Services provided by Dutch investment firms in connection with unregistered collective investment companies: a further explanation

News This news is older than 3 years. Therefore it is possible that the information is no longer valid.

The Netherlands Authority for the Financial Markets (AFM) has recently received many questions from market parties concerning services provided in connection with investment companies not registered in the Netherlands (collective investment companies) by Dutch investment firms. There is uncertainty concerning the interpretation of Section 4:100f of the Financial Supervision Act (Wft). The AFM would like to provide more information as to how this provision should be interpreted within the context of its supervision.

Pursuant to the Wft, managers of collective investment companies are allowed to offer participating interests in the Netherlands if they are allowed to develop activities in the Netherlands and have therefore been included in an AFM register for this purpose, or if they satisfy the exemption or notification requirements (see the Being Active in the Netherlands Policy Rule 2013). In addition, even if a manager of a collective investment company does not offer the rights of participation in the Netherlands it is still possible in certain circumstances for investors to acquire them via a Dutch investment firm. This can be done, inter alia, when an investor decides to invest in such a collective investment company, for example via execution only services.

The AFM considers in that connection that a Dutch investment firm that provides these investment services, such as execution only services, to a client is not or does not become a provider of rights of participation in a collective investment company merely as the result of providing the investment service. In some cases, offering rights of participation via an investment firm engaged by the manager of the collective investment company itself may qualify as offering indirectly. In principle, the manager of the collective investment company does remain the provider. This means that the AFM currently follows the statutory framework as applied before the Alternative Investment Funds Managers (AIFM) Directive entered into effect.

Further obligations apply when an investment firm provides an investment service to client in connection with the purchase of a right of participation in a collective investment company that is not registered in the Netherlands (or exempted/notified). For example, an investment firm is obliged to provide relevant information to the client concerning, inter alia, the nature and characteristics of the product and the service. In addition, it is important that an investment firm checks - depending on the nature of the service - to what extent the product is suitable for the client.

In order to be able to provide more clarity concerning the article, the AFM consults with several interested parties, including ESMA. The explanation above applies until the transitional term arising from the third-country policy of the AIFM Directive has expired or so much sooner as more clarity has been obtained concerning Section 4:100f, Wft.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

Share information

Share on: Share this