non-UCITS related changes: An overview Legal texts 1 st generation - - PowerPoint PPT Presentation

UCITS IV implementation & non-UCITS related changes: An overview

Legal texts – 1st generation

• Directive 2009/65/EC
• Law of 17 December 2010 on UCI’s modifying the Law of 20 December 2002 on

UCI’s

• CSSF Regulation Nr 10-4 re. organizational requirements, conflicts of interest,

conduct of business, risk management

• CSSF Regulation Nr 10-5 re. fund mergers, master-feeder structures and

notification procedures

• 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 – 2nd generation

• UCITS IV changes – 1 July 2011
• special regime for the KIID (1 July 2012)
• Non-UCITS IV changes – 1 January 2011
• special regime for the delegation of functions (1 July 2012)
• Tax provisions – 1 January 2011

• 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,…)

• CSSF Regulation Nr10-5 re. fund mergers, master-feeder structures
• listing of the information for the investors