Brexit impact for UK asset managers marketing in the EU

As the end of the transition period draws ever closer and the possibility of a negotiated trade deal with the EU27 moves further away, the reality of Brexit and the impact it will have on the promotion and marketing of UK funds in mainland Europe is really starting to bite.

Most EU27 regulators have finally clarified the position on:

how their existing investors in a UK fund will be treated after the 31st December 2020, and
what steps a UK fund will have to take if promotion is to continue after the 31st December 2020.

There are still a number of regulators that have yet to clarify either or both of the above points, but the table below provides details of the confirmed positions we have so far.

Country	Treatment of investors in UK funds post-Brexit	What is the registration process for UK funds post-Brexit?
Austria	Investors can keep their shares with the same rights and liabilities. The fund cannot accept new investment.	AIFMG 38 or 47 AIFMG/ Article 36 or 42 of the AIFMD.
Finland	No requirement to move or redeem investors if marketing is discontinued.	Article 36/ 42 of AIFMD
France	No advice has been released	Article 36/42 of AIFMD.
Germany	Investors can keep their shares with the same rights and liabilities. The fund cannot accept new investment by marketing.	Bilateral marketing notification (Section 320, 330 or 329)
Italy	UK firms must notify investors and CONSOB of intentions post-Brexit	N/A
Malta	Maltese investors can remain in the fund but fund needs to inform the MFSA.	Article 36/42 of AIFMD
Norway	Marketing will be prohibited. They can't specify any further.	Section 6-4/ 6-5 of the NAMAIF
Portugal	Notify the sub distributors in Portugal and notify the CMVM	Article 36/42 of AIFMD
Spain	No advice has been released	Article 36/42 of AIFMD
Sweden	There is no obligation for shareholders to redeem shares.	Article 36/42 of AIFMD

In addition to the regulatory position of the fund, UK asset managers also need to be aware that following 31^st December 2020 they can no longer rely on permissions granted by the FCA to promote the fund in the EU27.

A number of EU27 regulators offer authorisation of UK firms but applications will have to be made to each individual regulator. There are also offers being made to UK firms to use the MiFID permissions of EU27 based distributors and while this is technically possible, it is our opinion that this goes against the spirit of the MiFID Directive and it will be interesting how long this approach is tolerated by EU27 Regulators.

Contact us now for more information on how FE fundinfo’s Global Funds Registration (GFR) service can help UK asset managers navigate the post-Brexit world of fund marketing in Europe.