Marketing a Cayman Fund to EU Investors Under AIFMD Article 42: Country by Country

Marketing a Cayman fund to EU investors is governed by Article 42 of Directive 2011/61/EU, which lets each member state decide whether, and on what terms, a non-EU manager may offer a non-EU fund to professional investors in its territory. There is no passport, so the map has three zones: states where a notification opens the market, states that demand near-complete AIFMD compliance or a licence, and states with no route. Since 16 April 2026 the FATF test has been replaced by the EU high-risk and non-cooperative tax lists. The Cayman Islands is on neither, and CIMA has cooperation arrangements with 26 of the 30 authorities on ESMA's register. This article sets out what each regulator publishes and how a Cayman platform fund should sequence a European raise.

"Managers arrive with a list of European investors and assume there is one process. There is not. We treat Article 42 as a set of country decisions, each with a cost and a reporting tail, and we ask which three or four markets actually justify a filing. The Netherlands, Ireland and Luxembourg are usually where a first Cayman notification lands; Italy has no route and Spain has no cooperation arrangement with CIMA, so those conversations wait. The discipline is to file where the capital is real, keep pre-marketing on the right side of the line, and never plan a raise around reverse solicitation." David Lloyd, Chief Executive Officer at CV5 Capital

Executive Summary

A Cayman fund can be marketed to professional investors in a number of member states under national regimes built on Article 42, but the regimes differ materially in mechanism, timing and cost. The positions below are drawn from the Directive, ESMA's register and each regulator's own publications, checked on 5 September 2026.

• Article 42(1) sets minimum conditions: Articles 22 to 24 compliance, cooperation arrangements, and, since AIFMD II, clearance of the EU high-risk and Annex I lists plus a tax exchange agreement with the host state.
• The Cayman Islands is on neither EU list; CIMA has arrangements with 26 EU and EEA authorities but not with Spain, Italy, Slovenia or Croatia.
• The Netherlands, Ireland, Luxembourg, Belgium and Malta are notification or exemption regimes; Finland, Sweden, Denmark and Austria require a decision or licence first.
• Italy has no regime for non-EU managers, Spain's conditions cannot presently be met, and France and Austria require compliance with substantially the whole Directive.
• Every filing creates an Annex IV reporting obligation; pre-marketing and reverse solicitation are national questions with narrow answers.

What Article 42 Actually Requires

Article 42(1) provides that member states "may allow" non-EU AIFMs to market to professional investors, in their territory only, AIFs they manage, "subject at least to" stated conditions. The word "may" matters: a member state is free not to offer the route, and Article 42(2) expressly permits stricter national rules. The Directive fixes the floor, not the regime.

The first condition is compliance with Articles 22, 23 and 24 for each AIF marketed: an audited annual report, investor disclosure and regulatory reporting to the host authority. The second is that appropriate cooperation arrangements exist between the host regulator and the supervisors of the third countries where the AIFM and the AIF are established, which for a Cayman fund and manager means CIMA on both counts. The third was rewritten by Directive (EU) 2024/927, applicable from 16 April 2026. Article 1(18) replaces the FATF test with two. The third country must not be high-risk under Article 9(2) of Directive (EU) 2015/849. It must also have signed a tax exchange agreement with the host state meeting Article 26 of the OECD Model Tax Convention, "including any multilateral tax agreements", and must not appear in Annex I of the EU tax list.

Where the Cayman Islands Stands on Each List

FATF announced on 27 October 2023 that the Cayman Islands was no longer under increased monitoring. Delegated Regulation (EU) 2024/163, in force from 7 February 2024, deleted it from the EU high-risk table, and the Council's 17 February 2026 update of the EU tax list does not include it in Annex I. The AFM's April 2026 guidance adds that both lists are dynamic and a notified manager must monitor them and tell the regulator without undue delay if its standing changes.

The cooperation condition is where the real differentiation sits. ESMA's register of AIFMD memoranda of understanding shows a signed Cayman arrangement for 26 authorities, including every regulator named here except the CNMV and Consob; the other gaps are Slovenia and Croatia. For a Cayman manager that closes Spain and Italy at the Directive level, before any national rule is reached.

