AIFMD II Brings Clarity To Responsibility For Fund Distribution

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What has changed under AIFMD II?

In welcome legislative clarification, AIFMD II provides for circumstances under which a UCITS or AIF is marketed by an EU-regulated distributor which is not acting on behalf of the relevant management company or AIFM, but is being marketed by that EU-regulated distributor acting on its own behalf.

Effective from 16 April 2026, the revised UCITS and AIFMD frameworks now distinguish between (i) distributors which are acting on behalf of the relevant fund management company when marketing a fund which will continue to fall within the scope of the UCITS and AIFMD delegation rules and (ii) those EU firms regulated under the MiFID or the Insurance Distribution Directive (IDD) frameworks which are acting on their own behalf when marketing the relevant fund. From 16 April 2026, the second category of distributors, being those acting on their own behalf, will benefit from an exemption from, and therefore fall outside of the scope of, the UCITS and AIFMD delegation rules (Exemption).

What action should be taken by fund management companies now?

• Fund management companies should therefore consider carrying out a review of all existing distribution agreements in place with EU distributors/intermediaries regulated under MiFID or the IDD to determine in each case whether the relevant arrangement can fall within the scope of the Exemption.
• Where agreements are identified under which the distribution activity clearly falls within the scope of the Exemption, fund management companies should consider updating those agreements to clarify the role of the distributor/intermediary and contractually acknowledge that the arrangement does not constitute a delegation arrangement for the purposes of the UCITS/ AIFMD frameworks.
• Fund management companies should also review their programme of activities and internal policies and procedures. Where necessary, these documents should be updated to clarify that any distribution arrangements which benefit from the Exemption fall outside of the scope of the fund management company's delegation oversight framework.

Health Warning

Though clarification of agreements will provide contractual and regulatory certainty as regards the relationship between the management company and any distributor, management companies should remain vigilant to the risk of any reputational damage arising from a fund being mis-sold by an entity outside of its delegation framework. Consideration should therefore also be given to including disclosure in the fund offering documents to notify investors that the fund may be marketed by entities which are not operating under the instruction of the fund management company and for which the fund management company is not responsible.