 2021.