Non-UK AIFMs

Find out about management and marketing passport rights in the UK for alternative investment fund managers (AIFMs) authorised in their EEA home Member State.

EEA firms

AIFMs authorised in their EEA home Member State (EEA AIFM), should be able to exercise management and marketing passport rights in the UK in relation to certain types of EEA alternative investment fund (AIF), on a services and/or establishment basis, from 22 July 2013 onwards.

In order to exercise these rights, the EEA AIFM’s home Member State competent authority will need to send the relevant notification forms, in accordance with the requirements of the Alternative Investment Fund Managers directive (AIFMD), to us as the UK’s competent authority for these purposes.

We set out below some Q&A, with a view to assisting firms and their advisers with this process. These Q&As are not a substitute for considering the relevant parts of the Treasury legislation, EU legislation and FCA Handbook or seeking professional advice, as appropriate. They do not purport to deal with issues arising out of the law of other Member States.

Managing AIF

Do we need to send the management passport notification to the FCA?

No, your home State competent authority will do this for you. You will, however, need to send any approved persons forms to the FCA (see Q5), if you are exercising a branch passport right in the UK.

We already have a passport to do management business in the UK under the UCITS directive. Can we continue to use our UCITS passport in relation to our UCITS business in the UK, in addition to exercising passport rights under the AIFMD?

Yes. You will though need to make a separate notification to your home State competent authority if you wish to manage or market an EEA AIF on a passported basis.

Our UCITS passport also enables us to carry on additional MiFID investment services in the UK, as well as managing UCITS. Can we continue to use our UCITS passport to carry on these additional MiFID services in the UK, as well as exercising passport rights under the AIFMD?

Yes. You will though need to make a separate notification to your home State competent authority if you wish to market or manage an EEA AIF on a passported basis. Regarding passporting the MiFID services under AIFMD, we have made a statement under AIFMD latest news as of 7 June 2013.

We already have a MiFID passport to provide MiFID investment services in the UK, but not a UCITS passport. Can we exercise AIFMD passport rights in addition to continuing to use our MiFID passport to carry on these additional MiFID services in the UK?

Possibly. This will depend on whether this is permitted by your home State competent authority. If so, you will be able to exercise concurrent passport rights under MiFID and AIFMD in the UK, in accordance with the relevant requirements. As a manager of an AIF, you will only be able though to carry on those additional MiFID investment services permitted by and in accordance with article 6 AIFMD, including portfolio management and non-core services comprising investment advice, safekeeping and administration and reception and transmission of orders in relation to financial instruments.

If you are carrying on an activity under a MiFID passport prior to 22 July 2013 which after that date amounts to managing an AIF in the UK, you should have a passport for managing AIF in place in order to continue that activity, unless you can benefit from transitional arrangements in place until 22 July 2014. In order to benefit from those arrangements where your activity amounts to establishing, operating or winding up a collective investment scheme, you will need to have the corresponding top-up permission in place.

Will we need to make any other UK regulatory notifications or applications when managing AIF in the UK?

Yes, if you are exercising the right to manage EEA AIF from a branch in the UK. You will need to ensure that all persons carrying on ‘controlled functions’ have been approved by us for these purposes, if they are not currently approved. The relevant controlled functions to consider are the money laundering reporting officer [CF11], the customer function [CF30] and possibly the significant management function [CF29].

We have a top-up permission enabling us to operate collective investment schemes in the UK. Will we be still be able to make use of this permission to manage UK AIF in the UK?

Yes, but only for a transitional period to be provided for in the Treasury’s Alternative Investment Fund Managers Regulations 2013 [22 July 2014 at the latest], assuming that this arrangement is consistent with the law of your home Member State.

Marketing AIF

Do we need to send the marketing passport notification to the FCA?

No, your home State competent authority will do this for you.

We wish to market our AIF in the United Kingdom to a wider category of investors than ‘professional investors’, as defined by the AIFMD. Can we do this?