The tax condition is less settled in practice than on paper. The Cayman Islands has no double taxation treaties, but the OECD's status chart records it as a participating jurisdiction in the Convention on Mutual Administrative Assistance in Tax Matters from 1 January 2014. It also has bilateral exchange agreements with several member states, Ireland among them. The amended Article 42(1)(d) refers to agreements "including any multilateral tax agreements". Whether a given regulator treats the Convention as sufficient is a question for that regulator, and written confirmation should be obtained for each target state.

The Workable States: Notification and Decision Regimes

Eight member states are, on their regulators' own material, realistic destinations. In the first group a complete notification is the trigger; in the second the regulator takes a decision and marketing waits for it.

The Netherlands is the cleanest example of the first group. The AFM's Article 42 form, based on Article 1:13b of the Financial Supervision Act, states that after uploading a complete notification the AIFM may start marketing to qualified investors. It requires a home-regulator attestation that the manager is covered by the cooperation agreement with the AFM. Ireland's Regulation 43 is also a notification, and the Central Bank's Questions and Answers state that Regulation 25 reporting starts once it is made. Luxembourg's Article 45 form must reach the CSSF before marketing, and Belgium's FSMA tells the manager when it may begin. Malta's Regulation 22 of Subsidiary Legislation 370.24 exempts the third-country AIF and AIFM from licensing, but the MFSA's filing procedure should be confirmed with the MFSA.

Finland, Sweden and Denmark form the second group. The Finnish Act provides for a written notification with confirmations on transparency, cooperation, FATF status and a tax agreement with Finland, and marketing begins only after the FIN-FSA notifies the manager. The Finlex translation predates the 2026 amendments, so current conditions should be confirmed with the FIN-FSA. Finansinspektionen states that a non-EEA manager "can apply for a license", and the Danish FSA that the manager "must apply for a license".

The States Where the Route Is Closed or Heavily Conditioned

Five states either do not offer Article 42 to a Cayman manager at all, or offer it on terms that amount to becoming an EU-standard AIFM without the passport.

Italy is closed. Consob's published summary states in terms that the Italian framework does not provide a national private placement regime for marketing by non-EU AIFMs or of non-EU AIFs. Spain is closed in practice. Article 15 quáter of the Collective Investment Schemes Law 35/2003 allows marketing by non-EU managers only after the CNMV is satisfied on equivalence, a favourable home-regulator report, cooperation arrangements and FATF status, followed by express authorisation. With no CNMV arrangement with CIMA on ESMA's register, the cooperation condition cannot presently be met; anything else should be confirmed with the CNMV.

France and Austria offer a route at the price of near-full compliance. Article 421-13-1 of the AMF General Regulation makes marketing of any third-country-managed AIF subject to prior AMF authorisation. The AMF's guide states the Article D. 214-32 conditions: compliance with the AIFMD rules for management companies save the full depositary regime, entities named for the depositary functions, cooperation arrangements, and no AML listing. Section 47 of the Austrian Act, in force from 29 July 2026, requires compliance with the whole Act and the Directive other than the EU passport part, a legal representative in Austria and home-authority confirmations for both the AIFM and the AIF.

Germany is workable but has a depositary condition. Section 330 of the Investment Code permits marketing to professional investors where the foreign AIFM complies with the section 35 reporting rules and the section 307 and 308 disclosure rules. It must also have appointed, and notified to BaFin, entities performing the Article 21(7) to (9) functions, and meet the amended Article 42 conditions. BaFin's May 2022 guidance notice states that the notification letter must be in German. Whether BaFin treats the Multilateral Convention as the "agreement" required for a Cayman fund should be confirmed with BaFin in writing before filing.

Sequencing a Multi-State Notification Programme

Cost here is measured in reporting obligations rather than fees. Each filing makes the fund an Annex IV reporter to that regulator under Article 24, on the frequency set by Article 110 of Delegated Regulation (EU) No 231/2013, so five notifications mean five parallel reporting relationships.

