Material Change Notifications

Luxembourg implementation

The CSSF must be notified in advance of any substantial change affecting the AIFM, notably the information provided to the CSSF as part of the authorisation application and on the basis of which the CSSF authorised the relevant AIFM.  

The CSSF provides in Annex 2 of its Circular 18/698 on the authorisation and organisation of investment fund managers incorporated under Luxembourg law, a “summary table of the arrangements for the communication to the CSSF according to the nature of the change”. This annex establishes a detailed, yet non-exhaustive, list of changes which require either a notification to the CSSF only (e.g. delegation by the AIFM of the performance of the accounting function or IT function; resignation of members of the AIFM’s management body/governing body, the conducting officers and, where appropriate, of the members of the supervisory board), or a prior notification with a view to authorisation by the CSSF (e.g. acquisition of holdings/creation of a subsidiary by the AIFM; approval of the members of the AIFM’s management body/governing body, the conducting officers and, where appropriate, of the members of the supervisory board). 

The applicant must provide the CSSF with any relevant information for the examination of the request in the form of a detailed letter/email (the format of which is not prescribed). Because of the variety of possible amendments and, therefore, the variety of information that could change, no questionnaire addressing each type of change is currently available on the CSSF website for the collection of the relevant information. A specific form is available for (i) submitting an application to extend an AIFM’s licence, (ii) AIFMs seeking to apply for a UCI administration or for a MiFID top-up licence, (iii) seeking to acquire a qualifying holding in an AIFM or UCITS management company or (iv) seeking to establish a branch abroad. Please see here for the specific form for submitting an application to extend an AIFM’s licence.

With respect to the entry of a new qualifying shareholder^[1] in an AIFM’s shareholding structure or a request of extension of its license, the AIFM’s Market Entry Form must be amended and submitted through the CSSF’s eDesk Portal. 

[1] AIFMD and its transposition in Luxembourg through the law of 12 July 2013, as amended, define a qualifying holding as “a direct or indirect holding in an AIFM which represents 10% or more of the capital or of the voting rights, in accordance with Articles 9 and 10 of Directive 2004/109/EC, taking into account the conditions regarding aggregation of the holding laid down in Article 12(4) and (5) thereof, or which makes it possible to exercise a significant influence over the management of the AIFM in which that holding subsists”.

UK implementation

Following the UK’s withdrawal as a Member State of the European Union and the end of the Transition Period, the UK has implemented a domestic regime for UK AIFMs. At present, the UK regime is broadly the same as that which remains in place in the EU, including requirements to notify the FCA of matters relating to the authorisation of AIFMs and the marketing of AIFs, and changes thereto. Please see the “AIFMD in the UK after Brexit” page for more information in relation to the UK’s withdrawal from the European Union. 

With respect to material changes to the conditions for a UK AIFM’s initial authorisation, the FCA must be notified of a planned material change at least one month before the change takes effect, or immediately thereafter if an unplanned change has occurred. 

The forms that must be completed in order to notify the FCA of a material change are referenced below, and can be found on the FCA’s website. They contain some helpful guidance as to the kinds of changes that should be notified, the key features of which at the time of writing are summarised below. Please note that the FCA forms are subject to change so the latest versions should be used, and any updated guidance included in those forms should be taken into account.

The FCA has provided guidance in its Material Change Notification form that a change must be deemed material if there is a substantial likelihood that a reasonable investor, becoming aware of such information, would reconsider its investment in the AIF, including because such information could impact an investor’s ability to exercise its rights in relation to its investment, or otherwise prejudice the interests of one or more investors in the AIF.

The form also provides illustrative examples of changes which should be notified – these include significant changes to the rules or instruments of incorporation of an AIF, or changes to the predominant investment strategy of an AIF. There is no exhaustive list of notifiable material changes and AIFMs must therefore exercise their own judgement in determining whether a given change should be deemed material and therefore notified to the FCA. There is no formal requirement for this material change notification form to be accompanied by supplementary documentation, although in certain cases, it may be helpful for the form to be submitted together with an updated version of the AIFM’s Schedule of AIFs or an updated AIF prospectus.

