Marc van Rijckevorsel, Head of Sales for Corporate Solutions (North America), Alyson Yule, Managing Director of Financial Solutions, and Zachary Milloy, Partner at Paul Hastings Investment Funds & Private CapitalMarc van Rijckevorsel, Head of Sales for Corporate Solutions (North America), Alyson Yule, Managing Director of Financial Solutions, and Zachary Milloy, Partner at Paul Hastings Investment Funds & Private Capital

The Alternative Investment Fund Managers Directive (“AIFMD”) governs the marketing of alternative investment funds (“AIFs”) across the EU. While the AIFMD allows non-EU funds to be marketed under National Private Placement Regimes (“NPPRs”), many EU member states have set high regulatory standards. This article explores the challenges of marketing non-EU funds in France, Austria, Italy, and Spain, and offers guidance on navigating these hurdles.

The AIFMD permits EU member states to allow the marketing of non-EU funds in their territory, subject to the fund and its manager complying with a subset of AIFMD's requirements set out in Article 42 of the AIFMD.

Upon the implementation of the AIFMD in 2014, each EU member state was required to transpose the directive into their legislation. However, to date, not every member state has adopted the AIFMD into their legislation. Furthermore, those member states that did adopt the directive's requirements did so in slightly different ways, resulting in some variations in approach.

The rules implemented by each EU member state under Article 42 of the AIFMD are known as “National Private Placement Regimes” (“NPPRs”). These rules allow US sponsors to register US funds (and other non-EU funds such as Cayman or Canadian funds) for marketing in most EU member states. In this article, we will provide an overview of the NPPR processes (or lack thereof) in France, Austria, Italy, and Spain.

As noted above, not all EU member states have implemented an NPPR process under Article 42 of the AIFMD. Certain EU member states have implemented a process that sets standards so high (equivalent to full compliance with the AIFMD) that they are unrealistic for non-EU managers. In effect, this means that for many US managers wanting to market in those jurisdictions, the NPPR registration process is not a viable option. These “closed” jurisdictions include France, Austria, Italy, and Spain.

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NPPR process

France

Although France has implemented an NPPR process, it requires US sponsors to demonstrate compliance with the same standards of operation as an authorised EU manager, which is not feasible in practice due to the differing standards between the US and the EU. As a result, it is uncommon for US sponsors to register a fund for marketing in France.

However, there are some narrow marketing exemptions available in France, including an exemption that permits US sponsors to market a fund to French fund-of-funds clients without complying with any AIFMD requirements. The applicability of this exemption should be confirmed with French counsel on a case-by-case basis before any documentation is provided to the relevant French investor.

Austria

Similar to France, in practical terms, there is no viable option for carrying out an NPPR marketing registration in Austria.

Italy and Spain

Neither Italy nor Spain have implemented a viable NPPR process, and therefore it is generally not possible for US sponsors to undertake proactive marketing to investors domiciled in either of these jurisdictions.

How can we help?

Our team is currently working with Paul Hastings to assist with marketing enquiries into the EU and the UK. Zach Milloy, a partner at Paul Hastings, can help with queries related to marketing in France, Austria, Italy, and Spain. Once registration is complete, we can assist with ongoing investor reporting requirements. Additionally, our team at Holtara, part of the Apex Group, can support compliance with the complex ESG requirements of the SFDR.

For further information, please get in touch with our AIFMD reporting team.

Contact our team