The directive aims to harmonise the rules governing UCITS and to improve the way their distribution functions within the the European Union.
The directive will significantly update the existing Directive 85/611/EEC by modernising the regulatory framework with a view to:
In general, the European Investment fund industry needs to enhance its competitiveness by improving the quality of its services and reducing costs.
The UCITS IV Directive deals with the following points:
These measures are applicable since 1 July 2011, insofar as each member state has transposed them by that date.
As regards measures for execution, the European Commission has mandated the ESMA (European Securities and Markets Authority) to study the content of different measures and to draw up proposals. The member states will then be invited to transpose these execution measures at the same time as the UCITS IV Directive itself.
The principal measures providing detailed improvements to the UCITS regulations are as follows:
Management companies may carry out activities in other member states for which they have been authorised in their country of origin either through the free offer of services or by establishing a local branch.
Supervision of such activities will be provided by the regulatory authorities of the country of origin, which will send all required information to the relevant authorities in the host member state. The management company must therefore comply with the regulations of both countries.
This approach implies both a distinct procedure in each country as well as cooperation between the supervisory bodies through a point of contact as provided by the directive.
Establishment of a procedure facilitating domestic and cross-border mergers:
- choice of domiciliation of funds
- production of a shared merger scheme regarding a possible merger,
- asset valuation,
- establishment of a standard method for calculating the exchange ratio,
- assessment of tax implications.
This is a process of optimising forces in order to exploit the advantages of different European financial markets and actors: at least two funds will be concerned > the "feeder", generally domiciled in the investor's country, will invest the majority of its assets (85 %) in the "master", which may be domiciled in another country.
These structures will allow considerable economies of scale and provide greater flexibility in the commercialisation of funds.
This is a simplified procedure between the regulator in the home country and the regulator in the host country of the UCITS. The management company will thus be able to commercialise the UCITS freely, ten days after transmission from the regulator in the country of origin to the host country.
The KII or KID will replace the simplified prospectus, considered to be incomprehensible and indigestible. The KII or KID will be short and non-technical while providing accurate, precise and comprehensible information.
This document will be limited to 2 pages, and will contain the following information:
- description of the investment policy,
- description of the objectives,
- historical performance data,
- costs and charges,
- risk profile and performance profile of the fund,
- place where the investor can find further information.
These measures will reinforce existing regulatory requirements at several levels:
- risk management,
- conflicts of interest,
- rules of conduct.
These measures for implementation are currently being finalised (CESR).
This document was prepared by ALFI's implementation working group for the Key Investor Information document (KID). The working group comprises representatives of asset managers, management companies, securities service firms, audit firms, law firms, and document and information management firms.
This document contains the working group's answers to questions about KID implementation. The answers are not necessarily definitive and they might not be suitable for every circumstance. This document is not meant to be an industry standard or a guide to best practice but it represents the view from a group of market participants. The Q&A has not been validated by any regulator. It does not diminish the management company's or the investment company's responsibility to comply with the EU Regulation 583/2010 on the KID, CESR's related guidelines and technical advice papers and any other European or national law or regulation. This document must not be relied upon as advice and is provided without any warranty of any kind and neither ALFI nor its members who contributed to this document accept any liability whatsoever for any action taken in reliance upon it.
This document may be amended without prior notice to incorporate new material and to amend previously published material where the working group considers it appropriate. ALFI will publish amended copies of this document to its members, showing marked-up changes from the immediately preceding copy.
The titles used in this document are references to the relevant recitals, chapters, sections and articles of the EU Regulation 583/2010 and associated CESR guidelines and consultation papers.
Finesti, the Luxembourg-based information agency for the collection and dissemination of fund information, has launched a service that enables investment funds to comply with the requirements of the UCITS IV directive concerning European cross-border notifications.
Only one fifth of the active participants in cross border fund registration in Luxembourg planned to be ready with their first Key Investor Information document (KII), by 1 July 2011, launch date of UCITS IV. To date, however, over 70% of the participants admitted to not having clarified their liability regarding KII with their legal advisor. These results emerged from a survey conducted by Deloitte Luxembourg between the first and second quarter of 2011.
A partir du 1er juillet 2011 les OPCVM de droit luxembourgeois jusqu’ici soumis à la loi du 20 décembre 2002 concernant les organismes de placement collectif (la « loi de 2002 ») seront de plein droit régis par la nouvelle loi du 17 décembre 2010. Les prospectus de vente de ces OPCVM seront donc également de plein droit régis par la loi de 2010 à partir de cette date. La CSSF accepte que les adaptations des simples références à la loi de 2002 dans les prospectus de vente des OPCVM ne doivent pas être effectuées pour le 1er juillet 2011, mais qu’elles peuvent se faire au fur et à mesure lors de la prochaine mise à jour des prospectus.
Le concept de prospectus simplifié, qui avait été introduit par la loi du 20 décembre 2002 concernant les organismes de placement collectif, a été supprimé par la nouvelle loi du 17 décembre 2010 concernant les OPCs et remplacé par celui des « informations clés pour l’investisseur » (le « Key Investor Information Document » ou « KIID »), régi par les articles 159 à 163 de la loi de 2010.
On 9 February 2011, the ABBL and ALFI held their second Depositary Bank Forum breakfast seminar in order to inform members on the challenges for depositaries in the context of the AIFM Directive and the forthcoming new legislations on the UCITS depositary function.
An industry research report published jointly today by the European Fund and Asset Management Association (EFAMA) and KPMG’s European Investment Management practice shows that there are significant tax complications in the new Undertakings for Collective Investment in Transferable Securities (UCITS IV) Directive that prevent the achievement of a harmonised European funds industry. The report identifies critical tax issues and numerous examples of discrimination and inefficiencies across the 27 European Union (EU) Member States.
As announced during our UCITS IV European seminar series, Clifford Chance is pleased to publish a comprehensive guide titled "UCITS IV: New Beginnings" together with a booklet containing relevant UCITS IV legislation and other documents.
The fund tax regime has been improved for master feeder funds and foreign funds managed in Luxembourg. Both fund types are expected to grow after UCITS IV. Draft Law 6170 which implements Directive 2009/65/EC of 13 July 2009 on undertakings for collective investment in transferable securities (“UCITS IV” Directive) introduces as from 2011 some positive tax changes for the Luxembourg Investment fund industry.
On 6 August 2010, the Luxembourg Ministry of Finance submitted to Parliament a bill which transposes the European Directive 2009/65/EC of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to UCITS IV into domestic law.
Confirming its position as leading European Investment fund center, Luxembourg is again the first European Member State to have officialy stepped in the implementation process off Directive 2009/65/EC (the UCITS IV Directive) by depositing a bill with Luxembourg Parliament on 6 August 2010 in order to implement Level 1 provisions of the UCITS IV directive into national law.
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