Pre-marketing by AIFMs

Article 30a of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (the “AIFMD”), as transposed by Articles 28-1 and 28-2 of the Law of 12 July 2013 on alternative investment fund managers (“AIFM Law”), provides the conditions and the notification procedure for pre-marketing in the European Union by EU AIFMs.

Pre-marketing is defined as 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 AIF or a compartment which is not yet established, or which is established, but not yet notified for marketing in accordance with Article 31 or 32 of the AIFMD, 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 AIF or compartment.

Directive (EU) 2019/1160 (the “CBDF Directive”) mentions that national laws, regulations and administrative provisions necessary to comply with the AIFMD and, in particular, with harmonised rules on pre-marketing, should not in any way disadvantage EU AIFMs vis-à-vis non-EU AIFMs. Consequently, and in order to create a level playing field between EU AIFMs and non-EU AIFMs, the CSSF considers that the same conditions and notification procedure as mentioned in Article 30a of the AIFMD, and as explained in section I. below, apply to non-EU AIFMs when they engage in pre-marketing to potential professional investors in Luxembourg.

All AIFMs shall ensure that pre-marketing is adequately documented.

Article 28-1 of the AIFM Law provides that a Luxembourg-authorised AIFM may engage in pre-marketing in Luxembourg and in another Member State, except where the information presented to potential professional investors:

(a) is sufficient to allow investors to commit to acquiring units or shares of a particular AIF;
(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 AIF 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 an AIF; and
(b) the information presented therein should not be relied upon because it is incomplete and may be subject to change.

Luxembourg-authorised AIFMs engaging in pre-marketing in either Luxembourg or in another Member State shall send a duly completed and signed Pre-Marketing Notification Letter to the CSSF, within two weeks of starting pre-marketing.

The Pre-Marketing Notification Letter or any amendment thereto shall be sent to the CSSF in accordiance with the practical procedures described in Circular CSSF 22/810.

Thereafter, the CSSF shall promptly inform the competent authorities of the Member State(s) in which the Luxembourg AIFM is or has been engaged in pre-marketing.

Luxembourg-authorised AIFMs engaging non-EU AIFs in pre-marketing to potential professional investors in Luxembourg shall also send a duly completed and signed Pre-Marketing Notification Letter to the CSSF, within two weeks of starting pre-marketing. The CSSF emphasises that any subscription to units or shares of the AIF, or to the compartment(s) referred to in the information provided in the context of pre-marketing, or of an AIF or compartment established as a result of this pre-marketing, made within 18 months of the AIFM having begun pre-marketing, by professional investors in the relevant Member State shall be considered to be the result of marketing. This includes subscriptions made by professional investors subscribing at their own initiative and those which have not been approached during the pre-marketing phase. Such subscriptions shall be subject to the applicable notification procedure referred to in the AIFM Law (or to the Luxembourg marketing regime for Luxembourg AIFMs marketing non-EU AIFs without a passport mentioned under Article 37 of the AIFM Law).

A third party shall only engage in pre-marketing in the relevant Member State on behalf of a Luxembourg-authorised AIFM where it is authorised as an investment firm in accordance with Directive 2014/65/EU, as a credit institution in accordance with Directive 2013/36/EU, as a UCITS management company in accordance with Directive 2009/65/EC, as an AIFM in accordance with the AIFMD, or acts as a tied agent in accordance with Directive 2014/65/EU.

If an EU AIFM established in another Member state intends to pre-market to professional investors in Luxembourg, the AIFM must ensure that the CSSF receives the documentation referred to in paragraph (2), subparagraph 3, of Article 30a of the AIFMD from the competent authorities of the home Member State. The Pre-Marketing Notification Letter is transmitted directly to the CSSF by the authority of the home Member State of the AIFM. The AIFM is obliged to distribute the aforementioned notification either in French, German, English or Luxembourgish.

The CSSF may request the competent authorities of the home Member State of the EU AIFM to provide further information on the pre-marketing that is taking or has taken place on its territory.

A third party shall only engage in pre-marketing in Luxembourg on behalf of an authorised EU AIFM where it is authorised as an investment firm in accordance with Directive 2014/65/EU, as a credit institution in accordance with Directive 2013/36/EU, as a UCITS management company in accordance with Directive 2009/65/EC, as an AIFM in accordance with the AIFMD, 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 Article 30a of the AIFMD.

It should be noted that EU AIFMs engaging non-EU AIFs in pre-marketing to potential professional investors in Luxembourg shall send a duly completed and signed Pre-Marketing Notification Letter (for Luxembourg AIFMs) and a Pre-Marketing Notification Letter Art. 37 (for non-Luxembourg EU AIFMs), within two weeks of it having begun pre-marketing, directly to the CSSF and not to the authorities of their home Member State.

The Pre-Marketing Notification Letter or any changes thereto must be sent to the following email address: luaifmprema@cssf.lu.

EU AIFMs shall ensure that investors in Luxembourg do not acquire units or shares in an AIF through pre-marketing and that investors contacted as part of pre-marketing may only acquire units or shares in that AIF through marketing permitted under Article 32 of the AIFMD or Article 37 of the AIFM Law.

The CSSF emphasises that any subscription to units or shares of the AIF, or to the compartment(s) referred to in the information provided in the context of pre-marketing, or of an AIF or compartment established as a result of this pre-marketing, made within 18 months of the EU AIFM having begun pre-marketing, by professional investors in Luxembourg shall be considered to be the result of marketing. This includes subscriptions made by professional investors subscribing at their own initiative and those which have not been approached during the pre-marketing phase. Such subscriptions shall be subject to the applicable notification procedure referred to in the AIFMD (or to the Luxembourg marketing regime for EU AIFMs marketing non-EU AIFs without a passport mentioned under Article 37 of the AIFM Law).

The CBDF Directive mentions that national laws, regulations and administrative provisions necessary to comply with the AIFMD and, in particular, with harmonised rules on pre-marketing, should not in any way disadvantage EU AIFMs vis-à-vis non-EU AIFMs. Consequently, and in order to create a level playing field between EU AIFMs and non-EU AIFMs, the CSSF considers that the same conditions and notification procedure as mentioned in Article 30a of the AIFMD, and as explained in section I. above, apply to non-EU AIFMs when they engage in pre-marketing to potential professional investors in Luxembourg.

Non-EU AIFMs engaging in pre-marketing to potential professional investors in Luxembourg shall send a duly completed and signed Pre-Marketing Notification Letter, within two weeks of it having begun pre-marketing, to the CSSF.

The Pre-Marketing Notification Letter or any changes thereto must be sent to the following email address: luaifmprema@cssf.lu.