AIF: Key Investor Information Document (KIID) disclosure

As of 1 January 2018, managers of alternative investment funds (AIFs), will be subject to additional disclosure obligations.

The managers of alternative investments funds (AIFMs) that manage AIFs offering participation rights in the Netherlands and in other EU-countries, shall have to prepare a KIID. A KIID is a stand-alone, pre-contractual document, with a maximum of three pages, containing the essential features of the AIF and is to be systematically provided to investors before they decide to invest.

The obligation to prepare a KIID does not apply in case the participation rights in an AIF are solely marketed or transferred to professional investors (within the meaning of the Markets in Financial Instruments Directive, MiFID II, directive 2014/65/EC), which includes institutional investors, financial institutions and large corporations. It should be noted that also AIFs that benefit from an exemption as they offer their participation rights for a countervalue of EUR 100,000 only or to less than 150 natural or legal persons, not being professional investors, will be subject to the requirement to prepare a KIID.

Both AIFMs who benefit from the “light managers” registration regime under the Netherlands Act on the financial supervision, only being registered with the Netherlands Authority for the Financial Markets and full licensed AIFMs will be subject to the requirement to prepare a KIID.

Fully licensed AIFMs that market AIFs under the retail “top up” regimes and for UCITS managers will benefit from a transitional regime, requiring them to present the KIID only after 31 December 2019, as their current key investor information will remain valid until that date.

• KIIDs shall be prepared for each new AIF marketed after 1 January 2018 and for AIFs that were marketed prior to 1 January 2018 but also existing investors in an AIF that was marketed prior to 1 January 2018 may only transfer their participation rights in the AIF in case the AIFM has prepared a KIID. Therefore, insofar participation rights shall have to be transferred by investors after 1 January 2018, the AIFMs shall have a KIID in place.

• AIFMs provide the investors with the KIID by means of placing the document on their website, insofar the investors have agreed therewith.

• The KIID should be regularly updated during the lifetime of the AIF (i.e.: at least every 12 months).

• The KIID is to be drawn up in a standard format with a maximum of three pages. A detailed description of what a KIID shall look like and what it needs to contain, is to be found in the PRIIPS regulation (Regulation (EU) 1286/2014) and (in particular) Annex I to the Commission Delegated Regulation (EU 2017/653), click here . A KIID shall typically include:

1. 1. product name and the name of the manufacturer;
2. 2. types of investors for whom the KIID is prepared;
3. 3. risk indicator and performance scenarios (including a summary risk indicator, the possible maximum loss of invested capital and appropriate performance scenarios of the offered product);
4. 4. costs over time for investors and the composition of costs;
5. 5. complaint regulations for investors.