Guidelines on Marketing Communications in Accordance with the CBDF Regulation

30 May 2024
Ref.: 2312070

Circular no: 17/2024
To: Management companies of securities funds
Managers of special funds
Financial undertakings association

Subject: Guidelines on marketing communications in accordance with the CBDF Regulation.

The European Securities and Markets Authority (ESMA) has issued guidelines on marketing communications in accordance with the CBDF Regulation1 (ESMA34-45-1272; Guidelines on marketing communications under the Regulation on cross-border distribution of funds; hereinafter the guidelines). The guidelines are issued pursuant to Article 4(6) of the CBDF Regulation, and their purpose is to elaborate in detail on the marketing obligations set out in Article 4(1) of the aforementioned Regulation. The guidelines entered into force within the EU on 2 February 2022.

The guidelines are addressed to management companies of securities funds, including securities funds that have not appointed a management company, managers of special funds with authorisation2, managers of European venture capital funds and managers of European social entrepreneurship funds that are registered in this country pursuant to Act no. 116/2021 on securities funds, Act no. 45/2020 on managers of special funds or Act no. 31/2022 on European venture capital funds and European social entrepreneurship funds (hereinafter the companies or the companies).

The guidelines concern all marketing directed at investors or potential investors of securities funds and special funds, including when they are operated as European venture capital funds, European social entrepreneurship funds, European long-term investment funds or money market funds.

The purpose of the guidelines, as stated above, is to elaborate in detail on the marketing obligations set out in Article 4(1) of the CBDF Regulation. More specifically, the intention is to set out harmonised guidelines on what constitutes marketing communications, how to describe the risks and benefits of acquiring units or shares in a special fund or units in a securities fund, and how marketing communications are to be presented in a fair, clear and not misleading manner, including online marketing communications.

[1] Regulation (EU) 2019/1156 of the European Parliament and of the Council of 20 June 2019 on facilitating the cross-border distribution of collective investment funds. The Regulation was incorporated into Icelandic law by Act no. 64/2023 amending the Act on managers of special funds, the Act on securities funds and other acts (sale of funds across borders, master funds and feeder funds etc.), which entered into force on 1 September 2023.

[2] Managers of special funds must either have authorisation or be registered with the Financial Supervisory Authority. The definition in the CBDF Regulation assumes that a manager of a special fund, to which the Regulation applies, has authorisation, see point (b) of Article 3 of the Regulation: "'Alternative investment fund managers' (AIFMs): alternative investment fund managers as defined in point (b) of Article 4(1) of Directive 2011/61/EU and which are authorised in accordance with Article 6 of that Directive".

The guidelines themselves are set out in Chapters 4, 5 and 6. Chapter 4 of the guidelines provides, among other things, that marketing communications must be identifiable as such. It is stipulated that in cases where approval is a condition for marketing, companies must not publish marketing communications identifying a fund until the competent authority of the fund's home state has granted permission to do so and, where applicable, the management company/manager of the fund has received notification of approval by the competent authority of the management company's/fund's home state for the intended marketing in the fund's host state. Chapter 5 of the guidelines contains guidance on risks and benefits being described with equal prominence. The information must be accurate and give a fair and clear indication of risks and benefits, in addition to which their presentation is addressed. Chapter 6 provides, among other things, that all information in marketing communications must be presented in a fair and clear manner and must not be misleading. The chapter provides guidance on the presentation of information in marketing communications and sets out general guidelines; Section 6.2 stipulates how risks and benefits of an investment in a fund should be described, Section 6.3 how costs of an investment in a fund should be disclosed, Section 6.4 how information on past and expected performance of a fund should be addressed, and Section 6.5 what requirements are made for the disclosure of information on sustainability aspects of a fund, when such information is in any event disclosed in the fund's marketing communications.

Pursuant to Article 16(3) of the ESAs' Regulations, which were implemented by Act no. 24/2017 on the European financial market supervisory system, competent authorities and the relevant supervised entities shall seek to use all means to comply with the guidelines of the supervisory authorities and general recommendations.

This circular will be published on the Central Bank's website together with a link to the English version of the guidelines. The Financial Supervisory Authority of the Central Bank of Iceland will also rely on the guidelines in its supervisory activities.

The Financial Supervisory Authority calls upon management companies of securities funds, authorised managers of special funds, managers of European venture capital funds and managers of European social entrepreneurship funds that are registered in this country to familiarise themselves with the aforementioned ESMA guidelines and take them into account in their activities as applicable.

Yours faithfully,
CENTRAL BANK OF ICELAND

Inga Dröfn Benediktsdóttir
Erna Ágústsdóttir
Head of Department
Lawyer conduct supervision conduct supervision

Valid electronic signature
Erna Ágústsdóttir
30.05.2024 13:38

Valid electronic signature
Inga Dröfn Benediktsdóttir
30.05.2024 13:56