European Union’s AIFMD Amended with New Rules on “Pre-Marketing” and “Reverse Solicitation”

On April 6, 2019, the European Parliament approved a new Directive and a new Regulation, each on Cross-Border Distribution of Collective Investment Undertakings (respectively, the “CBDF Directive” and the “CBDF Regulation”; together, the “CBDF Legislation”).  Among other things, the CBDF Legislation amends the Alternative Investment Funds Directive (the “AIFMD”) to make clear that to be pre-marketing (and not implicate all of the requirements of the AIFMD) for a European Union Alternative Investment Fund ( an “AIF”) marketed privately to professional investors, the information presented to such investors: (i) must not be sufficient to allow commitment or acquisition of shares or units of the AIF; (ii) must not be subscription forms or the like; and (iii) must not be a prospectus, offering document or constitutional documents of an AIF (whether or not established).  Where a draft prospectus or offering document is provided, it must not contain information sufficient to allow investment and must clearly state that it is not an offer, is incomplete and is subject to change.  Moreover, once an investor has received the pre-marketing information, for 18 months thereafter any subscription by the investor is now considered a result of marketing and not of reverse solicitation by the investor.  The CBDF Legislation will need to be approved by the EU Council, which is expected, and it will then become law about 2 years later.  It is unclear what will happen in the UK in the event of Brexit, but is is expected that the UK would also adopt the CBDF Legislation.