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Cross Border Marketing of UCITS and AIF into Austria

By Markus Heidinger, Wolf Theiss, Vienna
Posted: 14th March 2018 08:52
The EU passport is a key component of the UCITS and AIFM regime as it allows fund promoters / managers to market their funds in other EU Member States without having to apply for any additional authorisation. However, a notification procedure (see below) needs to be followed which has been simplified following the implementation in EU Member States of UCITS IV and AIFMD.
 
Undertakings for Collective Investments in Transferable Securities ("UCITS")
 
Distribution of UCITS (approved in another Member State) to investors in Austria
 
The competent authority of the home Member State of the UCITS has to provide the Austrian Financial Market Authority (FMA) with (i) the complete required documents and information, and (ii) its attestation of the fund as UCITS compliant.
 
The required information and documents are:
  • the manner in which the units of the UCITS are to be marketed in Austria;
  • where applicable, information on the classes of units and investment compartments;
  • indication whether the UCITS is marketed by its manager (freedom to provide services and of establishment);
  • current version of the fund rules, the prospectus, and where applicable, the latest annual report and the subsequent half-yearly report in German or English; and
  • the client information document in German.
 
Fees have to be paid to the FMA in the amount of (i) €1,100 and for umbrella-funds this fee increases by €220 for each fund (starting from the second subfund), and (ii) €600 by 15 January of each year, with an increase of €200 for each subfund of an umbrella fund.
 
The UCITS has to designate at least one Austrian credit institution or an Austrian branch of an EEA credit institution licensed for custody business in Austria.
 
The UCITS shall make electronically available to the FMA on a website the fund rules, the prospectus, the latest annual report, the subsequent half-yearly report and the client information document, keep them up to date and notify the FMA of any changes.
 
The UCITS shall make available to investors (via durable medium or paper) fund rules, the prospectus, the latest annual report, the subsequent half-yearly report, the prices (German or English) and the client information document (German).
 
The UCITS has to notify the FMA of its intention to terminate the public distribution of units and publish this intention indicating the legal consequences thereof. The obligations arising from distribution under the Austrian Investment Funds Act must end not earlier than three months after the termination of distribution has taken effect.
 
Alternative Investment Funds ("AIF")
 
Distribution of EU AIFs to professional investors in Austria by EU AIFM licensed in another Member State
 
The competent authority of the home Member State of the AIFM has to provide the FMA with (i) the complete required documents and information, and (ii) its attestation of the fund as AIFMD compliant.
 
The required information and documents are:
  • a notification letter, including a program of operations identifying the AIFs the AIFM intends to distribute and information on where the AIFs are established;
  • the AIF rules or instruments of incorporation;
  • the depositary of the AIF;
  • a description of the AIF available to investors;
  • information on where the master AIF is established if the AIF is a feeder AIF;
  • additional information referred to in Art 23 (1) for each AIF the AIFM intends to distribute;
  • the indication of the Member State in which it intends to distribute the units or shares of the AIF to professional investors; and
  • information about arrangements made for the marketing of AIFs and, where relevant, information on the arrangements established to prevent units or shares of the AIF from being marketed to retail investors, including in the case where the AIFM relies on activities of independent entities to provide investment services in respect of the AIF in German or English.
Fees to be paid to the FMA are the same as set out above.
 
Distribution of Non-EU AIFs with a passport to professional investors in Austria by EU AIFM
 
In addition to the requirements set out above:
  • the AIFM shall comply with all the requirements established under the AIFMD (except of chapter six, distribution of EU AIFs);
  • appropriate cooperation arrangements between the FMA and the supervisory authority of the third country where the non-EU AIF is established;
  • this third country is not listed as Non-Cooperative Country and Territory by FATF; and
  • this third country has signed an agreement with Austria (and which each other Member State in which the units or shares of the non-EU AIF are intended to be distributed), which ensures an effective exchange of information in tax matters.

 
Fees to be paid to the FMA are the same as set out above.
 
Distribution of Non-EU AIFs without a passport to professional investors in Austria by EU AIFM

In addition to the requirements set out above:

  • the AIFM shall comply with all the requirements established under the AIFMD except Article 21 (7), (8), and (9) (specific depositary requirements);

  • appropriate cooperation arrangements for the purpose of systemic risk oversight between the FMA and the supervisory authority of the home EU Member State of the AIFM; and

  • the third country of the AIF is not listed as a Non-Cooperative Country and Territory by FATF.

 
Fees to be paid to the FMA are twice as high as set out above.
 

The EU AIFM shall notify the FMA of its intention to terminate the distribution of units immediately.
 
Distribution of EU AIF with a passport to professional investors in Austria by Non-EU AIFM

Same requirements as set out above and in addition the requirements according to Art 39 AIFMD (marketing conditions) have to be met. 

Fees to be paid to the FMA are the same as set out above.

 
Distribution of Non-EU AIF with a passport to professional investors by Non-EU AIFM
 
Same requirements as set out above and in addition the requirements according to Art 40 AIFMD (marketing conditions) have to be fulfilled (appropriate cooperation between the authorities, not a FATF-listed country etc.).
 
Fees to be paid to the FMA are the same as set out above.
 
Distribution of EU AIF and Non-EU AIF to retail investors in Austria by EU AIFM and also Non-EU AIFM
 
Requirements:
  • AIF is approved for distribution to retail investors in its home state;
  • AIF is approved for distribution to professional investors in Austria;
  • AIF is not a hedge or a private equity fund;
  • FMA has to be provided with the same information as described above;
  • client information document in German;
  • attestation of the fund by the home state authority that the fund is approved for distribution to retail investors in the home state;
  • semi-annual report;
  • attestation by the home state authority of the Non-EU AIFM or Non-EU AIF that the Non-EU AIFM or Non-EU AIF complies with all the requirements established under the AIFMD (except of chapter six, distribution of EU AIFs). Due to this requirement it is in fact "dead law".
 
Fees to be paid to the FMA are the same as set out above.

 Markus Heidinger heads the Banking and Finance group and specializes in banking law, financial institutions and markets regulation, corporate and corporate finance law, including dispute resolution and regulatory investigations. He also demonstrates substantial experience in banking and financial markets regulatory, funds, financing litigation and transactions, corporate finance structures and corporate transactions in the financial industry. Markus is ranked in band 1 for Banking and Finance in Chambers (2017) and is recommended by the Legal 500 for Banking and Finance and Capital Markets (2016). In addition to his Austrian law degree, Markus holds a Master's degree in International Financial Law from the University of London, King's College.

Mark can be contacted on +43 1 51510 5060 or by email at markus.heidinger@wolftheiss.com

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