I’m sorry if I got anyone’s hopes up with the title to this post. Unfortunately, this is not going to give fund managers magical insights on how to secure that crucial investment to launch a fund or take an existing fund to the next level. However, this post may help keep some fund managers out of trouble!
I am often approached by clients and contacts with queries about the marketing of their fund interests internationally. This may be because my business cards and email signature state that I am a “Practitioner of Foreign Law” – perhaps people think I am able to advise on the laws of every “foreign” jurisdiction!
The bad news for people with such queries is that I am usually not qualified to answer specific queries on marketing in particular jurisdictions – I only practice Cayman and BVI law. However, the good news is twofold:
1. Asking these types of questions is the right thing to do! All our fund manager clients are (hopefully) aware of the various laws, regulations and rules that govern marketing fund interests in their home country. What every fund manager should also know is that they need to tread very carefully when marketing fund interests overseas. My fellow Offshore Funds Bloggers have written some useful posts on the European Union’s Alternative Investment Fund Managers Directive here and here. Although the funds marketing regime in Europe can be considered one of the most stringent in the world, it is worth remembering that almost every other jurisdiction will have laws and regulations on how (and to whom) fund interests may be marketed there. For example, managers in the United States will be very familiar with the careful planning needed to ensure that their funds fall within the various exemptions and safe harbours of the Securities Act and Investment Companies Act (not to mention state-by-state blue sky filing requirements!).
Accordingly, before sending that deck to a potential investor overseas or jumping on a plane to pitch them face to face, I strongly recommend that fund managers speak with local advisors in that jurisdiction to make sure they don’t fall afoul of local securities laws. Even if a manager engages a placement agent to assist with their overseas marketing efforts, I would still suggest that the manager contact local law firms or compliance consultants for advice on marketing fund interests in each particular jurisdiction. I think that it is fair to say that in-depth knowledge of securities marketing regimes is not a placement agent’s core area of expertise (particularly where the placement agent covers a general region rather than a specific country). Therefore, while a placement agent may well be able to provide some assistance to help a manager to comply with local securities marketing requirements, expert local advice should still be obtained.
2. We have offices all over the world and it is highly likely that as a firm, we will know someone who can advise on marketing fund interests in just about every jurisdiction managers want to target. Please feel free to reach out to your friendly Harneys funds lawyer anytime you need an introduction – we would be happy to help!