United States: ESMA guidelines on marketing communications for funds will start to apply

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On February 2, 2022, the new ESMA Guidance on Marketing Communications under the Cross-Border Distribution of Funds Regulation (EU) 2019/1156) (“Guidelines“) will begin to apply.

The guidelines set out requirements for marketing communications that promote UCITS and alternative investment funds (AIFs), such as European Social Entrepreneurship Funds (EuSEF), European Venture Capital Funds (EuVECA) and European long-term investment funds (ELTIF).

The guidelines apply to alternative investment fund managers (“AIFM”) based in the EEA. Managers of non-EEA AIFs are only subject to the requirements if they carry out marketing activities in certain EEA member states.

What is Marketing Communications?

The Guidelines apply to all communications made for “marketing” purposes as defined by AIFMD. Communications covered include websites, social media posts, live presentations – the guidelines do not apply to legal documents, such as PPMs and constitutional documents. Any information provided to investors as part of pre-marketing (i.e. preliminary promotional communications made prior to obtaining AIFMD fund marketing clearance for a particular fund) is also not considered a marketing communication.

What are the requirements?

The Guidelines specify that marketing communications should:

  • Be identifiable as marketing material,

  • Describe the risks and benefits associated with the purchase of units or shares of an AIF, or units of a UCITS, in an equally visible manner, and

  • Contain fair, clear and non-misleading information.

For example, materials provided during the “marketing” phase of AIFMD that are not legal or regulatory materials should include a brief disclaimer stating that it is a marketing communication. and the Guidelines provide an example of a model disclaimer.

Next steps

Managers of alternative funds falling within the scope of the new guidance should review which funds fund marketing communications and take appropriate steps to comply with the recommendations and provisions set out in the guidance.

ESMA guidelines on marketing communications for funds will start to apply

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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