UCITS IV implementation & non-UCITS related changes: An overview
Legal texts – 1 st generation o Directive 2009/65/EC o Law of 17 December 2010 on UCI’s modifying the Law of 20 December 2002 on UCI’s o CSSF Regulation Nr 10-4 re. organizational requirements, conflicts of interest, conduct of business, risk management o CSSF Regulation Nr 10-5 re. fund mergers, master-feeder structures and notification procedures o CSSF Circulars 11/508, 11/509 and 11/511
EU passport for management companies (“Chap 15” in lieu of “Chap 13”) and reinforcement of organizational requirements and rules of conduct: - Services delivered by a branch or on basis of the free movement of services; - mutual recognition and authorization by the relevant regulators; - home/host regulators dialogue (information, withdrawal, distribution, …); - agreement of the depo bank; Merger of UCITS (national / cross-border): - to take place at the UCI or sub-fund level; - merger by absorption or setting-up of a new vehicle; - approval process to be given by the investors (SICAV) or management company (FCP); - exchange of information among regulators; - agreement CSSF and relevant depo banks
Master-feeder structures under the UCITS regime: – to be set up at the UCI or sub-fund level; – min. of 85% of the feeder assets into the master; – agreement CSSF required when master is located abroad; – co- operation between the depo banks/ auditors (“Exchange of Info Agreement”) of the relevant entities; – impact of liquidation of the master to be disclosed in prospectus. Replacement of the simplified prospectus by the Key Investor Information Document (“KIID”): – must be fair, understandable, plain language and short; – description of the investment policy; – details of past performance and charges; – including a synthetic risk and reward indicator.
Simplified notification procedure and closer co-operation between regulators: – easing the notification process for distribution (less “red tape”); – active role of the CSSF as notification agent with strict deadlines: transmission of the file to foreign regulator within 10 days after reception ; – inter-regulators communications; – ensure supervision by two regulators of both UCI and its management company.
1. Corporate – Cross-investments within the same fund: no cross holding allowed restrictions in terms of % apply no duplication of management fees suspension of voting rights – Annual report no longer need to be sent to shareholders (Art. 73 of the LCSC); – General meeting : record date 5 days prior to the shareholders meeting ; – Articles of incorporation: English version only is acceptable.
2. Regulatory – Regulatory approval may be withdrawn sub-fund by sub-fund; – Delegations of functions by Part II UCI and non-UCITS management company. 3. Taxation – Exemption of subscription tax for : exchange traded funds; funds/ sub-funds reserved for multi-employer pension schemes; funds / sub-funds of UCI/ SIF investing in microfinance institutions.
Legal texts – 2 nd generation o UCITS IV changes – 1 July 2011 - special regime for the KIID (1 July 2012) o Non-UCITS IV changes – 1 January 2011 - special regime for the delegation of functions (1 July 2012) o Tax provisions – 1 January 2011
o CSSF Regulation Nr 10-4 re. organizational requirements, conflicts of interest, conduct of business, risk management - more procedures to issue (complaints handling, e-processing of data, permanent functions of compliance, internal audit and risk management, personal transactions, registration of the subscription and redemption instructions,…) o CSSF Regulation Nr10-5 re. fund mergers, master-feeder structures - listing of the information for the investors
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