The CSSF published the CSSF FAQ – Cross Border Distribution of Funds – GUIDANCE ON MARKETING COMMUNICATIONS (the “CBDF FAQ”) on 20 September 2022. The CBDF FAQ brings further clarity about the supervisory expectations of the CSSF relating to the application of Regulation (EU) 2019/1156 of the European Parliament and of the Council of 20 June 2019 on facilitating cross-border distribution of collective investment undertakings (the “CBDF Regulation”) and the Guidelines of ESMA on marketing communication (ESMA34-45-1272) (the “ESMA Guidelines”). In particular, the CBDF FAQ deals with marketing communications as mentioned in section 1 of the ESMA Guidelines and article 4 of the CBDF Regulation (the “MCs”).
On an indicative basis, article 4 of the CBDF Regulation requires that MCs are identifiable and describe the risks and rewards of purchasing units or shares of the fund in an equally prominent manner. Moreover, all information included in MCs shall be fair, clear and not misleading. If an AIF publishes a prospectus according to Regulation (EU) 2017/1129 of the European Parliament and the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, as amended (commonly referred to as the ‘Prospectus Regulation’), its MCs must not contradict or diminish the significance of the information contained in the prospectus but must indicate that a prospectus exists and provide hyperlinks to or a web address for it.
Q.1 Which Luxembourg entities are in the scope of article 4 of the CBDF Regulation?
The following managers are in the scope of article 4 of the CBDF Regulation and of the ESMA Guidelines concerning the funds they manage:
- management companies incorporated under Luxembourg law and subject to Chapter 15 of the Law of 17 December 2010 relating to undertakings for collective investment, as amended from time to time (“2010 Law”);
- management companies incorporated under Luxembourg law and subject to Article 125-2 of Chapter 16 of the 2010 Law;
- investment companies which did not designate a management company within the meaning of Article 27 of the 2010 Law;
- alternative investment fund managers authorised under Chapter 2 of the Law of 12 July 2013 on alternative investment fund managers, as amended from time to time (“2013 Law”);
- internally managed alternative investment funds (“AIFs”) within the meaning of point (b) of Article 4(1) of the 2013 Law;
- managers of European qualifying venture capital funds (“EuVECA”) within the meaning of Regulation (EU) No 345/2013;
- managers of European qualifying social entrepreneurship funds (“EuSEF”) within the meaning of Regulation (EU) No 346/2013 (all together referred to as the “IFMs”).
However, article 4 of the CBDF Regulation shall not apply to IFMs when they act as distributors or intermediaries for funds they do not manage, although they may be impacted by such an article (see Q.3 below).
Q.2 Which funds are in the scope of article 4 of the CBDF Regulation?
MCs addressed to investors or potential investors of regulated and non-regulated funds managed by an IFM are in scope, as well as MCs addressed to investors or potential investors of Luxembourg and non-Luxembourg funds managed on a national, respectively, cross-border basis by an IFM.
Therefore, all UCITS and AIFs, including when they are set up as EuVECAs, EuSEFs, European long-term investment funds (the “ELTIFs”) and money market funds (the “MMFs”) managed by an IFM, are in the scope of article 4 of the CBDF Regulation.
But MCs addressed to investors or potential investors who are not residents of the European Economic Area are not in the scope of article 4 of the CBDF Regulation.
Q.3 Are the distributors or intermediaries involved in the distribution of funds managed by the IFM impacted by article 4 of the CBDF Regulation?
“Fund managers are responsible for the compliance with Article 4 of CBDF Regulation, irrespective of who is the actual entity marketing the fund, and of the relationship it has with the third-party distributor (whether it is contractual or not).”
Q.4 Are MCs in relation to a Luxembourg or non-Luxembourg EU fund which is managed by a Luxembourg IFM and distributed only in Luxembourg in the scope of article 4 of the CBDF Regulation?
Yes. Article 4 of the CBDF Regulation does not limit the scope to funds which have been solely notified for distribution on a cross-border basis but also include funds which are distributed in Luxembourg.
Q.5 Are MCs targeting professional investors in the scope of article 4 of the CBDF Regulation?
Yes, MCs addressed to all types of investors or potential investors of UCITS and AIFs, including when they are set up as EuVECAs, EuSEFs, ELTIFs and MMFs, are in the scope.
Q.6 What kind of information should be provided to the CSSF upon request?
There is no periodic reporting to the CSSF in relation to the MCs.
IFMs in the scope of Circular CSSF 22/795 of 31 January 2022 on the application of ESMA Guidelines (the “Circular 22/795”) shall, as of 16 September 2022, be ready to provide the following information with regards to the MCs used in relation with the funds under their management:
- country(ies) of dissemination of the MC (European Economic Area only); and
- targeted investors.
Furthermore, as of 1 April 2023, IFMs in the scope of Circular 22/795 must be able to link the above information to their relevant Fund(s) (respectively sub-funds) and identify if the MC entails information with regards to ESG in the context of the application of article 13 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector, as amended (commonly referred to as ‘SFDR’), and of the ESMA Supervisory briefing on Sustainability risks and disclosures in the area of investment management (ESMA34-45-1427).