Help Print this page 
Title and reference
Strengthening the global competitiveness of Europe's investment funds - UCITS

Summaries of EU legislation: direct access to the main summaries page.
Multilingual display
Text

Strengthening the global competitiveness of Europe's investment funds - UCITS

Popular with small investors and fund providers, UCITS (undertakings for collective investment in transferable securities) are set for further development thanks to the updating of rules for these funds under EU Directive 2009/65.

ACT

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) (Text with EEA relevance) [See amending acts].

SUMMARY

EU Directive 2009/65 on UCITS was adopted on 13 July 2009 and applies from 1 July 2011. It lays down EU-wide rules for setting up and operating European investment funds.

Investment funds are created with the goal of investing investors' capital collectively, through a portfolio of financial instruments such as stocks, bonds and other securities. Introduced in the 1980s, UCITS are a European form of investment fund accounting for over €5 trillion of assets in 2009, equivalent to half of EU gross domestic product.

This directive updates the rules on UCITS. Its main goals are to:

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

The text introduced the following changes:

  • improved investor information, thanks to a standardised summary information document. 'Key information for investors' strikes a balance between readability and the amount of information required by investors;
  • a genuine European passport for UCITS management companies: designed to cut red tape, this enables a management company located in one EU country to manage funds in other countries;
  • easier marketing of UCITS in other countries, thanks to simplified administrative procedures;
  • easier mergers of UCITS in other countries, enabling increases in the average size of European funds;
  • easier asset pooling, resulting for example in greater investor protection, by creating a framework for the system of 'master-feeder' arrangements whereby a fund invests more than 85% of its assets in another fund;
  • stronger supervision of UCITS and of the companies that manage them, thanks to enhanced cooperation between supervisors.

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

Improvements were made to the UCITS Directive on 1 July 2010, with the adoption by the Commission of four implementing acts. These seek to further improve investor protection, reduce red tape and make EU investment funds even more competitive.

The UCITS Directive was amended by EU Directive 2013/14/EC of 21 May 2013. The changes aim to protect investors in these collective investment schemes from over-reliance on credit ratings. For example, management or investment companies are asked to make their own assessments of the creditworthiness of companies and not to solely or mechanistically rely on credit ratings as issued by credit rating agencies.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

Directive 2009/65/EC

7.12.2009

30.6.2011

OJ L 302 of 17.11.2009

Amending act(s)

Entry into force

Deadline for transposition in the Member States

Official Journal

Directive 2010/78/EU

4.1.2011

31.12.2011

OJ L 331 of 15.12.2010

Directive 2011/61/EU

21.7.2011

22.7.2013

OJ L 174 of 1.7.2011

Directive2013/14/EU

20.06.2013

21.12.2014

OJ L 145 of 31.5.2013

Successive amendments and corrections to Directive 2009/65/EC have been incorporated in the basic text. This consolidated version is for reference purpose only.

RELATED ACTS

Implementing regulations

Commission Regulation (EU) No 583/2010 of Official Journal L 176 of 10.7.2010 ]. 1 July 2010 - conditions for providing key investor information / prospectuses in hard-copy form [Official Journal L 176 of 10.7.2010].

This Regulation aims to standardise key investor information, laying down rules for:

  • which information must be provided on investment policy objectives
  • how risk and reward are presented (requiring use of a numeric scale from 1 to 7).
  • how charges are presented and explained.

It also applies to particular UCITS structures consisting of two or more investment compartments.

Commission Regulation (EU) No 584/2010 of Official Journal L 176 of 10.7.2010 ]. 1 July 2010 -standard notification letter and UCITS attestation, use of electronic communication between competent authorities for notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities [Official Journal L 176 of 10.7.2010].

This Regulation aims at harmonising the procedure for notification of marketing of units of UCITS in another Member State.

It specifies the form and content of the standard notification letter to be used by UCITS. It also defines the form and content of the attestation to be used by the competent authorities of Member States to confirm that the UCITS fulfils the conditions laid down by Directive 2009/65/EC. The Regulation also sets out a detailed procedure for the electronic transmission of the notification file between competent authorities.

It also lays down procedures for the supervision of fund managers’ frontier activities.

Directives

EU Directive 2010/43/EU of Official Journal L 176 of 10.7.2010 ]. 1 July 2010 on organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company [Official Journal L 176 of 10.7.2010].

EU Directive 2010/44/EU of Official Journal L 176 of 10.7.2010 ]. 1 July 2010 on certain provisions concerning fund mergers, master-feeder structures and notification procedure [Official Journal L 176 of 10.7.2010].

Proposals

Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/65/EC on UCITS as regards depositary functions, remuneration policies and sanctions. [COM(2012)350 final - not published in the Official Journal].

Last updated: 21.01.2014

Top