French regulator AMF softens pre-marketing rules for local funds

The AMF adapted its definition of the act of marketing units or shares in undertakings for collective investment in transferable securities (UCITS) and alternative investments funds (AIF), the public body declared in a statement. The initiative fits into the larger project French Routes and Opportunities Garden (Frog), launched jointly by AMF and Association Francaise de la Gestion Financière (AFG) to increase French funds' competitiveness and extend their international reach.

The new policy should make it easier to launch new funds in France and provide a more favourable environment to fundraisers, enabling them to test waters with potential investors within a clearly defined regulatory framework, and establishing at which stage commercialisation is actually necessary.

"Until now, certain types of presentations or exchanges with investors may have been considered marketing practices, which would trigger the application of rules poorly suited to this stage of a product's development," the regulatory body said in a statement. "Thus, to encourage innovation, make it easier to create new funds in France and give participants legal protection, the AMF is introducing the concept of pre-marketing."

Under the new rules, management companies will be able to contact a maximum of 50 investors (defined as professionals or individuals with an initial subscription of at least €100,000) to assess their interest prior to the launch of a UCITS or AIF. This will not be considered as an act of marketing, and will therefore not call for a formal commercialisation of the fund. Any subsequent subscription by the contacted investors would, however, change those conditions.

Additional pre-marketing processes now allowed by the AMF include participating in conferences or meetings of professional investors (provided the investors' participation in a specific product is not solicited); over-the-counter trading between investors; purchasing UCITS or AIF shares in various specifically defined contexts; and responding to a request for proposal (RFP) made by a legal entity.

The initiative was warmly welcomed by French private equity association Afic, which for years has been campaigning for more flexible and friendly rules for local players, and has pushed for the internationalisation of the French private equity market. "It is a very strong signal for international investors, reinforcing the competitiveness of the French marketplace and putting it on an equal level with Germany, Luxembourg, the UK and certain Nordic countries," the trade body said in a statement.

Other professionals in the field were equally pleased with the AMF's move. Nathalie Duguay, partner and co-head of investment funds at King & Wood Mallesons, said the new measure would allow for more transparency and fluidity. While she does not see pre-commercialisation as a fundamentally new concept in France, she said that legislation was now aligned with practice, pointing to the lack of clarity that previously existed.

"This is exactly the sort of positive indications from the regulator that professionals in the sector welcome very favourably," says Duguay. "It is the result of good communication between actors in the marketplace and the relevant authorities adapting to their needs. It is a step forward, as more transparency is always better for the market."

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• Topics
• Regulation
• Fundraising
• France
• France
• AFIC