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Summaries of EU Legislation

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Strengthening global competitiveness of EU investment funds

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Strengthening global competitiveness of EU investment funds

 

SUMMARY OF:

Directive 2009/65/EC — rules relating to undertakings for collective investment in transferable securities (UCITS)

WHAT IS THE AIM OF THIS DIRECTIVE?

  • It lays down uniform rules on investment funds, allowing the cross-border offer of investment funds regulated at EU level.
  • It sets out the EU’s main regulations governing UCITS*.

KEY POINTS

The main aims of the directive are to:

  • offer investors a wider choice of product at lower cost through
    • a more efficient UCITS market in the EU
    • better investor information
    • more efficient funds supervision; and
  • keep the EU’s investment sector competitive by adjusting the rules to market developments.

In particular, this directive lays down rules on:

  • investor information via a standardised summary information document to make it easier for the consumer to understand the product;
  • a genuine European passport for UCITS management companies, which will allow a management company located in one EU country to manage funds in other EU countries;
  • marketing of UCITS in other countries, e.g. by simplifying administrative procedures;
  • mergers of UCITS in other countries;
  • stronger supervision of UCITS and of the companies that manage them, e.g. through enhanced cooperation between national financial services supervisors.

Directive 2009/65 is the fourth version of UCITS legislation, replacing UCITS Directive 85/611/EEC.

Directive 2009/65 was amended by Directive 2014/91/EU (UCITS V) which introduced new rules on UCITS depositaries (the asset-keeping entity), e.g. the entities eligible to assume this role, their tasks, delegation arrangements and the liability of depositaries.

It was also supplemented by Regulation (EU) 2016/438 which addresses non-market risks related to the depositaries’ activities. It covers aspects of depositaries’ duties such as:

  • safekeeping of UCITS assets;
  • oversight duties (e.g. checking that UCITS investments are consistent with their investment strategies as described in their rules and offering documents or ensuring that UCITS do not breach their investment restrictions); and
  • the liability for the assets.

Regulation (EU) 2016/438 also lays down specific due diligence requirements for insolvency protection of UCITS assets, as well as detailed independence requirements for managers and custodians of UCITS.

WHEN DOES THE DIRECTIVE APPLY?

It has applied since 7 December 2009. EU countries had to incorporate it into national law by 30 June 2011.

BACKGROUND

For more information, see:

* KEY TERMS

Undertakings for collective investment in transferable securities (UCITS): investment vehicles that pool investors’ capital and invest that capital collectively through a portfolio of financial instruments such as stocks, bonds and other securities.

MAIN DOCUMENT

Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, pp. 32–96)

Successive amendments to Directive,2009/65/EC have been incorporated in the original text. This consolidated version is of documentary value only.

Corrigendum

RELATED ACTS

Commission Regulation (EU) No 583/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website (OJ L 176, 10.7.2010, pp. 1–15)

Commission Regulation (EU) No 584/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities (OJ L 176, 10.7.2010, pp. 16–27)

Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company (OJ L 176, 10.7.2010, pp. 42–61)

Commission Directive 2010/42/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure (OJ L 176, 10.7.2010, pp. 28–41)

Corrigendum

Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries C/2015/9160 (OJ L 78, 24.3.2016, pp. 11–30)

last update 02.08.2016

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