Yes, a full scope EEA AIFM wishing to market a UK AIF or EEA AIF (that is not a feeder AIF, the master AIF of which is managed by a non-EEA AIFM or is a non-EEA AIF) to retail investors in the United Kingdom may do so if its home competent authority has submitted a passport notification to the FCA to market the AIF to professional investors or by applying to the FCA directly using the following form:

However, where your AIF takes the form of an unregulated collective investment scheme, you may only promote these to UK investors in accordance with section 238 FSMA and the financial promotion regime (section 21 FSMA), as applicable (see chapter 8.20 of our Perimeter Guidance - PERG 8.20G). Broadly, unregulated collective investment schemes cannot be marketed to the general public. For those restricted categories of UK non-professional investors to whom AIF can be promoted, see PERG 8.20.3-4G.

The promotion of an unregulated collective investment scheme by an unauthorised manager (that is a manager who is not exercising passport rights or has a top-up permission) to a prohibited category of investor is a criminal offence. The promotion of an unregulated collective investment scheme by an authorised manager to a prohibited category of investor is a breach of statutory duty and liable to action for damages (section 241 FSMA) and regulatory sanction.

Is it possible to market our EEA AIF to all categories of UK investor, including all types of retail investor, like a UCITS scheme?

Yes, but if the EEA AIF is an unauthorised collective investment scheme for the purposes of FSMA, you need to make an application to us for recognition of your scheme pursuant to section 272 FSMA. In this case, we will determine your marketing application either before the end of the period for determining your application for recognition or within 20 working days of receiving your marketing application if this period is longer, for example if the marketing application is made shortly before the determination of your application for recognition. When determining the application for recognition of an EEA AIF we must have regard to the requirements applicable to comparable UK authorised schemes. We have six months from receipt of your completed application to make our determination.

We have published a prospectus in accordance with the Prospectus directive in relation to an AIF. Are we also required to have a marketing passport in order to market this AIF we manage, in the UK?

No, at least as a matter of UK law, during a transitional period to be provided for in the Treasury’s Alternative Investment Fund Managers Regulations 2013. If the prospectus has been drawn up and published in accordance with the Prospectus directive before 22 July 2013, there is no need to have recourse to an AIFMD marketing passport for the duration of that prospectus. Subject to these transitional arrangements, however, the requirements of both the Prospectus Directive and the AIFMD apply to AIFM.

We want to market European Social Entrepreneurship funds (EUSEF) and European venture capital funds (EuVECA) to UK investors. Can we do this as part of or in addition to an AIFMD marketing passport?

No. A manager first needs to be registered by its home State competent authority pursuant to the EU regulations as a EuVECA manager or EuSEF manager, prior to exercising marketing passport rights in relation to EuVECA or EuSEF. Under these regulations, registration is only available to managers which are not authorised under the AIFMD and manage assets not exceeding the €500 million threshold referred to in point (b) of Article 3(2) AIFMD.

We are an EEA AIFM currently lawfully marketing EEA AIFs to UK investors. By when we will need an AIFMD marketing passport to do the same?

By 22 July 2014, at the latest. Until then, as a matter of UK law, you may promote AIFs to UK investors, albeit in the case of unregulated collective investment schemes only in accordance with section 238 FSMA and the financial promotion regime (section 21 FSMA), as applicable (see PERG 8.20G). For sanctions in relation to breach of these requirements, see answer to Q8 above.

Passport rights

Will our home Member State need to have transposed the AIFMD, prior to our exercise of passport rights?

Yes, we would not expect to receive either a management or marketing notification from a competent authority of a home Member State until it has transposed the directive.

3rd country firms

Firms based in non-EEA (3rd country) jurisdictions wishing to market AIFs in the UK will also be required to comply with the National Private Placement Regime as well as our financial promotion rules. The Treasury has put in place transitional arrangements for the regime, for firms to be able to continue to carry on non-EEA activities on the basis of existing requirements.

EEA firms or full scope UK AIFMs managing non-EEA AIFs and wishing to use the National Private Placement Regime.