Legal updates covering current topics.
The Finnish Financial Supervisory Authority (“FIN-FSA”) has on 13 October 2020 issued guidance regarding funds and fund managers (AIFMs and UCITS) domiciled in the United Kingdom as regards enabling uninterrupted marketing activities in Finland after the end of the Brexit transitional period on 31 December 2020. After the end of the Brexit transitional period, the UK will be considered a third country and all UK fund managers and funds are regarded as third country AIFMs and AIFs. Consequently, such UK UCITS and AIF fund managers that currently market their funds in Finland based on the UCITS or AIFMD passports will lose their passporting privileges at the turn of the year.
Accordingly, if there is an intention to continue marketing such funds in Finland after year-end whether by the fund manager or by a third party, the fund managers must submit new notifications to the FIN-FSA pursuant to Article 36 or 42 of the AIFMD. Marketing may then be continued in 2021 subject to the FIN-FSA granting the marketing approval. Marketing to non-professional clients in Finland will however no longer be possible.
Such UK fund managers that have not applied for a new marketing permission before the end of the year will be automatically deregistered, and the relevant funds may no longer be marketed in/into Finland.
The guidance issued by the FIN-FSA does not unfortunately address the issue of whether such UK fund managers that have not applied for a marketing approval (i.e. that do not have any marketing permission after the turn of the year) would be allowed to continue any discussions with previously targeted Finnish investors in 2021. I.e. the guidance is silent e.g. on whether any investor onboarding processes commenced during 2020 can be completed in 2021 without a new marketing approval. Market participants are requesting the FIN-FSA to provide express guidance on this, but it is unclear if and when the FIN-FSA will give their views on this. The resulting uncertainty entails that UK fund managers would need to apply for a marketing approval well before year end to be on the safe side.
The above considerations apply also to EEA UCITS and AIF fund managers that currently market their UK funds in Finland.
Process and schedule
To ensure that there is no gap between the passport and the new AIFMD Art. 36/42 marketing approval, the notification will need to be submitted to the FIN-FSA before the end of November 2020. The notification needs to be complete and include all the required information to ensure successful processing. Should the notification be incomplete, the FIN-FSA will request the fund manager to supplement the notification. In such a case, there is no guarantee that the FIN-FSA would grant the new marketing approval in time.
The FIN-FSA will maintain an online list of fund managers whose notification has been processed and who will thus be able to continue marketing in 2021. The FIN-FSA will, however, send the formal marketing approval letters only after the turn of the year.
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