An ESMA Guidelines Assessor automatically assesses whether a specific non-EU fund can establish a parallel fund in an EU member state and what requirements need to be met determines which legal requirements this entails.
The tool provides guidance regarding the benefits of different EU member states and their regulatory environments, such as Luxembourg or Ireland. It guides the user through country-specific application requirements using a series of interactive questions to collect basic company and financial information and to identify the management structure as well as any potential risks or blockers. As a result, the tool generates a tailored report that outlines EU fund opportunities in different member states and points out any initial red flags or necessary next steps to complete the assessment. It streamlines the communication with the law firm and structures all provided information to efficiently initiate an application if desired. Its modular logic can easily be updated to accommodate changing regulatory requirements and to provide tailored advice to specific fund types in line with their services.
Non-EU managers looking to set up a parallel fund structure in Europe to access EU investors have to be mindful both of the substance requirements issued by the European and Securities and Markets Authority (ESMA) as well as any specific requirements imposed by the regulator in the relevant EU Member State.
Luxembourg is one of the EU member states that is most popular with both European funds and international fund managers. The Commission de Surveillance du Secteur Financier (CSSF) put in place detailed requirements regarding the shareholding structure, capital, management bodies, central administration and internal governance arrangements of fund management companies, and rules governing the delegation of key functions.
As EU policy tightens eligibility criteria in an effort to counteract the creation of ‘letter-box’ entities and to protect domestic fund industries post-Brexit, non-EU managers find it increasingly difficult to assess whether a parallel EU fund in Luxembourg would be beneficial and how to navigate through their rigorous application process and its requirements.
With BRYTER, law firms can build an automated ESMA Guidelines Assessor that allows clients to inform themselves about the opportunities and requirements related to setting up a parallel fund in EU member states such as Luxembourg. Clients receive immediate feedback and the matter is then directed to the competent lawyer to advise on and initiate next steps. To start the assessment, the user is guided through a series of questions. These inputs then determine the requirements the particular fund manager needs to fulfil in-line with ESMA regulations. Any additional documentation or information can be requested from the fund manager directly via our financial services automation tool. As a result, the tool assesses the requirements in several EU member states, provides a recommendation and determines whether there are any red flags that would prohibit or constitute a severe blocker to the creation of a parallel EU fund given the specific requirements of the user. The user can then choose which EU member state the fund should be established in and is guided through the particular requirements as outlined by the national regulator.
Due to the open architecture of the BRYTER platform, the embedded modular logic of the tool can easily be amended to account for any changes in the law and to provide a tailored solution for a specific fund type and its services.
Automated & Standardized
An ESMA Guidelines Assessor allows clients to auto-assess whether they can establish a parallel EU fund and how, while evaluating different EU member states and their regulatory environments. The tool ensures a consistent approach and documentation to streamline the application process.
Centralized audit trail
Within an ESMA Guidelines Assessor, all the information collected from the fund manager, assessment results and next steps are tracked and documented in a centralized audit trail. This allows law firms to efficiently progress a client’s application efforts and advise on the next steps.
An EU Funds can easily be integrated into an existing IT infrastructure so that clients can for example access the tool via a law firm’s client portal.
As every application built on BRYTER is customizable, an ESMA Guidelines Assessor may contain guidance for all fund types and sizes and can easily be updated to accommodate changing laws.
How it works
Go through Q&A
Through a customizable and user-friendly questionnaire, all relevant information such as basic company and financial information and management structure is gathered from the user. The inputs then determine which requirements apply to the particular fund.
A tailored assessment report is generated using the client’s provided information. This report not only outlines the different EU member states that a parallel EU fund could be established in along with the requirements of the national regulators but also provides the user with a summary of identified blockers and next steps.
The open architecture of the BRYTER platform allows the application to be updated continuously in the background ensuring that the generated advice is always compliant and up-to-date with any changes in the law and tailored to the specific needs of the fund.