On 14 September 2016, the European Parliament (Parliament) voted to reject the draft regulatory technical standards (RTS) adopted by the European Commission (Commission) in June 2016 in respect of the EU Regulation on Packaged Retail and Insurance-Based Investment Products (“PRIIPs”) (EU 1286/2014) (“PRIIPs Regulation”). (The Parliament’s resolution supported a similar vote of the ECON Committee on 1 September 2016). The Parliament has called on the Commission to submit new draft RTS taking account of Parliament’s concerns and to consider the postponement of the 31 December 2016 implementation date. Any amendment to the implementation date of the PRIIPS Regulation would need to be introduced by the Commission by way of a new regulation in accordance with the ordinary legislative procedure.
From 1 January 2017, the PRIIPS Regulation requires PRIIPs manufacturers (e.g. AIF fund promoters) to produce key investor documents (KIDs) where the PRIIPs product (e.g. an AIF) is being offered to investors who are not MiFID professional clients (see our previous article here). There are a number of controversial aspects to the contents of the KID, not least the requirement for future performance scenarios to be included, whilst excluding past performance metrics (a UCITS KIID, by contrast, requires disclosure of past performance only). Following the Parliament’s resolution, there is a possibility that the PRIIPs Regulation may enter into force on 31 December 2016 without the benefit of related RTS at that time or it may enter into force at a later date. In any event, whether or not the PRIIPs Regulation application date is delayed, sooner or later it will affect all AIF investment fund products whose offering is not limited to MiFID professional clients. Affected AIF promoters are strongly advised to start taking appropriate preparatory action now.
How can we help?
William Fry can assist you in determining whether or not you may have to produce KIDs in order to continue your current offering of the fund; or in the preparation of a KID. If you do not have “retail” investors and wish to exclude “retail” investors from your potential target market (by limiting the target market to MiFID professional clients), we can also assist in preparing appropriate amendments to the AIFs Prospectus, subscription/application form and any related documentation.
Contributed by Patricia Taylor
