A non-Austrian "sub-threshold" AIFM cannot benefit from the passporting procedures under the AIFMD and is not entitled to benefit from the AIFMD as well as the "freedoms" to provide services established thereunder. Accordingly, any such AIFM must not market participations in an AIF it manages in Austria. Austrian laws restrict the possibility of "sub-threshold" AIFM to marketing participations in AIFs they manage to such "sub-threshold" AIFM which are registered in Austria based on section 1 para 5 of the Austrian Investment Funds Manager Act ("AIFMG"); non-Austrian "sub-threshold" AIFM may not benefit from such provision and the registration in Austria is not possible for a non-Austrian entity.
The AIFMG defines the term "marketing" as the direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM of units or shares of an AIF it manages to or with investors domiciled or with a registered office in the Union. Accordingly, a non-Austrian sub-threshold AIFM may not conduct any activities which fall within the scope of this definition in relation to Austria.
Although the Austrian regulator FMA (Austrian Financial Market Authority – Finanzmarktaufsicht) stipulated in their Frequently Asked Questions to the AIFMG that "passive marketing" (reverse solicitation) would not be regarded as marketing, the exact scope of such reverse solicitation is not clear in Austria.
In our understanding, and this point of view is shared by the FMA, a reverse solicitation describes a situation where an investor contacts the AIFM/AIF with the clear intention to acquire a participation in a specific AIF it names without such contact to the AIFM/AIF having been initiated directly or indirectly by the AIFM, the AIF or any legally or factually related person or entity. Where an investor approaches the AIFM with questions on a specific fund product following a previous communication with the AIFM, such previous communication would likely "taint" any reverse solicitation claims even if such previous communication involved no references to a specific fund product (e.g. name, plan to launch a new fund, intended investment strategy of new/next fund), but only references to the AIFM (e.g. team and track record).
Accordingly, the AIFM may only respond to unsolicited requests. We recommend keeping evidence that the investor approached the AIFM without any prior solicitation or communication by the AIFM and ask for a written and signed confirmation by the investor. Please note that such a confirmation does not guarantee that the FMA will consider the individual case to be one of reverse solicitation. Depending on the number of cases such confirmation is used in, and in light of all circumstances, FMA may in certain cases suspect a rather systematic approach towards reverse solicitation by the AIFM.
Taking the foregoing into account and from an AIFMG-perspective, the closing of an Austrian investor pre-requisites either the successful completion of the respective registration procedure (i.e. passport) or alternatively, a reverse solicitation approach as described above (side note: if the AIF is closed ended generally further notifications in addition to the AIFMD-Passport are necessary prior to any envisaged offer in/into Austria).
The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. The above information reflects the legal situation as of February 10, 2020. Before marketing a fund into the respective country, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.