The Implementation of the EU Directive on Cross-border Distribution of Funds Completed in Finland

Authors: Elisa Viiri, Linda Launonen, and Jari Tukiainen

The Government Proposal implementing Directive (EU) 2019/1160 regarding the cross-border distribution of collective investment undertakings (the “Directive”), which has been discussed in our previous blog here, has now been approved by the President of Finland. The relevant amendments to the Finnish Act on Alternative Investment Fund Managers (in Finnish: laki vaihtoehtorahaston hoitajista) and the Finnish Mutual Funds Act (in Finnish: sijoitusrahastolaki) (the "Implementing Acts") will enter into force on 1 December 2021.

The provisions of the Implementing Acts largely correspond to the ones presented in our previous blog based on the draft Government Proposal. As stated in the previous blog, third parties (i.e. parties other than the AIFM) may engage in pre-marketing on behalf of the AIFM only if the third party is authorised as an investment firm, a credit institution, a UCITS management company, an AIFM in accordance with the relevant Finnish legislation or equivalent legislation in another EU Member State, or as a tied agent (as defined in the Finnish Investment Services Act). Therefore, it has now been confirmed by the legislator that UK firms that hold a cross-border investment services licence granted by the FIN-FSA are not permitted to engage in pre-marketing in Finland.

As stated in the previous blog, pre-marketing is restricted to professional investors only, but an EEA AIFM is allowed to pre-market also to non-professional investors. However, the final Government Proposal underlines that the target group of pre-marketing by an EEA AIFM is in principle professional investors but, according to the proposal, allowing pre-marketing only to professional investors would unnecessarily exclude non-professional investors, who are comparable by their nature to professional investors. Thus, EEA AIFMs may also pre-market to non-professional investors.

The financial services regulation team at Hannes Snellman is available to discuss any questions and happy to assist with filing pre-marketing notifications with the FIN-FSA.