Facilities Agent Services: Considerations for Alternative Fund Managers

EU collective investment schemes ("CIS") such as retail alternative investment funds and UCITS often need specialised support to get a foothold in certain markets. The Maples Group's comprehensive facilities agent services and broader service offering helps clients navigate the various regulatory requirements associated with marketing European-domiciled funds across the European Economic Area ("EEA") and the United Kingdom ("UK").

Experts from across the Maples Group discussed the role of a facilities agent and its importance, given the increasingly global business landscape.

What is a facilities agent and why is this an important service for alternative fund managers?

Emma Conaty: From August 2021, the UCITS and the alternative investment funds ("AIFs") directives were updated. These updates were made largely to enhance the cross-border sale of funds that fall within those two categories, and particularly for asset managers who are targeting retail funds, be they retail UCITS and/or retail AIFs. They are required now from August of last year effectively to have a facilities agent in place.

Christina McCarthy: Facilities agent services can assist investors by way of a standardised more simplified approach in which they can access fund documentation. Facilities agent services are necessary to help asset managers distribute their funds in various EEA countries, as well as in the UK. The service provides, as required by EU law, provides documents in the local language of the countries where these funds are distributed. Importantly, this now can come from a single point of contact, no matter where those investors are located. This is also more efficient and cost-effective for the asset manager as well, because they can have that single point of contact, rather than dealing with multiple entities before the directive was updated.

Sam Ellis: When we refer to the UK, this covers equivalent requirements under UK regulations.

How does a facilities agent work?

Emma Conaty: The function of the facilities agent now is entirely harmonised across all member states. So any UCITS or AIFs that are to be distributed to retail investors in any member state of the EU is now required to have facilities in place. Under the former regime, it was much more fragmented and a patchwork of requirements.

Sam Ellis: Yes. This gives investment managers access to investors and their capital across more jurisdictions, making capital raising and investor relations across jurisdictions more straightforward.

What legal and regulatory considerations do fund managers need to keep in mind with regards to facilities agent services? Have there been any recent developments of which fund managers should be aware?

Emma Conaty: Previously, UCITS funds were required to have certain facilities made available. The whole backdrop of this is extending protection to or giving greater aid to retail investors. It's a harmonised service, with the harmonised set of information and documentation that has to be provided.

Sam Ellis: This has the added benefit across member states of giving investors in some of those smaller jurisdictions greater access to investment opportunities, while at the same time opening up a broader investor base to investment managers in a more cost-effective and less administratively burdensome manner.

Christina McCarthy: There were different requirements across different EEA member states and the UK, some of which were "gold plated"; some European jurisdictions being stricter in their approach to UCITS and cross-border distribution than others.

Whereas before the waters were muddy, now they are a bit clearer for both asset managers and investors for funds being distributed in Europe.

What are the key considerations for fund managers looking to engage a service provider to fulfil the facilities agent role?

Christina McCarthy: It is important to work with an established provider with a global outlook such as the Maples Group. Our cross-jurisdictional expertise and deep experience differentiates us and can add value for managers beyond the facilities agent function. We can essentially provide support for the entire lifecycle of a fund, from legal setup, through to regulatory and compliance services, along with full fund servicing capabilities including AIFM or ManCo offerings. Our Global Registration Services team also has vast experience in registering funds across countries, jurisdictions, and exchanges.