The Cross Border Distribution of Funds Rules (CBDF Rules) are composed of two legislative texts (Regulation (EU) 2019/1156 and Directive 2019/1160) and focus on the regulation of cross border marketing and distribution of collective investment schemes within the EU.
A key aspect is the application of the regulation to EU AIFMs. By default, non-EU AIFMs will be able to continue to rely on the National Private Placement Regime or reverse solicitation already in existence . This new regulatory framework will come into effect on 2 August 2021.
The CBDF Rules introduce a definition of pre-marketing, which “means provision of information or communication, direct or indirect, on investment strategies or investment ideas by an EU AIFM or on its behalf, to potential professional investors domiciled or with a registered office in the Union in order to test their interest in an AIF or a compartment which is not yet established, or which is established, but not yet notified for marketing in accordance with Article 31 or 32 of the AIFMD, in that Member State where the potential investors are domiciled or have their registered office, and which in each case does not amount to an offer or placement to the potential investor to invest in the units or shares of that AIF or compartment”.
Any information presented (as part of pre-marketing efforts) to investors by an EU AIFM must not:
Drafts of the constitutional documents and/or offering material can be circulated to professional investors provided that the documents:
Within two weeks of having begun pre-marketing, EU AIFMs must send an informal letter  to their home member state specifying:
The CBDF mentions that it is possible for a third party to engage in pre-marketing on behalf of an EU AIFM if that third party is authorised as:
AIFMs (as well as EuVECA managers, EuSEF managers and UCITs management companies) must ensure that all marketing communications addressed to investors are:
The CBDF introduces new obligations for EU AIFMs to inform Member States of the de-notification of an AIF. These notifications obligations are subject to several requirements which will also need to be disclosed in the notification:
The CBDF mentions retail investors specifically, with several significant updates on physical locations. The regulation will require AIFMs to make available, in each Member State where it intends to market units or shares of an AIF to retail investors, facilities to:
Importantly, the above tasks do not require the AIFM to have a physical presence in the host Member State or to appoint a third party.
Additionally, the AIFM will need to ensure that the facilities to perform the tasks referred to above, including electronically, are provided:
The CBDF has not been implemented in the UK and as such, pre-marketing and marketing are distinct, with the latter only constituting marketing if documents in a materially final form are shared with prospective investors. The FCA further adds that documents in draft form do not constitute marketing .