On 21 May 2021, the Luxembourg Parliament (Chambre des Députés) published an amended version of the Draft Law 7737 transposing the directive (UE) 2019/1160 of the European Parliament and of the Council of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU with regard to cross-border distribution of collective investment undertakings (the “Directive”) and amending the amended law of 17 December 2010 regarding undertakings for collective investment (the “OPC Law”) and the amended law of 12 July 2013 related to alternative investment fund managers (the “Draft AIFM Law”) (the “Draft Law”). The Draft Law aims to transpose the Directive into Luxembourg Law. The regulation 2019/1156 of the European Parliament and of the Council of 20 June 2019 on facilitating cross-border distribution of collective investment undertakings and amending Regulations (EU) 345/2013, (EU) 346/2013 and (EU) 1286/2014 (the “Regulations”), for which no transposition is needed, completes the Directive. Further information on the Directive and the Regulations can be found in our previous newsletters here and here.
The transposition of the Directive into Luxembourg law
The Draft Law proposes to implement all the provisions of the Directive with no additional clarification. The text of the Bill of Law as adopted by the Chamber of the Deputies on 21 May is unlikely to change at this stage and a promulgation of the final law can be expected relatively soon, and in any cases, by the deadline posed by the Directive.
Therefore as of 2 August 2021 the following changes should be effective in Luxembourg:
- The discontinuation of marketing will move to a regulator-to-regulator procedure. Under the new regime UCITS or AIFM will notify the CSSF of their intention to stop the marketing of shares identifying the relevant Member States. Upon verification that the conditions provided by the law have been meet, the CSSF will then notify the relevant Member States regulator.
- UCITS and AIFM targeting retail investors will no longer be required to appoint local agents in the Member States where they want to market shares. The functions and services previously rendered by local agents will in the future be performed directly by the UCITS or the AIFM, who may delegate such functions.
- The CSSF will now have 15 business days to inform a UCITS or an AIFM that it should not proceed with a contemplated amendment to the marketing notification letter if it deems that the UCITS or the AIFM will no longer comply with applicable law, as a result of this change.
- The new harmonised regime for pre-marketing to professional investors will apply in Luxembourg. It will not be necessary to inform the CSSF before starting such activities. No subscriptions shall be accepted during the pre-marketing phase. The same rules will apply across the EU and Luxembourg based AIFMs will be authorised to undertake pre-marketing activities in other EU Member States within the same limits. Luxembourg based AIFMs will have to inform the CSSF within 2 weeks as of the start of pre-marketing activities that those activities are taking or took place. AIFMs which have undertaken pre-marketing activities in a Member State will not be able to rely on the reverse solicitation for a period of 18 months.
The other rules immediately applicable as of 2 August 2021
The Regulation establishes uniform rules on marketing communications addressed to investors, the publication of national provisions concerning marketing requirements for collective investment undertakings, as well as common principles concerning fees and charges levied on fund managers in relation to their cross-border activities. It also provides for the establishment of a central database on the cross-border marketing of collective investment undertakings.
As of 2 August 2021:
- All marketing communications addressed to investors must be identifiable as such and comply with the requirements in terms of information to include, presentation of the information and consistency with the prospectus and other specific fund documentation and with the Guidelines to be issued by ESMA on this topic. In this respect, ESMA published on 27 May 2021 the Final Report on Guidelines on marketing communications under the Regulation including the final text of the Guidelines which will apply 6 months after the publication of their translated version on ESMA’s website.
- The CSSF will be authorised to require a prior notification of marketing communication to verify whether they comply with the Regulation. It is not yet known at this stage whether the CSSF will make use of this opportunity offered by the Regulation.
- Finally the amendments of the EUVECA and EUSEF regulations providing for the provisions related to pre-marketing will be effective.