• Start with the investors, not the map. A filing without an investor behind it is a reporting obligation with no revenue.
• Check the Directive-level gates first. The CIMA arrangement on ESMA's register and the regulator's reading of the tax condition.
• Assemble the Article 22 to 24 pack once. It is common to every state.
• File the notification states first. Germany follows once the depositary-lite entities and the German-language letter are ready.
• Treat decision states as separate projects. Each needs a decision, a fee and, in Austria, a local representative.
• Diarise the exit. The AFM accepts de-notification only where no Dutch investor remains.

Pre-Marketing: What Directive (EU) 2019/1160 Does and Does Not Do

Article 4(1)(x) defines marketing as an offering or placement "at the initiative of the AIFM or on behalf of the AIFM". Directive (EU) 2019/1160 inserted Article 30a from 2 August 2021, permitting an authorised EU AIFM to test interest in an AIF not yet established or notified, provided the material falls short of subscription forms or final offering documents. An informal letter goes to the home regulator within two weeks, and any subscription within 18 months is deemed to result from marketing. The definition in Article 4(1)(aea) refers to "an EU AIFM or on its behalf"; the Directive does not extend Article 30a to non-EU AIFMs, and recital 12 says only that national rules must not disadvantage EU AIFMs.

A Cayman manager's pre-marketing position is therefore national, and the published positions differ. The CSSF applies the Article 30a conditions and notification procedure to non-EU AIFMs to create a level playing field. Finland's Act contains an express pre-marketing right for third-country AIFMs with the same two-week notice and 18-month rule. The AMF marks its pre-marketing procedure as not applicable to third-country managers, while its general position on what is not marketing describes a comparable test. Every other state should be asked before any conversation goes beyond strategy.

The practical rule is to run pre-marketing to the strictest standard in the target set. That means strategy and track record material only, no draft subscription documents or final offering memorandum, a dated log of who received what, and an assumption that any subscription within 18 months of first contact is marketing. Where the fund already exists, the window is narrower still.

Reverse Solicitation: A Narrow Defence, Not a Strategy

Recital 70 preserves an EU professional investor's ability to invest in an AIF on its own initiative. That is the entire foundation of reverse solicitation: it is not an exemption in the operative articles, it is not defined, and its scope is set state by state. The AMF's guide provides that subscribing a specifically designated fund at a client's unsolicited request is not marketing in France; the CNMV treats a discretionary manager acquiring unregistered funds for clients as not marketing absent advertising for the fund. Both are narrow carve-outs tied to the investor identifying the fund first.

Two features make it unsuitable as a plan. The burden of showing that the investor initiated contact for that specific fund sits with the manager, and the evidence has to exist at the time. That means the investor's own written approach, no prior outreach, and no intervening pre-marketing that triggers the 18-month rule. A manager that has sent a deck or taken a meeting in a member state should assume that later subscriptions from that state need a filing. The clearest legitimate case is an existing EU allocator asking to be admitted to the Cayman vehicle, recorded in its own words.

What This Means for a Cayman Platform Fund

A segregated portfolio on a Cayman platform changes the Article 42 analysis in three ways. The first is identifying the AIFM. Article 42 attaches to the entity that manages the AIF for AIFMD purposes, which may be the segregated portfolio company, its board or the appointed investment manager, depending on how portfolio and risk management are allocated in the platform documents. That has to be settled with independent professional advice before the first form is completed, and it determines which cooperation arrangement is relied on.

The second is the transparency pack. A platform fund already produces an audited annual report, an offering memorandum with Article 23-type disclosure and administrator data suitable for Annex IV. CV5 Capital provides the regulated platform, governance framework and service provider architecture through which those outputs are produced; it does not manage the strategy, select investments or generate returns, which remain the appointed investment manager's responsibility. CV5 has addressed the parallel-vehicle alternative in third-party ManCo versus Cayman platform as routes to a regulated wrapper, and the domicile trade-off in choosing between Cayman and Luxembourg for global and European capital.

The third is sequencing against the rest of the investor base. Most Cayman funds raising in Europe are also raising in the United Kingdom and Switzerland: see CV5's guide to the FCA NPPR for Cayman funds and Cayman hedge funds for Swiss investment managers and family offices. The offering-document and investor-category discipline that runs across all of these markets is set out in private placement rules for Cayman funds. Digital asset strategies face a further overlay where the fund trades through EU venues, addressed in the end of MiCA's transitional period for digital asset funds.