Small registered UK AIFMs must notify the FCA when they cease to satisfy the conditions of registration. Small AIFMs must notify the FCA when they exceed the assets under management threshold.

Luxembourg implementation

Luxembourg AIFMs that exercise the passport right to provide cross-border services in another EU Member State to manage an EU AIF must notify the CSSF of any change to the information provided in connection with the passporting application one month in advance or immediately after such change in case of an unplanned change to the information contained in the application. This notification should be made using the relevant form for any notification regarding the free provision of services and amendments to the information included in such a notification available on this page.

UK implementation

Following the UK’s withdrawal from the European Union and the end of the Transition Period during which EU rules continued to apply in the UK, UK AIFMs may no longer manage EU AIFs on the basis of the AIFMD management passport. Equally, EU AIFMs do not have the right to manage UK AIFs under the management passport. Please see here for more details. 

Luxembourg implementation

The CSSF must be notified of a planned material change at least one month before the change takes effect, or immediately thereafter if an unplanned change has occurred. In contrast to the FCA, the CSSF has not provided guidance on what would constitute a material change. The assessment of the materiality of a change to a marketing notification is therefore mostly a matter of regulatory practice.

Marketing notifications and changes thereto shall be submitted through the CSSF’s eDesk Portal (eDesk (cssf.lu)). 

The CSSF instructions, available on its website, are that in the event of a material change in the information contained in its original notification file, a Luxembourg-based AIFM must provide written notice of this change to the CSSF by resubmitting a marked-up version of the original notification file indicating the proposed changes.

UK implementation

Full-scope UK AIFMs that market funds in the UK (and Gibraltar AIFMs that market funds in the UK to retail customers) in accordance with Regulation 54 of the UK Regulation must notify the FCA of material changes to the information provided with their marketing application.

There is no exhaustive list of notifiable material changes and AIFMs must therefore exercise their own judgement in determining whether a given change should be deemed material and therefore notified to the FCA. There is, however, various commentary as to what constitutes a notifiable material change in the UK context. As noted above, the FCA has provided guidance on what constitutes a material change and this is also set out in the AIFMD Marketing Notification Form available on the FCA’s website. 

In our view, as a matter of practice, in most cases where firms are making material change notifications in a management or authorisation context, they are also making material change notifications with respect to their marketing.

Luxembourg implementation

Every authorised EU AIFM which intends to market non-EU AIFs to professional investors in Luxembourg must send an Information Form to the CSSF by email. The CSSF must be notified of a planned material change at least one month before the change takes effect, or immediately thereafter if an unplanned change has occurred.

In particular, if an AIFM intends to cease the marketing of its AIF/sub-fund in Luxembourg and deregister the AIF/sub-fund, it must inform the CSSF whether Luxembourg investors are still invested in the fund/sub-fund. Such deregistration should be made through email correspondence with the CSSF.

The same is applicable to non-EU AIFMs applying for such authorisation under Article 42 of AIFMD, with a similar Information Form being used.

UK implementation

The UK retains an NPPR following its departure from the EU and the end of the Transition Period. Non-UK AIFMs wishing to market AIFs in the UK must notify the FCA under Regulation 59 of the UK Regulations (or Regulation 58 in the case of small AIFMs). UK AIFMs wishing to market in the UK non-UK AIFs (including EU AIFs) and certain UK feeder AIFs, must notify the FCA under Regulation 57 of the UK Regulations. 

Firms are required to notify the FCA of any material changes to the information previously submitted to the FCA in respect of the marketing of AIFs under the UK NPPR. 

The FCA’s online Connect system is used for material change notifications in relation to AIFs marketed under the UK NPPR, in most circumstances. The process for submitting these notifications changes from time to time; the latest position can be checked on the NPPR page of the FCA website.

The FCA must be notified of a planned material change at least one month before the change takes effect, or immediately thereafter if an unplanned change has occurred. The nature of the information items required in the material change forms suggest that any changes to the information previously submitted to the FCA as part of the initial NPPR notification will need to be notified to the FCA, not just changes which would be deemed material in the exercise of a firm’s judgement.