New Danish Rules on Pre-Marketing of Alternative Investment Funds

The Definition of Pre-Marketing

In accordance with the AIFM Directive, the Danish AIFM Act sets out strict require-ments for the marketing of AIFs. In practice, the Danish FSA permitted limited pre-marketing activities, which, however, were restrictive and not always sufficient to test investor interest with respect to a contemplated AIF. Further, certain activities being permitted pre-marketing activities within one jurisdiction could be interpreted as non-permitted marketing within another jurisdiction. The directive-based introduction of a pre-marketing definition does thus not only constitute easier access to carry out such ac-tivities as such, but also provides greater predictability with respect to the legal treat-ment in case of cross-border activities.

The amendment to the Danish AIFM Act defines pre-marketing as the provision of in-formation or communication, direct or indirect, on investment strategies or investment ideas by an EU AIFM or on its behalf, to potential professional investors domiciled or with a registered office in the Union in order to test their interest in one of the follow-ing: (1) an AIF not yet been established, (2) a compartment not yet established, (3) an established AIF or compartment, which has not yet provided notice for marketing in the jurisdiction in which the potential investors are domiciled or have their registered office, and which in each case does not amount to an offer or placement to the potential inves-tor to invest in the units or shares of that AIF or compartment.



Restrictions in Pre-Marketing Activities

Pre-marketing may first of all only be directed at professional investors. 

Further, the AIFM may not present information to such potential investors, which (1) is sufficient to allow them to commit to acquiring interests in a particular AIF, (2) consti-tutes subscription forms or similar documents whether in a draft or a final form, or (3) constitutes constitutional documents, a prospectus or offering documents of an AIF not yet established in a final form.

An AIFM is permitted to provide a draft prospectus/offer document. However, the doc-ument in question must in such case clearly state that (1) it does not constitute an offer or an invitation to subscribe for interests in an AIF, and (2) the information presented therein should not be relied upon because it is incomplete and may be subject to change.

With the introduction of legislation on pre-marketing, only AIFMs having obtained a li-cense in Denmark or another EEA country may carry out pre-marketing activities. Un-der the previous guidance-based regime, pre-marketing was also permitted for other AIFMs, such as AIFMs having obtained a registration only, but not a license (i.e. “sub-threshold AIFMs” managing a maximum of EURm 500 or, if leveraged, a maximum of EURm 100) and non-EEA AIFMs. Also, pre-marketing directed at semi-professional in-vestors is no longer permitted.

It should be noted that the AIFM is not obligated to inform the Danish FSA on the con-tents or the pre-marketing or the potential investors.