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Summaries of EU Legislation

Strengthening the global competitiveness of EU investment funds

SUMMARY OF:

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

WHAT IS THE AIM OF THE DIRECTIVE?

The main aims of Directive 2009/65/EC are as follows.

  • To offer investors a wider choice of products at a lower cost through:
    • a more efficient market in undertakings for collective investment in transferable securities (UCITS)1 in the European Union (EU);
    • better investor information; and
    • more efficient supervision of funds.
  • To keep the EU’s investment sector competitive by adjusting the rules to market developments.

KEY POINTS

The directive sets out uniform rules on investment funds, allowing the cross-border marketing of investment funds to be regulated at the EU level.

The directive lays down rules on:

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

The UCITS framework also includes:

  • rules on UCITS depositaries (the asset-keeping entity), including the entities eligible to assume this role, their tasks, delegation arrangements and the liability of depositaries;
  • requirements for UCITS assuming exposure to securitisation (see summary);
  • rules to remove regulatory barriers that previously hindered the cross-border distribution of investment funds to make their distribution easier, faster and less costly;
  • rules adapting it to a new regulatory framework for investment firms (see summary);
  • rules, especially on definitions and standards, for covered bonds2 issued by credit institutions3 (see summary) to remedy the fact that Directive 2009/65/EC previously did not specify the nature and content of a special supervision framework – an element defining covered bonds – or the authorities that should be responsible for performing such supervision;
  • rules to ensure key information documents set out in Regulation (EU) No 1286/2014 (see summary) provided by investment companies or management companies of UCITS always satisfy the requirement applicable to key investor information set out in Directive 2009/65/EC;
  • rules to align with the requirements on information and communication technology risk for financial entities set out in the digital operational resilience of the financial sector (DORA) regulation (Regulation (EU) 2022/2554 – see summary).

Amending Directive (EU) 2023/2864 inserts an article in Directive 2009/138/EC requiring Member States, from , to ensure that, when making public any regulated information, management companies and investment companies submit that information at the same time to the collection body, and notify the European Securities and Markets Authority (ESMA) thereof for the purposes of making it accessible on the European single access point, set up under Regulation (EU) 2023/2859.

Amending Directive (EU) 2024/927 modernises the rules for UCITS as regards delegation arrangements, liquidity risk management, supervisory reporting and the provision of depositary and custody services.

Delegated acts

Directive 2009/65/EC has also been supplemented by delegated acts adopted by the European Commission.

  • Delegated Regulation (EU) 2016/438, as amended by Regulation (EU) 2018/1619, addresses non-market risks related to the depositaries’ activities (see summary). It covers aspects of depositaries’ duties such as:
    • the 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.
  • Delegated Regulation (EU) 2016/438 also lays down specific due diligence requirements for insolvency protection of UCITS assets, along with detailed independence requirements for managers and custodians of UCITS.
  • Delegated Regulation (EU) 2024/911 sets out regulatory technical standards on information to be provided in relation to the cross-border activities of management companies and UCITS.

Implementing acts

The Commission has also adopted:

  • Directive 2007/16/EC as regards the clarification of certain definitions;
  • Directive 2010/42/EU on certain rules concerning fund mergers, master-feeder structures and the notification procedure (see summary);
  • Directive 2010/43/EU on organisational requirements, conflicts of interest, conduct of business, risk management and the content of an agreement between a depositary and a management company (see summary);
  • Regulation (EU) No 583/2010 as regards key investor information and conditions to be met when providing key investor information or a prospectus in a durable medium other than paper or by means of a website;
  • Regulation (EU) No 584/2010 on the EU notification procedure for UCITS (see summary);
  • Implementing Regulation (EU) 2016/1212 on technical standards with regard to standard procedures and forms for submitting information in accordance with Directive 2009/65/EC;
  • Implementing Regulation (EU) 2024/910 on technical standards with regard to the form and content of the information to be provided in respect of the cross-border activities of UCITS, UCITS management companies and the exchange of information between competent authorities on cross-border notification letters.

FROM WHEN DO THE RULES APPLY?

  • Directive 2009/65/EC had to be transposed into national law by . The rules contained in the directive should apply from the same date.
  • Amending Directive 2014/91/EU had to be transposed into national law by and these rules have applied since that date.
  • Amending Regulation (EU) 2017/2402 has applied since .
  • Amending Directive (EU) 2019/1160 had to be transposed into national law by . The rules contained in the directive should apply from the same date.
  • Amending Directive (EU) 2019/2034 had to be transposed into national law by . The rules contained in the directive should apply from the same date.
  • Amending Directive (EU) 2019/2162 had to be transposed into national law by . The rules contained in the directive should apply from .
  • Amending Directive (EU) 2022/2556 had to be transposed into national law by . The rules contained in the directive should apply from the same date.
  • Amending Directive (EU) 2023/2864 has to be transposed into national law by .
  • Amending Directive (EU) 2024/927 has to be transposed into national law by . The rules contained in the directive should apply from the same date, with the exemption of the rules on supervisory reporting, which should apply from .

BACKGROUND

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

For further information, see:

KEY TERMS

  1. 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.
  2. Covered bond. A debt obligation issued by a credit institution that is secured by assets to which its investors have direct recourse. The assets in question are usually a pool of mortgage loans or credits to the public sector, or other high-quality cover assets, that ensure that the credit institution issuing the covered bonds has a claim for payment and that are secured by collateral assets subject to strictly defined requirements.
  3. Credit institution. An undertaking that takes deposits or other repayable funds from the public in order to grant credit.

MAIN DOCUMENT

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

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

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