Additional questions have been added to the August 2015 update of the CSSF FAQ on the AIFMD and its application in Luxembourg. The responses to these questions clarify two important aspects of the AIFMD regime: the marketing of AIFs and the reverse solicitation exemption.
1. Marketing action
According to the FAQ, a marketing action takes place "when the AIF, the AIFM or an intermediary on their behalf seeks to raise capital by actively making units or shares of an AIF available for firm purchase by a potential investor".
Does a single presentation of draft documents in relation to an AIF by an AIFM to investors constitute marketing and require prior notification to the CSSF? The answer to this question is no, provided that the draft documents cannot be used by investors to formally subscribe or commit to subscribe for shares or units of the AIF. Any subsequent subscription to the AIF shares and units by the investors to whom draft documents relating to this AIF were presented cannot benefit from the reverse solicitation exemption (see point 2).
Regarding the means, marketing can be performed by offering or placing AIF shares and units in various forms, e.g. advertisement, distribution of AIF documents to prospective investors, road shows, provided the material delivered to investors can be used to formally subscribe or commit to subscribe for shares or units of the AIF. The physical presence of the AIFM on Luxembourg territory is not required; means of distance marketing and use of Luxembourg-based intermediaries (e.g. management companies, credit institutions or professionals of the financial sector authorised under the Law of 1993(3)), are also allowed. Distance marketing qualifies as marketing in Luxembourg when the investors are domiciled or have their registered office in Luxembourg.
2. Reverse solicitation
The concept of reverse solicitation which allows investors to subscribe for AIF shares and units without prior obligation for its AIFM to comply with the AIFMD marketing requirements is characterised by the absence of any solicitation by the AIF or its AIFM (or an intermediary acting on their behalf) in relation to this AIF.
Two cumulative conditions must be met:
- the investor (or an agent of the investor) has approached the AIFM or the AIF on its own initiative with the intention of investing in or, initially, receiving information regarding AIF(s) managed by such AIFM;
- neither the AIFM nor the AIF (nor any intermediary acting on their behalf) has solicited the investor to invest in this AIF.
The CSSF takes the view that the AIFM must be able to prove the investor's initiative. In this respect, the CSSF states that written confirmation by the investor that he/she has decided on his/her own initiative to invest in (or, initially, request for information on) the relevant AIF(s) can be produced.
Investments made in AIFs in the context of discretionary portfolio management, advisory agreement and collective management of UCI/AIF (on the initiative of the investment manager, the adviser, the UCI/AIF, its portfolio manager, or another agent, respectively) do not constitute marketing.
The FAQ also clarifies a few additional points:
- the possibility for an investment firm and a credit institution to combine the status of investment firm or credit institution and registered AIFM;
- the scope of permitted activities for professional depositaries of assets other than financial instruments; and
- the reporting obligation by a non-EU AIFM in the case where it manages or markets a feeder AIF (whether EU or non-EU) in Luxembourg.