A German sub-threshold AIFM may market an AIF in Liechtenstein if it fulfills the conditions laid down in Article 3(2) of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 ("AIFMD") and provided that:
Passporting for small AIFMs is also available within the realm of Regulation (EU) No 345/2013 or Regulation (EU) No 346/2013.
The AIFMA defines marketing in line with Art. 4 (1) x) AIFMD as a direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM of units or shares of an AIF it manages.
The Liechtenstein Financial Market Authority ("FMA") has issued a Q & A (FAQ Umsetzung AIFMG, Stand 22.03.2019) clarifiying that an "offer" generally requires an activity by the AIFM in the broader sense and also covers an invitatio ad offerendum, while "placing" generally requires an active sales of fund units. Considerations with regard to pre-marketing are outlined below.
See already above. Outside of the scope of Regulation (EU) No 345/2013 or Regulation (EU) No 346/2013, the sub-threshold AIFM must notify the local regulator pursuant to Art. 118 AIFMA.
The following documents must be attached to the notification:
(1) proof that the AIFM is registered in its home member state
(2) a statement that the AIFM will notify the FMA of any material change to its registration and
(3) additional information and documents on its business activities, to the extent required by the FMA.
The sub-threshold AIFM may commence distribution, if the respective legal requirements are met (see above) and the FMA does not object within one month upon receipt of the notification. Only upon request and at the expense of the AIFM, the FMA may confirm the fulfillment of the respective requirements.
Liechtenstein law currently does not define pre-marketing or provide a specific safe harbor for such activities. However, according to the FMA, both, an offer or placing must be related to an existing fund, in order to qualify as marketing. This is particularly the case, if it is already established, ready for offer or already operates ("firmiert") under a certain name (hereinafter "existing fund").
If investors involved in the negotiations with respect to a fund project decide to invest on this basis (e.g. by signing a letter of intent) before the fund is an existing fund and subsequently subscribe to this fund, no marketing acitivities are performed with regard to these investors (FAQ Umsetzung AIFMG, 22.3.2019, 8). In this context, the AIFM may not approach third parties or investors that are not involved in the negotiations (as described above) and/or change commited volumes. Changes to this regime and local interpreation of the term pre-marketing must be expected upon implementation and entry into force of Directive (EU) 2019/1160 of the European Parliament and of the Council of 20 June 2019 amending Directives 2009/65/EC and 2011/61/EU with regard to cross-border distribution of collective investment undertakings into national law as well as by 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 and amending Regulations (EU) No 345/2013, (EU) No 346/2013 and (EU) No 1286/2014. Both legal acts have not yet been transposed into the EEA Agreement.
There is no safe-harbour for pre-marketing, soft marketing or market sounding activities under Liechtenstein law with regard to an existing fund. However, such activities are permissible with regard to a fund, which is not yet an existing fund.
Therefore, the distribution of a fundraising deck (slide deck with the fund's name and with a summary of the fund terms, potential assets, exit scenarios, team description) or other documents (such as a term sheet or draft PPM) may be considered marketing.
There is no explicit safe harbour for reverse solicitation under the Liechtenstein AIFMA. However, the Liechtenstein regulator recognizes the concepts of passive freedom to provide services and reverse solicitation. Thus, if the investor entirely on own initiative requests the subscription of units of an AIF, this does not constitute distribution within the meaning of the AIFMA. The applicability of reverse solicitation must be assessed on a case by case basis.
The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. The above information reflects the legal situation as of April 7, 2020. Before marketing a fund into the respective country, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.