A hard Brexit looks likely and will have country-specific consequences in Norway
On 24 April 2019 Finanstilsynet (the Norwegian Financial Supervisory Authority, FSAN) announced that in case of a hard Brexit, UK will be regarded as a third party country, meaning that the following funds will lose their current marketing status into Norway:
- UK UCITS
- EEA UCITS with UK managers
- UK AIFs managed by UK AIFM
- UK AIFs managed by a non-UK EEA AIFM
- Non-UK EEA AIFs managed by a UK AIFM
- Non-EEA AIFs managed by UK AIFM under AIFMD art. 36
FSAN will on 31 October 2019, in case of a hard Brexit, deregister all such funds, and marketing into Norway will have to cease unless marketing can continue under local private placement rules.
Norwegian private placement rules – AIFS
Marketing by non-EEA funds and EEA funds managed by non-EEA managers to non-professionals will be possible under local licenses, in a regime comparable to AIFMD art. 42.
UK AIFMs currently holding authorisation under AIFMD art 36 for marketing of non-EEA AIFs to professionals, may apply to FSAN to convert this authorisation to an art 42 authorisation under a simplified procedure not yet established. Note should be taken that such conversion will mean the UK AIFM being subject to certain reporting requirements to FSAN, including Annex IV reporting.
Norwegian private placement rules – UCITS
UK UCITS currently marketed into Norway under the UCITS Directive notification regime can apply for a marketing license to market the fund to non-professionals. A simplified procedure for such applications is anticipated.
For marketing to professionals of a UK UCITS, a marketing license under a regime similar to AIFMD art. 42 must be applied for. There are no indications as to any simplified procedure contemplated for such applications.
FSAN have categorically stated that no applications will be reviewed until it is certain that a hard Brexit is the result, i.e. 31 October 2019. As deregistration will also to take place on such date, we expect FSAN to give further guidelines in order for managers to prepare and submit necessary applications to avoid stop of marketing during any review period.
Norwegian investor’s proactive investments
FSAN have defined marketing not to include “cold calling”, which has a stricter interpretation that reverse solicitation. In order to continue to rely on this exemption, it is advisable to adopt appropriate procedures to document this.
FSAN have earlier guided on this exemption not being available for marketing to non-professional investors as it is unlikely that such investors will have sourced their investments on a truly un-solicited basis.
As a hard Brexit will mean that non-discriminatory rules will not apply, Norwegian investors may be subject to new tax rules on capital gains when selling shares in UK UCITS/AIFs.