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Undertakings for Collective Investments in Transferable Securities (UCITS IV)

The European Council voted on 22 June 2009 for the adoption of the UCITS IV Directive. The European Parliament had previously voted on 13 June 2009, so the UCITS IV Directive has been adopted in accordance with the codecision procedure.

The UCITS IV Directive is under the Lamfalussy process. The UCITS IV implementing measures are due in July 2010.

Member States must transpose the Directive into national legislation until the 1st of July, 2011.

This directive seeks to update the regulatory framework applicable to European investment funds – undertakings for collective investment in transferable securities (UCITS) – which represent a market of around EUR 5 000 billion.

The aim of the directive is to modernise the regulatory framework applicable to these financial products in order to:

– Offer investors a greater choice of product at lower cost through better integration of the internal market;

– Provide investors with suitable protection through high-quality information and more efficient supervision;

– Maintain the competitiveness of European industry by adjusting the regulatory framework to developments in the market.

Against this background, the text is aimed at fulfilling the following objectives:

Improve investor information by creating a standardised summary information document: "key information for investors"; this is an innovative approach aimed at making it easier for the consumer to understand the product: thus a fine balance has to be struck between the document's readability and the amount of information required (too often consumers are deluged with information); the document will be tried out with consumers before it is finalised;

– Create a genuine European passport for UCITS management companies – this is the last piece missing from the internal market as regards UCITS management: a management company located in a Member State will be able to manage funds in other Member States; this should enable substantial economies of scale to be made (up to EUR 700 million per year, according to the Commission) and ensure greater transparency for consumers as to the location of the management company; it should make for greater diversity in the products offered to consumers, which is essential in view of increasing requirements concerning
retirement saving;

– Facilitate cross border marketing of UCITS by simplifying administrative procedures: there will be immediate market access once the authorisation has been granted by the country of origin of the UCITS; the host country will be able to monitor the commercial documents but not to block access to the market;

– Facilitate cross border mergers of UCITS, which will make it possible to increase the average size of European funds; the information given to investors about the merger will be monitored by the supervisor, who will not authorise the merger unless it is satisfactory; authorisation will be assigned to a single supervisor, in conjunction with the other supervisor concerned, so as to make the procedures more efficient;

Facilitate asset pooling by creating a framework for the system of "master-feeder" arrangements whereby a fund invests more than 85 % of its assets in another fund;

Strengthen the supervision of UCITS and of the companies that manage them, by means of enhanced cooperation between supervisors: the Directive encourages the exchange of information between supervisors, harmonises the powers of supervisors, and allows for the possibility of on-the-spot investigation, consultation mechanisms and mutual-aid mechanisms for the imposition of penalties, in particular.


 
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Undertakings for Collective Investments in Transferable Securities (UCITS IV)
 
INTRODUCTION

CHAPTER I - SUBJECT MATTER, SCOPE AND DEFINITIONS

CHAPTER II - AUTHORISATION OF UCITS

CHAPTER III - OBLIGATIONS REGARDING MANAGEMENT COMPANIES
SECTION 1 Conditions for taking up business
SECTION 2 Relations with third countries
SECTION 3 Operating conditions
SECTION 4 Freedom of establishment and freedom to provide services

CHAPTER IV - OBLIGATIONS REGARDING THE DEPOSITARY
 
CHAPTER V - OBLIGATIONS REGARDING INVESTMENT COMPANIES
SECTION 1 Conditions for taking up business
SECTION 2 Operating conditions
SECTION 3 Obligations regarding the depositary

CHAPTER VI - MERGERS OF UCITS
SECTION 1 Principle, authorisation and approval
SECTION 2 Third party control, information of unit-holders and other rights of unit-holders
SECTION 3 Costs and entry into effect

CHAPTER VII - OBLIGATIONS CONCERNING THE INVESTMENT POLICIES OF UCITS

CHAPTER VIII - MASTER-FEEDER STRUCTURES
SECTION 1 Scope and approval
SECTION 2 Common provisions for feeder UCITS and master UCITS
SECTION 3 Depositaries and auditors
SECTION 4 Compulsory information and marketing communications by the feeder UCITS
SECTION 5 Conversion of existing UCITS into feeder UCITS and change of master UCITS
SECTION 6 Obligations and competent authorities
 
CHAPTER IX - OBLIGATIONS CONCERNING INFORMATION TO BE PROVIDED TO INVESTORS
SECTION 1 Publication of a prospectus and periodical reports
SECTION 2 Publication of other information
SECTION 3 Key investor information
 
CHAPTER X - GENERAL OBLIGATIONS OF UCITS
 
CHAPTER XI - SPECIAL PROVISIONS APPLICABLE TO UCITS WHICH MARKET THEIR UNITS IN MEMBER STATES OTHER THAN THOSE IN WHICH THEY ARE ESTABLISHED

CHAPTER XII - PROVISIONS CONCERNING THE AUTHORITIES RESPONSIBLE FOR AUTHORISATION AND SUPERVISION

CHAPTER XIII - EUROPEAN SECURITIES COMMITTEE
 
CHAPTER XIV - DEROGATIONS, TRANSITIONAL AND FINAL PROVISIONS
SECTION 1 Derogations
SECTION 2 Transitional and final provisions

 

 
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