The Key Information Document for Packaged Retail Investment Products (PRIIP)

A manufacturer of so-called packaged retail and insurance-based investment products (PRIIPs) must provide a key information document to such retail investors before they purchase the investment product. Packaged investment products are instruments of which the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets. This includes especially the group of structured financial products such as certificates whose value and payouts depend on other underlying assets such as shares or indices. In the case of public offerings of securities in Germany which qualify as a packaged investment products and where the issue volume is between EUR 100,000 and EUR 8,000,000 over a period of twelve months, a basic information sheet pursuant to the PRIIP Regulation must be prepared instead of a securities information document.

Form and Content of the Document

The information contained in a key information document is pre-contractual information. It must be accurate, fair and clear and not misleading. The key information document shall contain the essential information and be consistent with any binding contractual documents, with the relevant parts of the offering documents and with the terms and conditions of the packaged investment product. It shall be worded in a precise and comprehensible manner and shall not exceed three DIN A4 pages. Regulation (EU) No 1286/2014 (PRIIP Regulation) sets out a precise structure with which compliance is mandatory when drawing up the key information document. A special feature compared to a securities information document is that a so-called overall risk indicator must be included in the key information document, which is to be determined by a specified calculation formula. Unlike a securities prospectus or a WIB, a key information document does not have to be approved by BaFin prior to the public offering.

Key Information Document must be Provided in the Sales Process

Drawing up a key information document is an obligation of the manufacturer of the investment product. The law defines as manufacturer the person or entity that issues the PRIIP. The manufacturer must regularly review the information contained in the key information document and must revise the information document if the review reveals that changes are necessary. The revised version of the document must be made available to the market without delay. In order to ensure that the relevant key information document is provided to the retail investor before the purchase of a packaged investment product, any person advising on or selling a PRIIP shall provide the key information document to relevant retail investors before the conclusion of the sales contract.

The competent lawyer for questions concerning the Key Information Document (PRIIP) in our law firm is Attorney Dr. Konrad Uhink.