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The law of 17 December 2010 on undertakings for collective investment transposes the European UCITS directive of 13 July 2009 known as UCITS IV (DIR 2009/65/EC) into national law.

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:

  • assuring adequate protection for investors through more coherent, clearer, correct and comprehensible information in relation to market evolutions,
  • maintaining the fund industry's competitiveness by adapting the regulatory framework of the market,
  • paving the way for cost reductions, while safeguarding a diversified investment product for investors.

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:

  • management company passport,
  • cross-border mergers,
  • asset grouping by means of joint structures (master-feeders)
  • simplified authorisation procedures,
  • replacement of the simplified prospectus: Key Investor Information or Key Investor Disclosure (KID),
  • measures concerning implementation.

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:

Articles

  • 16/08/2010

    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.

  • 12/08/2010

    On August 6, 2010, the Luxembourg Government submitted to the Chamber of Representatives a draft law, the main objective of which is the implementation of the EU Directive 2009/65/CE (“UCITS IV Directive”). The draft law also includes some additional changes for investment funds, in particular in respect of taxes.

  • 01/07/2010

    The European Commission has completed a programme of improvements to the EU framework for investment funds. The new rules better empower investors by requiring a new standardised fund document, while also setting out in detail the high standards of conduct of business that UCITS fund managers must comply with. In addition, the new rules improve the efficiency of the UCITS market in the EU by introducing and facilitating new possibilities for the pooling of assets from different funds, by simplifying the cross-border distribution of UCITS and by better coordinating the work of national supervisors.

  • 03/06/2010

    Major tax issues arise in new cross-border fund management and structuring options available under UCITS IV Directive. With the adoption of the Undertakings for Collective Investment in Transferable Securities (UCITS IV) Directive, the European Union has taken a decisive step towards the realization of a single European fund market. According to a new research report from KPMG International, Fill the glass to the brim: Analysis of the tax implications of UCITS IV and the impact for funds operating cross border, while at first sight, the UCITS IV Directive considerably simplifies regulatory boundaries between management companies and fund structures within Europe, the political decision to focus on the regulatory side of international fund structures, has meant that tax considerations were not included.

  • 25/03/2010

    Kremer Associés & Clifford Chance welcomed on 25th March 2010 representatives from across a wide range of financial institutions and professions to Luxembourg for the final in a series of conferences aiming to promote discussion of the key provisions of the UCITS IV Directive and their impact on the European funds market.

  • 26/10/2009

    A survey published today by RBC Dexia Investor Services and KPMG shows how some of Europe's largest asset managers plan to capitalise on UCITS IV and identifies how these reforms will contribute to wider changes across the European investment fund landscape. The main findings of the report, entitled "UCITS IV: Which business model for tomorrow?" are as follows: 

    The vast majority of UCITS managers are taking a proactive approach to UCITS IV

    - The number of Management Companies will decrease

    - A new wave of fund mergers lies ahead

    - Master/Feeder structures will be key for new markets/client segments

    - Immediate cost savings are expected

  • 28/09/2009

    The ABBL and alfi welcome the Commission’s Consultation on the UCITS depositary function dated 3 July 2009 and would like to thank the European Commission for the opportunity to participate in this consultation and share the Commission's view, which “expects this consultation to lead to the development of a set of informed and evidence-based views on the range of issues addressed in this paper”. In order to efficiently and comprehensively achieve this goal we believe a certain number of tasks are prerequisite.

  • 20/06/2009

    Ernst & Young has released its publication entitled UCITS IV – Transforming the European fund industry.

    There are six key enhancements to the UCITS regime in UCITS IV:

       1. Time to market and the administrative burden will be significantly reduced for funds distributed cross-border.
       2. A procedure facilitating cross-border fund mergers is established. This should accelerate the existing trend towards merging smaller funds into “mega” funds, distributed cross-border.
       3. “Master-feeder” UCITS structures may be created. In this case, there will be at least two funds: the feeder, generally, in the country of the investor, invests most of its assets into the master, which may be in another country. It may be considered that the management of most of portfolio of the feeder is delegated to the master.
       4. The new standardized key investor information document will provide fair, clear and understandable information to investors, replacing the current simplified prospectus which is often considered to be difficult for investors to understand.
       5. The management company passport becomes a reality. Management companies will be permitted to manage funds cross-border, and will not be required to appoint service providers in the domicile of the fund, except the custodian bank.
       6. Existing regulatory requirements are strengthened, particularly regarding management companies.
     

     

   
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