Marketing of funds in Norway following a «no-deal Brexit»

On 4 April, the Financial Supervisory Authority of Norway (the FSAN) published a statement with respect to marketing of funds in Norway following a “no-deal Brexit”. If the UK leaves the EU without an agreement, the UK will be regarded as a third country in relation to EU-rules. This will impact marketing of UK funds and UK managed funds to Norwegian investors.

 

Repeal of the right to market funds in Norway and the passporting regime

Following a “no-deal Brexit”, the UK will be regarded as a third country. Managers based in third countries are not eligible for the passporting regimes set out in the UCITS Directive or the AIFMD.

  • A UK AIFM may no longer market UK AIFs to professional investors in Norway under the passport regime (AIFMD Article 32).
  • A UK AIFM may no longer market EEA AIFs to professional investors in Norway under the passport regime (AIFMD Article 32).
  • A UK AIFM may no longer market third country AIFs to professional investors in Norway under the AIFMD Article 36 notification regime. We expect that the same will apply to feeder funds marketed under the AIFMD Article 36 regime.
  • An EEA AIFM may no longer market UK AIFs to professional investors in Norway under the passport regime (AIFMD Article 32).
  • UCITS established in the UK may no longer be marketed to investors in Norway under the notification regime (UCITS Directive Article 93). UCITS established in the UK will be classified as third country AIFs.
  • UCITS established in the EEA managed by a UK UCITS management company may no longer be marketed to investors in Norway under the notification regime (UCITS Directive Article 93).

The third country regime

The Norwegian AIF Act implementing the AIFMD allows for marketing of AIFs managed by third country AIFMs subject to authorisation from the FSAN.

As the UK will be regarded as a third country following a no-deal Brexit, a UK AIFM may apply for authorisation to market AIFs to professional investors in Norway under the AIFMD Article 42 regime. The AIFMD Article 42 regime will apply to UK managed AIFs which are established in the EEA, the UK and third countries outside the EEA. An EEA AIFM managing a UK AIF may apply for authorisation to market the UK AIF to professional investors under the AIFMD Article 36 regime.

UK securities funds which are currently classified as UCITS will be reclassified as third country AIFs following a no-deal Brexit. These securities funds may be marketed to non-professional investors in Norway after receiving authorisation from the FSAN pursuant to the Norwegian Securities Funds Act.

Section 9-4. In addition, UCITS established in the UK may be marketed to professional investors following authorisation under AIFMD Article 42.

Simplified application procedure for conversion of certain marketing authorisations

The FSAN has set out a simplified application procedure for conversion of certain authorisations under UCITS and AIFMD. The simplified application procedure is only relevant for “current” authorisations. Although the FSAN has not set out any cut-off date, we expect that all relevant authorisations obtained before a “no-deal Brexit” will be eligible.

The simplified application procedure for AIFs applies only to AIFMD Article 36 authorisations. Therefore, a UK AIFM holding a marketing authorisation under AIFMD Article 36 for marketing of a non-EEA AIF may apply to the FSAN for a conversion of the AIFMD Article 36 authorisation into an AIFMD Article 42 authorisation. When converting an AIFMD Article 36 authorisation into an AIFMD Article 42 authorisation, the AIFM will be subject to the Norwegian reporting requirements to the FSAN, such as Annex IV reporting.

The FSAN has not set out any similar simplified application procedure applicable to AIFs which are currently passported for marketing in Norway. Hence, these AIFs will have to apply for marketing authorisations under the regular third country regime (AIFMD Article 36 and Article 42).

A UCITS established in the UK which currently holds a marketing licence in Norway pursuant to the notification regime may apply for a marketing license under the Norwegian Securities Funds Act Section 9-4 under the simplified application procedure. This marketing license will allow the UCITS to be marketed to non-professional investors in Norway. In order to market a UCITS to professional investors in Norway, a marketing authorisation under AIFMD Article 42 must be applied for.

Time frame for applications

The FSAN has stated that no applications as described above will be processed until it is certain that the UK leaves the EU without an agreement. As funds marketed under the AIFMD passport regime, AIFMD Article 42 and UCITS notification regime will be deregistered for marketing in Norway following a no-deal Brexit, we expect the FSAN to provide further details in due course, giving fund managers time to prepare and submit the necessary applications to avoid being deregistered on Brexit date.

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