Austria

Summary of private placement provisions for fund interests (if applicable)

The Austrian Alternative Investment Fund Managers Act (Alternatives Investmentfonds Manager Gesetz “AIFMG”) allows EU AIFs and Non-EU AIFs to be placed in accordance with a dedicated set of rules, which do not provide for a private placement exemption.

The AIFMG does not impose an obligation to draw up a prospectus. However, it requires the submission of comprehensive information to investors and the supervisory authorities. In addition, the Austrian Capital Market Act provides the requirements for public offerings of investments which also apply to AIFs.

A substantial part of the AIFMG contains provisions for the marketing of AIFs. The provisions set out complex rules and distinguish between (i) the place of marketing, (ii) whether the AIFM is licenced in Austria or in another EU Member State or is a Non-EU AIFM, and (iii) whether the AIF is an EU AIF or a Non-EU AIF. In general, an AIFM which is licenced in Austria is entitled to market EU AIFs to professional investors in Austria and in other EU Member States.

However, the marketing of AIFs to private investors and qualified private investors is possible only under certain conditions. A “qualified private investor” is a person who owns free deposits and securities of more than EUR 500,000, commits to invest at least EUR 100,000 into an AIF, does not invest more than 20% of its assets into an AIF and who is in a position to make its own investment decisions and understands the risks associated with the investment.

The following AIFs are eligible for marketing to private investors and qualified private investors:

• Real Estate Funds according to the Real Estate Fund Act (ImmoInvFG) provided that the AIFM holds a licence pursuant to Section 1 para 1 cf 13a Austrian Banking Act (Bankwesengesetz, – “BWG”);
• Special Funds, Other Funds and Pension Investment Funds according to the Investment Fund Act (Investmentfondsgesetz “InvFG”), provided that the AIFM holds a licence pursuant to Section 1 para 1 cf 13 BWG and Section 6 para 2 InvFG.
• AIF in Real Estate provided that the AIFM holds a licence according to the AIFMG;
• Managed Futures Fund subject to the conditions of Section 48 para 7 and 8 AIFMG provided that the AIFM holds a licence according to the AIFMG;
• Private Equity Umbrella Funds according to Section 48 para 8a and 8b AIFMG provided that the AIFM holds a licence according to the AIFMG;
• AIFs investing in interests of companies according to Section 48 para 8c and 8d AIFMG provided that the AIFM holds a licence according to the AIFMG; and
• Exclusively to qualified private investors, AIFs which are authorised to be marketed to professional investors and provided that they do not employ leverage exceeding 30%.

Pursuant to Section 48 para 1a AIFMG the private investor and the qualified private investors investing in AIFs have to confirm in writing that they have sufficient knowledge about the investment and the risks contained therein. The AIFM needs to be sufficiently convinced that the private investor and the qualified private investor are able to assess the risk and the adequacy of the obligation related to the investment.

The AIFMG provides the possibility of passporting the licence for the distribution of AIFs to professional investors and qualified private investors. It also offers Non-EU AIFs the opportunity to file an application for authorisation with the Austrian Financial Market Authority (“FMA”) which can then be passported to other EU Member States, provided that Austria qualifies as a reference member state as defined in the AIFMG.

Non-EU AIFs and EU-AIFs are eligible for marketing to private investors and qualified private investors in Austria if the Non-EU AIF or EU-AIF (i) is admitted for marketing to retail investors in its home state, (ii) is admitted for marketing to professional investors in Austria and (iii) is materially equivalent to AIF-types that are admitted for the marketing to retail investors and qualified private investors in Austria.

Other forms of possible placement options for fund interests outside fund regulations

As the scope of the AIFMG is very wide it covers a wide range of funds, and hence, regulates the distribution of all kinds of AIFs. Only such investment undertakings which do not qualify as AIFs are not subject to those rules, such as operational companies or certain trust structures.

Furthermore, the AIFMG is explicitly not applicable to:

• holding companies;
• institutions providing occupational retirement provisions;
• supranational institutions such as the European Central Bank, the European Investment Bank, the European Investment Fund, the European Development Finance Institutions and bilateral development banks, the World Bank, the International Monetary Fund, and other supranational institutions and similar international organisations, in the event that such institutions or organisations manage AIFs and in so far as those AIFs act in the public interest;
• national central banks;
• national, regional and local governments and bodies or other institutions managing funds supporting social security and pension systems;
• employee participation schemes or employee savings schemes; and
• securitisation special purpose entities.

In addition, the AIFMG does not apply to AIFMs managing one or more AIFs whose only investors are the AIFM or the parent companies or the subsidiaries of the AIFM or other subsidiaries of those parent companies, unless one of these investors is itself an AIF.

The AIFMG defines distribution, on the initiative of the AIFM or on its behalf, as the direct or indirect offering or placement of shares in an AIF managed by the AIFM to investors whose place of residence or place of incorporation is in an EU State. Reverse solicitation is not regulated and seems to be possible. In its circular “Frequently asked Questions regarding the application of the AIFMG” the FMA states that if the investment is made at the sole initiative of the investor it is not mandatory that the AIF is licensed in Austria.

Consequences of non-compliance with placement regimes for fund interests

The distribution of fund interests in breach of the marketing regime of AIFMG could constitute an administrative offence with possible penalties of up to EUR 100,000. Other administrative and criminal sanctions are contained in different Austrian acts (e.g. Real Estate Fund Act), whose applicability is dependent on the respective type of fund interest offered.

Private placement rules for non-fund investments available

The Austrian Capital Market Act regulates the offering of securities or investments and governs exemptions for the offering of those instruments without the requirement of publishing a prospectus.

There are various exemptions from the obligation to draw up and publish a prospectus. The following refer to private placements:

• offers of securities or investments solely addressed to professional investors;
• offers whereby investors may only acquire securities or investments for a minimum amount or minimum denomination of EUR 100,000; or
• offers of securities or investments addressed to fewer than 150 investors (natural or legal persons) per EEA State that are not qualified investors.