Permitted General Marketing - Raising Your Asset Management Profile without Breaking the Rules

Overview

General marketing activities within the asset management sector include a range of different strategies aimed at promoting a firm’s profile. These activities are designed to raise brand awareness, build credibility, and foster long-term client relationships.

Some of these general marketing activities may be possible without triggering the local restrictions that apply to the promotion of specific funds or investment services. What is possible depends on where the rules “bite” in a particular jurisdiction and/or whether the activities can be structured within an available exemption/exclusion.  It is necessary to check the position on a jurisdiction-by-jurisdiction basis. In this article, we draw out some themes across different regions and highlight the range of different approaches across the world. Please note that this is not a comprehensive analysis, and it is essential to check the specific regulations of the country where you plan to operate and ensure compliance with all legal/regulatory requirements.

1. What type of activities fall within permitted general marketing?

The following activities are often (but not always!) considered to fall within permitted general marketing:

• Brand marketing – includes use of the firm’s corporate name, logo, slogan or design scheme
• Provision of general information on the firm – for example, its history, key personnel, and business divisions
• Publishing articles/blogs/giving interviews – including thought leadership pieces or macroeconomic analysis/market outlook
• Attending and/or speaking at finance-related events – where speaker is discussing general trends/themes rather than a specific product/services
• Socialising with prospective investors
• Distribution of business cards

Based on the data we have on aosphere, we can see that the following activities start to stray into amounting to specific product/service marketing in which case licensing/registration requirements are more likely to be triggered. The position should therefore always be considered on a case-by-case basis:

• General awareness-raising of product/service lines
• Reference to particular characteristics of a fund or service – for example discussion of investment strategies or ideas without referring to the name of the fund. This may be presented as a tear sheet which includes a brief description of strategy, terms, summary statistics (e.g. relating to AUM, performance, risk) and/or a list of key service providers without naming the specific fund

Note that such activities are typically distinguishable from pre-marketing.

2. Do such general marketing activities trigger regulatory requirements?

There is no harmonised approach to general marketing. Whether general marketing activities trigger regulatory or licensing requirements must be considered on a jurisdiction-by-jurisdiction basis.

For example, regarding EU jurisdictions, brand marketing and provision of general information on a firm without reference to a specific fund or investment strategy is permitted in most jurisdictions without any licence/registration. However, this is not the case in Malta where local counsel’s view is that the regulator is likely to interpret any business procured as a result of such advertising/general marketing activities as licensable.

In Colombia and Ecuador, local counsel have indicated to us that brand marketing will most likely be caught by the relevant restrictions and caution is required as where these restrictions are triggered the scope of any workable exemptions/exclusions is limited.

Regarding publishing articles or speaking at finance events, we note that these activities are mostly permitted in most jurisdictions where general trends/themes are discussed. 
The activity of handing out business cards (whether in hard-copy or electronically) is generally not specifically regulated. However, care must be taken to ensure such actions may be interpreted as active solicitation. For example, in France, counsel advise that it may be indicative of targeting the French market particularly if handed out at a fly-in meeting.

In several countries, it is advised that business cards do not contain any local address or phone number e.g. Chile, Kuwait and Singapore. In China, handing over business cards in a discreet manner at a social event should be acceptable, whereas business cards at a training event inviting the audience to contact the member of staff if they are interested in a particular fund may be problematic. Note that there are also some jurisdictions (Greece, Guatemala, Malaysia) where it is advised not to hand out business cards at all as this might well trigger local licensing requirements.

Analysis becomes more sensitive once a firm starts to raise awareness of product/service lines or to discuss certain characteristics/strategies and many jurisdictions require licensing/registration requirements to be complied with, particularly if the communication could identify a specific fund or strategy or if the marketing is seen as “pre-marketing” or could be construed as an indirect offer.

Finally, some jurisdictions are very restrictive, for example Malaysia and Qatar, where all types of general marketing described here are deemed to trigger local licensing and registration requirements (although speaking at a finance-related event may be permitted in Qatar in certain limited circumstances).

3. Use of word “bank”

A common theme in a number of jurisdictions, for example, Australia, Ireland and New Zealand, is a restriction on the use of the word "bank” (or similar words/expressions which indicate that the firm is a bank) when carrying out any kind of marketing unless the firm has regulatory consent to use such term or actually holds a banking licence in the local jurisdiction. 

Note that in Argentina a global bank (i.e. a financial institution with commercial banking operations in 20 or more jurisdictions) is not permitted to carry out most general marketing without establishing a representative office or a locally registered branch.

4. What is the best way to structure general marketing activities?

As discussed above, every jurisdiction has its own rules, and it is essential to check the specific regulations of the jurisdiction where you plan to operate and ensure compliance with all legal/regulatory requirements.

Where it is possible to carry out some general marketing activities in a jurisdiction without the fund or firm requiring a licence/registration, the point at which such activities are likely to trigger regulatory requirements is typically where specific products or services are mentioned and/or specific products may be identifiable from the information provided. In such jurisdictions, it is therefore worth trying to ensure that information that is provided is sufficiently general in nature and does not reference specific fund or service. 

5. What impact does general marketing have on relying on reverse enquiry?

In certain jurisdictions, if general marketing is conducted, even without reference to a specific fund or service, it is not permitted to later rely on any approach by an investor as being a reverse enquiry. This is the case in Italy where local counsel recommend that a firm only performs general marketing, especially if addressed to the public, where it is or is considering getting duly licensed or passported in Italy.

6. Can you use disclaimers to make it clear it is only general marketing?

We ask our local counsel whether it is recommended or mandatory to include a disclaimer in general marketing materials and if so, to provide us with example/suggested disclaimers. Many jurisdictions require or strongly recommend disclaimers are included in materials, particularly if there is any risk of the communication being interpreted as the marketing of a specific product/investment service. 

Note that the use of a disclaimer will not by itself prevent the material from being viewed as marketing specific products or services where the content suggests otherwise. 

7. Final thoughts

Although it is permitted to carry out certain general marketing activities in several jurisdictions without triggering local licensing/regulatory requirements, there is no harmonised approach, and it is therefore necessary to analysis the rules in each jurisdiction where you wish to carry out general marketing to ensure compliance with any applicable rules. 

aosphere has extensive and practical data on this topic for all of the below jurisdictions:

• Americas: Argentina, Bahamas, Bermuda, Brazil, British Virgin Islands, Canada (Alberta, British Colombia, Ontario and Quebec), Cayman Islands, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, United States, Uruguay and Venezuela
• Asia-Pacific: Australia, Brunei, China, Hong Kong SAR, India, Indonesia, Japan, Kazakhstan (excluding AIFC), Macau SAR, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam
• Europe: Austria, Belgium, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Russian Federation, Spain, Sweden, Switzerland, Turkey and United Kingdom
• Middle East and Africa: Abu Dhabi Global Market (ADGM), Bahrain, Botswana, Dubai International Financial Centre, Egypt, Israel, Jordan, Kenya, Kuwait, Mauritius, Morocco, Namibia, Nigeria, Oman, Qatar, Saudi Arabia, South Africa and United Arab Emirates