French AMF Permits Certain "Pre-Marketing" Activities

Recently, the Autorité des Marchés Financiers (AMF, the French financial markets authority) updated its Position n° 2014-04, Guide to UCITS and AIF marketing regimes in France (Position). This follows recent lobbying by the newly created French task force dedicated to improving French financial market competitiveness (French Route & Opportunities Garden). 

Pursuant to this update, the AMF has introduced the notion of “pre-marketing”, which relaxes the constraining marketing rules applicable to funds in France. The updated Position allows management companies (or third parties acting on their behalf) that contemplate offering a new fund, to measure interest in the fund by pre-marketing to a maximum of 50 prospective investors, provided that such investors are (i) professional investors or (ii) non-professional investors whose initial subscription is at least € 100,000. Within this framework, management companies may provide potential investors with draft by-laws, private placement memoranda, term sheets or fact sheets regarding the fund. However, the management company may not provide a subscription agreement or comparable document allowing potential investors to subscribe to such fund’s shares or units. 

It should be noted that the updated Position only clarifies the distinction between pre-marketing and marketing – it does not allow management companies to ostensibly use pre-marketing in order to circumvent the marketing or passport rules, which remain stringent in France. In particular, the amendment to the Position does not create a French national private placement regime for AIFs and UCITS once they have been set up. 

The updated Position also clarifies that the following activities are not precluded by the marketing rules: 

1. Management company attendance at industry conferences or meetings with investors for the purpose of providing information as to the company and its activities (e.g., description of the management team, main strategies, funds closed to subscriptions and other general information) and market trends, provided that only professional investors may attend such meetings and the management company may not promote or discuss any specific UCITS or AIF to be offered. 
2. Secondary transactions (transfers of shares or units between investors in existing funds), provided that the management company (and any third party acting on its behalf) does not manage such transfer of shares or units (for instance by seeking counterparties for a seller); 
3. Purchase, sale or subscriptions of shares or units (including carried interest shares or units) by, among others, executives, directors, managers or employees of the management company in accordance with or without the management company’s remuneration policy; 
4. Response to a tender offer made by a professional investor (provided that such investor is not a natural person) for the setting up of an AIF or a UCITS. 

The AMF reminds management companies that, notwithstanding the amendment to the Position, the above activities remain subject to marketing rules of foreign jurisdictions applicable to the management company (and third parties acting on their behalf), and that management companies must always act professionally, honestly, with due skill, care and diligence.