Andorra Financial Securities Act: Marketing of Public Funds

The Andorran financial system has implemented a comprehensive regulatory framework for the marketing of public funds, ensuring transparency, investor protection, and fair competition in the industry.

Marketing Framework

The marketing of public Andorran and foreign funds within the Jurisdiction is regulated by the following laws:

• Funds Act
• Financial Act
• Financial Securities Act
• Prudential Supervision and Capital Requirements Act
• Technical Communication 163/05
• Technical Communication 189/09

These regulations govern all active marketing activities conducted within the Jurisdiction, including those conducted through telephone, email, mail, or in-person approaches.

Licensure Requirements

To engage in marketing activities, entities must obtain prior authorization from the Andorran Financial Authority (AFA). This requirement applies to both natural persons and legal entities involved in marketing activities. The AFA defines active marketing as attracting clients by means of an advertising activity on behalf of a collective investment scheme or any entity acting on its behalf.

Exceptions

The following are commonly available exceptions:

• Circulating generic information to institutional investors, such as information that does not refer directly or indirectly to specific funds.
• Initial contact to gauge interest, which involves discreet one-to-one discussions with a limited number of institutional investors.
• Approaches made to potential institutional investors based in Andorra on a genuine unsolicited basis (reverse solicitation scenario).

Regulatory Restrictions and Requirements

Entities involved in marketing public funds must comply with the following regulatory restrictions and requirements:

• Distribution Fees: There are no specific regulations governing distribution fees, which are typically agreed upon between the management company of the funds and the local distributor.
• Remuneration:
  • Management entities are entitled to a management fee, subscription fee, and reimbursement fee.
  • Depositary entities can charge a fee for their services.

Conclusion

The Andorran financial system has implemented a robust regulatory framework for the marketing of public funds, ensuring a level playing field and protecting investors’ interests. Entities involved in marketing activities must comply with licensure requirements, distribution fee regulations, and remuneration restrictions to ensure compliance with Andorran law.