The alternative investment fund managers directive (AIFMD) became effective July 21, 2011 and the Member States needed to transpose the directive into national law by 22 July 2013. The implementation of the Directive implies that the fund manager can market their funds freely in all countries within the EES. It was transposed into the Swedish Alternative Investment Funds Act (“the AIFM Act”) in July 2013. The AIFM Act regulates the managers of alternative investment funds and requires that such managers seeking permission for their business. Those fund managers based outside the EU that manage and/or market alternative investment funds in the EU will also be significantly influenced by the framework.
According to the AIFM Act non-EES AIF managers who want to market units or shares in Sweden must be granted a marketing license from the Swedish Financial Supervisory Authority (“Swedish FSA”) before conducting any marketing activities. This requirement applies regardless of whether the marketing activities are directed towards professional or non-professional investors and regardless of whether the managers assets under management exceeds or is less than the threshold for licensing which applies to Swedish managers. The application fee to the Swedish FSA under the new legislation is 16.000 SEK for a license to market a fund to professional investors and 100.000 SEK to market a fund to non-professional investors.
The term “marketing” is defined in the AIFM Act as a direct or indirect offering or placement, on behalf of the AIF manager, of units or shares in an AIF which manages and which is directed towards investors domiciled in the EES. According to the preparatory works for the act, the term “marketing” should have a wide interpretation and include “all” types of sale improving measures, i.e. media commercials, offerings by phone, mail or internet and specific investor events. The term also includes non-public offers (i.e. private placements).
The prerequisites for a non EES AIF-manager to market a fund in Sweden to non-professional investors is that i) the fund is regarded as similar to a Swedish “special fund”, or ii) that the shares of the fund will be traded on a regulated market or a similar market outside of the EES. It is possible to acquire a license for marketing to professional and non-professional investors. Generally, a fund would be regarded as similar to a “special fund” if it:
- makes collective investments in financial instruments with capital from the public or a limited group of investors,
- applies the principle of risk diversification,
- is open for redemption of units or shares,
- has a paying agent in Sweden and
- there is a fact sheet (basically a Key Invester Information Document as applicable to UCITS) available to investors. A fact sheet must also be available for such funds that are permitted due to that the shares are traded on a regulated market or similar.
To a limited group of non-professional investors, it is also possible to acquire a license to market a closed end fund if the fund applies a general investment policy to gain control over its portfolio companies.
As a general rule a marketing license will only be granted to non EES-AIF managers domiciled in a country with whom the Swedish FSA has agreed appropriate collaboration arrangements with, for the monitoring of system risks and the countries where the AIF manager or the fund is domiciled has taken appropriate measures to prevent money laundering and terrorist financing.
The Swedish Investment Fund Association has issued guidelines for marketing of investment funds which are regarded, by the Swedish Costumer Agency and the Marketing Court, as good marketing practice in regard to investment funds. The guidelines are available in English and will certainly apply to marketing of AIF’s as well as UCITS.