Contributed By Travers Smith LLP
Private closed-ended Funds
Although not required by UK law, the key marketing document that is usually used for a closed-ended private fund is a private placement memorandum (PPM). UK law generally requires that any marketing material, including a PPM, is "clear, fair and not misleading". Depending on the intended recipient, the PPM may also need to be approved by an FCA-authorised person. Under the Alternative Investment Fund Managers Directive (AIFMD), there are also specific requirements to make set disclosures to investors prior to their investment into the fund. These disclosures are usually included in the PPM.
Listed closed-ended Funds
In addition to the AIFMD disclosure requirements, ITCs and REITs must also comply with the disclosure requirements set out in the FCA's listing, prospectus, disclosure guidance and transparency rules.
Under UK companies' legislation, and the FCA's listing, disclosure guidance and transparency rules, UK incorporated ITCs and REITs must also publish annual and half-yearly reports and accounts. The annual report and accounts must be prepared in accordance with applicable accounting standards and must give a true and fair view of the assets, liabilities, financial position and profit and loss of the company. Half-yearly financial reports do not need to be audited, but it is common practice to ask the auditor to cast an eye over them and the audit committee of the fund should certainly review them.
Investors in open-ended funds must have access to an up-to-date prospectus at all times. A key information document must also be prepared and be made available to potential investors under the UCITS Directive (the UCITS KID). The UCITS KID requirements differ from the document that has to be produced under the PRIIPs regulation. For example, the UCITS KID must be provided to all potential investors, not just those in the EEA. Further, it must be provided to both potential retail and professional investors (whereas the PRIIPs KID is required only to be made available to retail investors).