The PRIIPs Regulation (EU Regulation 1286/2014, "PRIIPs") requires that investment funds which are made available to "retail investors" within the EU must provide such investors with a Key Information Document ("KID") in advance of an investment being made.
UCITS are exempt from PRIIPs until 1 January 2020, but Alternative Investment Funds ("AIFs") are within scope from 1 January 2018.
A retail investor under PRIIPs is any investor who is not classified as a "professional client" under MiFID II. Therefore, as clarified recently in the Central Bank's AIFMD Q&A, any Irish authorised AIF which, from 1 January 2018, continues to make its shares available to any such retail / non-professional clients in the EU will need to produce a KID for these investors.
As well as having clear implications for Retail Investor AIFs, this also has implications for two common categories of investors in Qualifying Investor AIFs ("QIAIFs") when located in the EU, namely:
(i) high net worth individuals; and
(ii) connected investors exempt from QIAIF minimum subscription requirements (commonly referred to as Accredited Investors or Knowledgeable Employees)
- in each case unless such individuals elect to be treated as "professional clients" under MiFID.
Of note, the requirement to provide relevant investors with a KID will apply both in instances where the relevant fund is marketed to the investor and instances where the investment is at the initiation of the investor. In the latter instance, the provision of the KID may be after the investment has taken place.
We are continuing to work with clients both in analysing the implications of PRIIPs on their funds and assisting with the production of KIDs where required.
On 2 January 2018, the Central Bank published the Twenty-Eighth Edition of the AIFMD Q&A. New questions ID 1125 and ID 1126 regarding the PRIIPS Regulation