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08 January 2013
A new legislative act
Notification and marketing of alternative investment funds
Marketing alternative investment funds to non-professional investors
Rules for conducting activities
Supervision and sanctions
In June 2011 the EU Alternative Investment Fund Managers Directive(1) was adopted by the European Parliament and Council. Pursuant to the directive, member states are obligated to introduce common regulation in respect to alternative investment funds and the managers of such funds. On October 5 2012 a government report was presented with a proposal on how to implement the directive into Swedish law. The proposal has currently been subject to a consultation which recently ended. A final legislative proposal from the Swedish government on the implementation of the directive is expected during Spring 2013, and the new act is set to enter into force on July 22 2013. Certain transitional provisions are proposed in the report.
The directive is proposed to be implemented via a new legislative act. Alternative investment funds currently regulated by the Investment Funds Act (2004/46) (ie, special funds in Sweden), will be regulated in the new act together will all other alternative investment funds. The act will regulate funds covered by the EU Undertakings for Collective Investment in Transferable Securities Directive only.(2)
Alternative investment fund managers must obtain authorisation from the Financial Supervisory Authority (FSA) in order to manage alternative investment funds. Once authorisation has been granted, the alternative investment fund manager may not - besides activities specified in the Alternative Investment Fund Managers Directive - involve itself in any activities other than the management of alternative investment funds. This means that firms authorised under the EU Markets in Financial Instruments Directive(3) will not be able to obtain authorisation as alternative investment fund managers under the new act.
The proposed regulation on marketing alternative investment funds in Sweden is relatively extensive. For example, an alternative investment fund manager must notify the FSA of every alternative investment fund that the alternative investment fund manager intends to market in Sweden. Alternative investment fund managers are also obliged to provide the FSA regularly with certain information relating to the managing of the alternative investment funds.
Strict requirements apply in relation to marketing in Sweden alternative investment funds that are domiciled outside the European Economic Area (eg, Jersey, Guernsey and the Cayman Islands), and also to alternative investment funds intended to be marketed to non-professional investors in Sweden.
The report proposes that alternative investment funds may be marketed to non-professional investors in Sweden under certain conditions. Funds in Sweden regulated as special funds pursuant to the Investment Funds Act will be permitted to market the funds to non-professional investors. The same shall apply to alternative investment funds that are not special funds, but the units of which are admitted to trading on a regulated market, either as fund units or as shares. A further condition is that a key investor information document containing a summary of basic information needed by investors to understand the risks involved with the investment be made available to investors in due time before any investment is made.
The Alternative Investment Fund Managers Directive contains several provisions on how alternative investment fund managers should conduct their activities. The following are examples of requirements presented by the inquiry in the proposal. Alternative investment fund managers must:
The FSA will have the right to intervene if an alternative investment fund manager breaches its obligations under the new act or any other relevant regulation. If the breach is severe, the alternative investment fund manager's authorisation may be revoked.
The most obvious change following the implementation of the Alternative Investment Fund Managers Directive is that several managers of funds that are presently not subject to supervision will be covered by the new regulation - for example, private equity firms and managers of real estate and infrastructure funds. In turn, these entities will be subject to, for example, capital requirements. However, for other companies that are already subject to supervision, the changes will not be as drastic.
For further information on this topic please contact Niclas Rockborn, Nils Unckel or Josefin Ström at Gernandt & Danielsson Advokatbyrå by telephone (+46 8 670 66 00), fax (+46 8 662 61 01) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org).
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