Performance fees: New online CSSF declaration for investment fund managers regarding performance fee model
Further to its communication on 22 September 2021, the Luxembourg Regulator (Commission de Surveillance du Secteur Financier, CSSF) informed the investment fund managers (IFMs) of the launch of a new e-desk module on performance fees as of 30 September 2021. The purpose of such a new module is to ensure compliance with the European Securities and Markets Authority’s guidelines on performance fees applicable to UCITS and certain types of AIFs (ESMA Guidelines) and to collect standardized key information concerning performance fees. Indeed as of 30 September 2021, all funds with a financial year ending between July 2021 and 31 December 2021 will be available in the performance fee module. The IFMs will be required to transmit the performance fee declaration and the confirmation of compliance with the ESMA Guidelines via e-desk. For such funds, the deadline for submission of the initial declarations is 30 November 2021. The same will apply for funds with a financial year ending between 1 January 2022 and 30 June 2022 as from January 2022. The deadline for submitting the initial declaration will be at the latest before the corresponding closing date of each fund, as further specified in the IFM corresponding performance fee e-Desk dashboard.
Funds and sub-funds that are not subject to a performance fee will have to be declared accordingly as well as funds that have not yet been launched since having been approved by the CSSF or which are inactive following the full redemption of their shares or units.
IFMs will also be responsible for ensuring that performance fee declarations are kept up to date in case of changes (e.g., the introduction of a performance fee for the first time after that date or changes in performance fee models). A specific update function will be made available shortly by the CSSF under the new e-Desk module to send electronically any such changes in parallel to the transmission of the modified prospectus/issuing document.
For any further questions, feel free to contact our investment management team.
Clarification of the ESMA’s guidelines on performance fees in UCITS and certain types of AIFs
On 30 March 2021, the European Securities and Markets Authority (ESMA) updated its Questions and Answers on the application of the Undertakings for Collective Investment in Transferable Securities Directive (Q&A on the UCITS Directive) and its Questions and Answers on the application of the Alternative Investment Fund Managers Directive (AIFMD) (Q&A on the AIFMD).
ESMA added two new Q&As (applicable to both Q&As on the UCITS Directive and the AIFMD) relating to the ESMA’s guidelines on performance fees in UCITS and certain types of AIFs (the Guidelines) whereby it confirms the following :
- “The Guidelines on performance fees do not prevent to pay performance fees during the performance reference period of 5 years and/or in the first years of a fund’s existence, in case the fund has not existed for 5 years“.
- “Managers of any funds already compliant with paragraphs 40) and 41) of the Guidelines on performance fees before the application date of the guidelines should look at the past 5 years/whole life of the fund for the purpose of setting the performance reference period (i.e. they should not reset the performance reference period after the application date of the guidelines). In all the other cases, managers should apply the performance reference period starting from the beginning of the financial year following 6 months from the application date of the Guidelines (i.e. the performance reference period should start at the beginning of the financial year following 5 July 2021; by way of example, if the financial year of the fund starts on 1 September 2021, the period 1 September 2021 – 1 September 2022 should be considered as the first year of the performance reference period)“
ESMA also added a third new Q&A relating to the scope of the Guidelines in respect of ELTIFs in the Q&A on the AIFMD whereby it confirms the following :
“The Guidelines on performance fees apply to managers of UCITS and, in case Member States allow AIFMs to market to retail investors in their territory units or shares of AIFs they manage in accordance with Article 43 of the AIFMD, they also apply to AIFMs of those AIFs, except for:
- a) closed-ended AIFs; and
- b) open-ended AIFs that are EuVECAs (or other types of venture capital AIFs), EuSEFs, private equity AIFs or real estate AIFs.
Therefore, ELTIFs marketed to retail investors that do not have a closed-ended structure, within the meaning of Article 1(2) of the Delegated Regulation 694/201425 and are not venture capital/private equity or real estate AIFs are in scope of the guidelines.”
Links to the updated Q&A on the UCITS Directive: https://www.esma.europa.eu/sites/default/files/library/esma34_43_392_qa_on_application_of_the_ucits_directive.pdf
Links to the updated Q&A on the AIFMD: https://www.esma.europa.eu/sites/default/files/library/esma34-32-352_qa_aifmd.pdf
For any questions concerning the above, please do not hesitate to contact our investment management team.
