Increasingly, investors also pursue social goals and are not only seeking financial returns. For that reason, a social investment market is emerging in the EU, comprising, in part of, of investment funds targeting social undertakings. Such investment funds provide funding to social undertakings that act as drivers of social change by offering innovative solutions to social problems. To that end, the EuSEFR, as an optional specialist regime available to alternative investment fund managers (‘AIFMs’) registered or authorized under the AIFMD, was adopted. AIFMs managing qualifying social entreneurship funds (‘EuSEF’) may opt to use the ‘EuSEF’ label, i.e. EuSEF marketing passport, for these funds and market them to professional and certain high networth investors throughout the EU.The EuSEFR establishes uniform rules enabling a clear demarcation line can be drawn between EuSEFs and alternative investment funds (‘AIFs’) that engage in other, less specialized, investment strategies, which the EuSEFR is not seeking to promote. The EuSEFR establishes a uniform regulatory framework on the nature of EuSEFs, in particular on qualifying portfolio undertakings into which the EuSEFs are to be permitted to invest, and the investment instruments to be used. The EuSEFR is an optional regime. To AIFMs that do not wish to use the designation ‘EuSEF’, the EuSEFR does not apply. In those cases, AIFMs may continue to base themselves upon labels under existing national rules and general EU investment fund law applies. This also implies that AIFMs may choose not to use the ‘EuSEF label’ but instead indicate, in accordance with the SFDR, that the AIFs they manage (i) have environmentally ‘sustainable investment’ as their objective, (ii) promote environmental or social characteristics or (iii) qualify as an ‘other financial product’ implying that no designated ESG methodology is being complied with.This contribution discusses the EuSEFR legal framework. To that end, Section 2 discusses the EuSEFR’s scope, including the relationship between Full AIFMs managing EuSEFs that are subject to the AIFMD and the ‘EuSEFR regime’ for Small AIFMs managing EuSEFs. Section 3 focuses on the EuSEFR and the relationship between ‘intermediary’, ‘product’ and ‘marketing/sales regulation’. These are elaborated in more detail in Section 4 (‘manager regulation’), Section 5 (‘depositary regulation’), and Section 6 (‘marketing & sales regulation’). Section 7 explains the registration regime for both Full/Small AIFMs intending to manage EuSEFs and the ‘product’ EuSEF itself and Section 8 concludes
