Date: 5 November 2021

The European Union has taken steps to facilitate the cross-border distribution of funds (both undertakings for collective investments “UCITS” and alternative investment funds “AIFs”) by introducing the Cross-Border Distribution of Funds package of measures (the “CBDF legislation”).

The CBDF legislation includes a Directive (EU) 2019/1160 amending both the UCITS Directive and AIFMD and a directly effective Regulation 2019/1156 supplemented by ESMA guidelines on marketing communications for UCITS and AIFs published on the 27 May 2021.

The Directive was implemented in Cyprus with the publication on 18th October 2021 in the official gazette of amending legislations 135(I)/2021 and 134(I)/2021 to the Alternative Investment Fund Managers Law as well the Open-Ended Undertakings for Collective Investment (UCI) Law respectively.

The new rules increase the harmonisation on the marketing of AIFs and UCITS, reduce regulatory barriers, improve cost efficiencies and enhance investor protection.

Summary of key points

The Directive introduces rules regarding: 

  • “pre-marketing” of AIFs
  • local facilities for UCITS and AIFs sold to retail investors
  • alignment of procedures and conditions for the de-notification of UCITS and AIF funds in a host Member State.
  • alignment of certain notifications in respect of marketing an EU AIF or UCITS in a host Member State.

The Regulation contains rules on:

  • requirements around marketing communications
  • verification of marketing communications by regulators
  • the creation of central databases for the publication of 
    • national marketing requirements
    • fees and charges
    • a list of AIFs, UCITS and their managers.

Next Steps

Fund managers that undertake marketing activities for UCITS or AIFs in the EU, or that engage distributors to market UCITS or AIFs in the EU will need to consider whether the new framework requires them to make any changes to their existing cross-border distribution arrangements and/or marketing materials.

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