In the world of contemporary art trading, it is difficult to use the name of promotion galleries without entertaining thoughts of a financial investment environment. However, the tendency to no longer regard art promotion as art criticism but as a service for the art buyer means there is a real chance that the promotion gallery will turn into an investment consultant that defends the interests of the buyer. A work of art no longer belongs to an art movement, but to a certain investment category with associated risks. In legal jargon, this means searching for clarity about the dividing line where consumer purchasing ends and legislation on alternative investment instruments begins
The purpose of the laws governing the management of investment instruments is to oblige the provider of such instruments to disclose information about what is offered and under what conditions. The Financial Services and Markets Authority has developed a number of criteria to determine whether a particular agreement should be considered a sale or an investment contract: “If rights are acquired which make it possible to execute a financial investment and which relate to one or more movable goods that are part of a group and whose collective management is assigned to one or more persons acting in a professional capacity (unless those rights provide for unconditional, irrevocable and complete delivery in kind of the goods).” That’s what it all boils down to.
The condition that raises the most questions is about the concept of ‘collective management’, in human language the ‘commotion’ around selling an artwork. It concerns the fact that an art gallery is often an artist’s exclusive representative, so collectors depend on the efforts of the art gallery to promote the artist’s oeuvre (including their art) or are offered additional services as a result of a purchase in the form of ‘remarketing’. Basically, the gradations in which this advisory function is exercised determines whether it can be considered ‘collective management’. Any rebuttal by an annoyed gallery owner that this is not laid down in any contractual framework is irrelevant. It’s ‘substance over form’, as they say in the trade.
The only element where there is no clarity in the current advisory practice of the FSMA concerns the condition that an artwork can only be considered an investment instrument if there is a waiver of the physical enjoyment by the buyer-collector. The most obvious scenario here is when the artworks are kept (or can be kept) in deposit with the gallery owner or in a warehouse. The question is whether the market watchdog will be awakened if the lines are less clearly drawn. For example, it is conceivable, according to a case manager at the market watchdog, that it may not be considered complete or conditional delivery if the gallery owner and the artist reserve a kind of usufruct (meaning: no waiver of copyright to the buyer), so that the sold artwork can still be displayed at future exhibitions and fairs.
Since recently, this entire theoretical exercise has acquired some practical and concrete importance. If an offer of works of art is considered to be a public offer of investment instruments, then the gallery owner may be obliged to comply with far-reaching information obligations under the current prospectus law. Non-compliance with those information obligations can even be subject to administrative and criminal sanctions.
 Deloitte, Art and Finance report, 2017, 173-179 [https://www2.deloitte.com/lu/en/pages/art-finance/articles/art-finance-report.html]
 Article 3 §1, 4° of the Law of 11 July 2018 relating to the offering of investment instruments to the public and the admission of investment instruments to trading on the regulated market, O.J. 20 July 2018;