On 29 January 2014, The Danish Minister for Business and Growth presented a proposal to amend inter alia the Danish Alternative Investment Fund Managers Act (the "AIFMA"). The amendment is meant to take effect on 1 April 2014.

In this newsletter, we brief on certain aspects of the proposal, which in our assessment are of significance to foreign fund managers, if the proposal is adopted by the Danish Parliament in its current form. In addition, we brief on certain new guidance from the Danish FSA, that may be important to foreign AIMFs' marketing to investors in Denmark and the first successful application for a Danish marketing licence handled by our firm.

Relaxation of restrictions on marketing towards retail investors

As a main rule marketing to retail investors (as defined in Annex II to the MiFID) will not be permitted under the AIFMA. A separate marketing licence in respect of marketing towards retail investors is required and only EU/EEA AIFMs may apply for such licence.

Under the proposal, however, non-EU/EEA AIFMs will receive equal treatment compared with EU/EEA AIFMs and thus will be eligible to be licensed to market towards retail investors.

The proposal also provides for an opportunity to market towards retail investors without requiring a sep-arate marketing licence regardless of the origin of the AIFM. This opportunity applies to retail investors, who qualify as so-called "semi-professional investors".

Specifically, this means that an AIF can be mar-keted to persons and businesses who by definition are retail investors. This, if the relevant person or business:

  • subscribes for at least 100,000 euro worth of units or shares in that specific AIF, and
  • states in writing on a document separate from the one, by which shares or units of the AIF are subscribed for, that the investor is familiar with the risks associated with the contemplated com-mitment or investment.

Opportunity for EU/EEA sub-threshold AIFMs to market EU/EEA AIFS without ob-taining a Danish marketing licence

Today, only authorised EU/EEA AIFMs may market units or shares of an EU/EEA AIF to professional in-vestors in Denmark under the AIFMD passport. Sub-threshold EU/EEA AIFMs are required to obtain a Danish marketing licence, unless they have opted-in under the AIFMD.

However, the proposal provides for a right for sub-threshold EU/EEA AIFMs to market EU/EEA AIFs to professional and semi-professional investors in Denmark on a cross-border basis without having to obtain a Danish marketing licence.

Pre-marketing: Preliminary meetings with potential investors

In its Q&A, the Danish FSA has stated that preliminary meetings with potential investors will not consti-tute marketing, provided (i) the AIF in question is not yet established, (ii) no private placement memo-randum, prospectus or similar document has been prepared in respect of the AIF, and (iii) it is not yet possible for the potential investors to commit to acquiring units or shares in the AIF in question, cf. Section 3 of a Q&A made available by the Danish FSA on its website (www.ftnet.dk).

Marketing of publicly listed AIFs in Denmark

In its Q&A, the Danish FSA also states that "Public listing and public offerings of shares or units in AIFs are regarded as marketing by the Danish FSA. If the listing took place before the entry into force of the AIFMA (i.e. before 22 July 2013) and no new offering of shares or units is made so that only shares pre-viously issued may be exchange traded this is also viewed as marketing [...] Thus, every publicly listed AIF is subject to the rules on marketing towards retail investors under the AIFMA."

A strict construction of the above statement would be wildly extraterritorial. We deem this to be unin-tended on the part of the Danish FSA. Under our interpretation, the above applies only to listed AIFs, which are in fact marketed in Denmark.

Accordingly, please be advised that marketing of the IPO of an AIF or marketing of already exchange traded shares on websites directed specifically towards investors in Denmark (e.g. if the marketing is in Danish, the marketing includes references specifically aimed at investors in Denmark, or the website has a Danish domain name etc.) or if the prospectus is translated into Danish this may constitute marketing in Denmark even though no direct contact is made to investors in Denmark.

Whether any activity constitutes marketing of a listed AIF under the AIFMA is important as non-EU/EEA AIFMs may not market listed AIFs to investors in Denmark as such AIFMs are prohibited from marketing to retail investors.

EU/EEA AIFMs may market listed AIFs to investors in Denmark only on the condition that such AIFMs obtain both a Danish marketing licence and a specific licence to market to retail inves-tors.

Right for non-EU/EEA AIFMS to manage Danish AIFs

Under the current rules, non-EU/EEA AIFMs may not manage AIFs established under the laws of Den-mark. However, pursuant to the AIFMD, during a transitional period Member States may provide for na-tional rules allowing non-EU/EEA AIFMs to manage AIFs in that particular Member State until the rules on passporting for non-EU/EEA AIFMs take effect.

The proposal contains such national rules meaning that non-EU/EEA AIFMS will be able to manage Danish AIFs when the proposal takes effect. This may be of special importance to non-EU/EEA AIFMs, which are currently relying on the general transitional provision in the AIFMA in order to manage Danish AIFs, and which currently would not be able continue managing Danish AIFs past the expiry of the transitional period on 21 July 2014.

Access for non-EU/EEA self-managed AIFs to market in Denmark

Non-EU/EEA self-managed AIFs will be eligible to be granted a marketing licence pursuant to the AIFMA. This is not the case today.

First successful application for a Danish marketing licence

In January 2014, we assisted a non-EU/EEA AIFM client in obtaining a Danish marketing licence under the AIFMA for the first time providing us with valuable practical experience regarding the application proce-dure.

The licence was issued within 3-4 weeks after submitting the application.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.