The New E.U. Cross‑Border Distribution of Funds Rules

The European Commission has introduced new rules on the cross-border distribution of funds (CBDF Rules), which recently went into effect in the E.U. The CBDF Rules are intended to remove regulatory obstacles that prevent more active cross-border flow of capital within the E.U. and introduce regulatory certainty to allow for more market testing activity, so fund managers can confirm investor interest before embarking on marketing registration under the Alternative Investment Fund Managers Directive and its attendant regulatory requirements. Although equivalent rules are not currently being implemented in the U.K., the CBDF Rules are likely to have at least some impact on many U.K. managers’ marketing activities in the E.U. Similarly, U.S. and other non‑E.U. managers should assess what impact the CBDF Rules may have on them. In a guest article, Akin Gump partner Ezra Zahabi discusses the key provisions of the CBDF Rules as they relate to pre-marketing activities, reverse solicitation, marketing to non-professional investors and marketing communications. For additional commentary from Akin Gump attorneys, see “What Must a PE Sponsor Consider Before Launching a Private Credit Strategy? (Part One of Two)” (Feb. 4, 2020); and “How Fund Managers May Deploy Opportunity Zone Funds to Defer and Partially Eliminate Capital Gains” (Apr. 30, 2019).

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