5. Distribution and national private placement regimes

AIFMD II - European Parliament Final Report - Distribution and national private placement regimes

The EU Parliament final report does not extend the definition of professional investors.

 The EU Parliament final report exempt AIFs constituted exclusively for the purpose of purchasing company shares and proposed to employees of these companies within the framework of employee savings schemes from Article 31 (Marketing of units or shares of EU AIFs in the home Member State of the AIFM) and Article 43 (Marketing of AIFs by AIFMs to retail investors).

Regarding the provisions of the AIFMD applicable to non-EU AIFs, the EU Parliament final report clarifies that the new requirements in the European Commission proposed directive shall be met at the time of the AIFM’s application for authorization. Also, if a third country where the non-EU AIF is established is added to Annex I to the relevant last updated version of the Council conclusions on the revised EU list on non-cooperative jurisdictions for tax purposes, after the AIFM applied for authorisation, closed-ended funds shall continue to be considered to meet that criterion for a period of two years. A third country that has been continuously mentioned in Annex II to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes (the ‘grey list’) for over three years shall be considered to be mentioned in Annex I to those conclusions. Regarding the marketing without a passport of AIFs managed by a non-EU AIFM, the third country where the non-EU AIFM or the non-EU AIF is established shall not be identified as an AML/CFT high-risk third country at the time the Member State allows the non-EU AIF to be marketed to professional investors in its territory.

Access the European Parliament Final Report of 2 February 2023 here.


AIFMD II - The Council position - Distribution and national private placement regimes

There is no extension of the professional investor definition in the Council position.

The Council position does not refer to the Council conclusions of 2020 on the revised EU list on non-cooperative jurisdictions for tax purposes but only to the Council conclusions on the revised EU list on non-cooperative jurisdictions for tax purposes.

Access the European Council position of June 2022 here.


AIFMD II - European Commission proposed directive, November 2021 - Distribution and national private placement regimes

Various changes and amendments have been provided by the Commission proposal regarding the marketing of non-EU AIFs in view of strengthening distribution conditions relating to third countries.

More restrictive conditions for the distribution in member states of AIFs managed by a non-EU AIFM, in particular, non-EU AIFs:

  • The third country in which the non-EU AIF or non-EU AIFM is established is not identified as a high-risk third country according to article 9(2) of Directive (EU) 2015/849 (AML Directive IV); and
  • The third country in which the non-EU AIF or non-EU AIFM is established is not mentioned in appendix I to the EU Council conclusions of 2020 on the revised EU list of non-cooperative jurisdictions for tax purposes. The Cayman Islands appears in appendix I, preventing the marketing under national private placement regimes of funds established in the Cayman Islands if this wording is retained in the final version of AIFMD II. However, the Cayman Islands are not mentioned in the most recent conclusions of the EU Council dated October 4, 2022. Note that the European Parliament draft report does not update the reference to the conclusions of 2020, which mention the Cayman Islands.

Some countries and territories have been recently added to the EU list of high-risk third countries by the European Commission, such as the Cayman Islands, Jordan, and Morocco.
The impact of references to the lists of high-risk countries for AML/CFT and tax purposes will depend on how the EU deals with the third countries that raise issues in this regard. The process to be followed by an AIFM when a third country is added to such lists should be clarified.

[1] On 4 October 2022, the Council added the Bahamas, Anguilla and Turks and Caicos in their conclusions. The current EU list of non-cooperative jurisdictions for tax purposes is composed of the following: American Samoa, Anguilla, the Bahamas, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos, US Virgin Islands, and Vanuatu. This EU list is due to be revised in February 2023.

You can access a copy of the directive proposed by the European Commission here.


AIFMD II - European Parliament Draft Report - Distribution and national private placement regimes

The European Parliament draft report extends the definition of professional investor to investors

  • That have committed to investing a minimum of €100,000 and have stated in writing, in a document separate from the contract incorporating the commitment to invest, that they are aware of the risks associated with the envisaged commitment or investment; or
  • That are executives, portfolio managers, directors, officers, agents or employees of the manager or its affiliates and have sufficient knowledge about the AIF concerned.

These additions widen the scope of the marketing passport and may increase the use of co-investment financing in relation to AIFs. The PRIIPs Regulation should be amended in line with these new categories of professional investor since they may require a KID.

Access the draft report of 16 May 2022 from the European Parliament here.