The common errors are filing wherever a prospect exists rather than where an allocation is probable, assuming the FATF test still governs, sending draft subscription documents during pre-marketing, and leaving the identity of the AIFM unresolved. Why Cayman remains the default offshore vehicle for a European professional raise despite the absence of a passport is set out in why Cayman funds attract institutional capital. Article 42 is the price of that choice, and it is manageable where the programme is planned. Managers assessing the vehicle itself can review the CV5 hedge fund platform.

Key Takeaways

• Verify the Directive-level gates for each target state before spending on filings: the CIMA arrangement on ESMA's register, the two EU lists, and the regulator's reading of the tax condition.
• File first in the notification states with real allocation intent, typically the Netherlands, Ireland and Luxembourg, and add others only where investors justify the reporting tail.
• Treat Italy as closed, Spain as closed until a CNMV arrangement with CIMA exists, and France and Austria as full-compliance projects needing a separate business case.
• Build the Article 22 to 24 package once, at fund level, and confirm depositary-lite appointments before approaching Germany or France.
• Run pre-marketing to the strictest national standard in the target set, keep a dated log, and assume any subscription within 18 months is marketing.
• Document any genuine reverse solicitation in the investor's own words at the time; never let it substitute for a filing.

Frequently Asked Questions

Can a Cayman fund be marketed to EU investors?

Yes, to professional investors, in those member states that have implemented Article 42 of the AIFMD in a form a Cayman manager can meet. The Netherlands, Ireland, Luxembourg and Belgium operate notification regimes; Sweden, Denmark, Finland and Austria require a regulator decision or licence; Germany requires a notification with depositary-type appointments. Italy states that it has no national private placement regime for non-EU managers, and Spain's statutory conditions cannot presently be met because the CNMV has no cooperation arrangement with CIMA.

What are the AIFMD Article 42 conditions after AIFMD II?

The non-EU AIFM must comply with Articles 22 to 24 for each AIF marketed, and cooperation arrangements must exist between the host regulator and the third-country supervisors. The third country must not be a high-risk jurisdiction under Article 9(2) of Directive (EU) 2015/849. It must also have a tax information exchange agreement with the host state meeting the OECD Article 26 standard and must not appear in Annex I of the EU tax list. Member states were required to apply the amended conditions from 16 April 2026 and may add stricter rules.

Is the Cayman Islands on the EU high-risk third-country list?

No. The Cayman Islands was removed from the EU list of high-risk third countries by Commission Delegated Regulation (EU) 2024/163, in force from 7 February 2024, following its removal from FATF increased monitoring on 27 October 2023. It does not appear in Annex I of the EU list of non-cooperative jurisdictions for tax purposes as updated on 17 February 2026. Both lists change, and a manager that has notified in a member state must monitor them.

Which EU regulators have cooperation arrangements with CIMA?

ESMA's register of AIFMD memoranda of understanding shows a signed arrangement with the Cayman Islands for 26 of the 30 EU and EEA authorities listed. Those include the regulators of the Netherlands, Ireland, Luxembourg, Germany, France, Belgium, Sweden, Finland, Denmark, Austria and Malta. It shows no arrangement for Spain, Italy, Slovenia or Croatia. The register should be checked at the time of each filing because it is updated periodically.

Can a non-EU manager pre-market a Cayman fund in the EU?

Not under the harmonised regime. Article 30a of the AIFMD and the definition of pre-marketing apply to EU AIFMs, so a non-EU manager's position depends on national rules. Luxembourg applies the Article 30a conditions to non-EU AIFMs, and Finland's statute contains an express third-country pre-marketing right. France marks the pre-marketing procedure as not applicable to third-country managers while applying a general position on what is not marketing. Other states should be asked directly.

Does reverse solicitation allow a Cayman fund to take EU investors without a filing?

Only where the specific investor genuinely approached the manager on its own initiative for that fund, with no prior marketing or pre-marketing by the manager in that state, and where the relevant national rules recognise the carve-out. The manager carries the burden of proof and should hold contemporaneous evidence. Any subscription within 18 months of pre-marketing is deemed to result from marketing in states that have adopted that rule, so reverse solicitation cannot be relied on as a distribution plan.