UK Law and Practice Contributed by: Sam Kay, Philippa List, Mark Stapleton and Nicolas Kokkinos, Dechert LLP
3.3.3 Local Regulatory Requirements for Non- Local Managers FCA authorisation is always required to manage a UK authorised fund, irrespective of the location of the manager. UK rules permit a UK authorised fund manager to delegate to an overseas sub- manager, subject to certain requirements being met. 3.3.4 Regulatory Approval Process Investment funds must be authorised or recog - nised by the FCA in order to be promoted to retail investors in the UK. Authorised funds must be established in the UK and take one of the fol - lowing legal forms: • ACS; • AUT; or • ICVC. A fund must also be classified, based on a mar - keting strategy, as either a UCITS, NURS, QIS or LTAF. The application must include the requi - site application form, certain relevant supporting documents and information, and an application fee. Application processing times depend on whether the application relates to a NURS or QIS (six months, although the FCA aims to process such applications within two months and one month respectively), a UK UCITS (two months) or an LTAF (six months). 3.3.5 Rules Concerning Pre-Marketing of Retail Funds The pre-marketing of retail funds is subject to the financial promotion regime (see 2.3.5 Rules Concerning Pre-Marketing of Alternative Funds ), which requires financial promotions to be approved by an authorised firm.
3.3.6 Rules Concerning Marketing of Retail Funds A “retail investor” is defined as any investor that does not meet the necessary criteria in MiFID, unless it can be treated as an “elective profes - sional client” (see 2.3.10 Investor Protection Rules ). UCITS and NURS funds can be marketed gen - erally to retail investors in the UK. UK UCITS and NURS funds cannot be marketed to inves - tors living in EU countries, unless the fund is approved by the regulators in each country and complies with the terms for regulated funds in each country. Although QISs also fall within the UK AIFMD Regime, they may only be marketed to expe - rienced investors who meet certain qualifying conditions. The ability for EU UCITS to passport into and out of the UK was revoked when the UK withdrew from the EU. The Temporary Marketing Permis - sions Regime (TMPR) was created to allow EU UCITS that were using their marketing passport in relation to the UK to continue to market to UK retail investors for a limited period. Schemes domiciled overseas that are not in the TMPR, including those in non-EU countries, can be recognised in the UK under the process set out in Section 272 of the FSMA. This recogni - tion route requires the FCA to undertake an in- depth assessment of the individual scheme and its country’s legislative regime. The FCA must be satisfied that a scheme meets several tests in legislation and affords adequate protection to investors (including an assessment of the suit - ability of both the operator and depositary). This is a lengthy and time-consuming process.
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