The European Commission has chosen not to include plans for a management company passport in its latest proposed amendments to the Ucits Directive (Ucits IV). The directive is designed to "facilitate increased efficiency and consolidation in the fund industry and to enhance investor disclosures".
However, the Commission said in a letter to the Committee of European Securities Regulators (Cesr) that after careful consideration of the possibility of introducing new provisions in respect of the management company passport, it had concluded “the inclusion of such provisions could give rise to supervisory, legal and operational risk which could be detrimental to the operation of funds making use of the management company passport”, where a fund management company is authorised and supervised in a different EU member state to that where its fund range is based.
The Commission has instead asked Cesr to “provide advice that will help the Commission to develop provisions permitting the introduction of a management company passport under conditions that are consistent with a high level of investor protection”. Cesr has requested submissions from the industry and will report back to the Commission in November.
Among the other Ucits IV proposals are the provision of a single Key Information Document to replace the current simplified prospectus, on which Cesr is also advising the Commission.
The Investment Management Association in the UK has welcomed the Ucits IV proposals, saying it hopes they can be implemented without delay to allow the asset management industry to benefit from an efficient, single European market.
Jarkko Syyrila, the IMA’s director of international relations, commented: “Ucits has been a great European success story for the industry and investors and with increasing global competition these improvements are welcome. The provisions to improve investor protection, and reduce costs and bureaucracy will benefit the industry and investors alike. We now call on the European institutions to work together to ensure that all these crucial improvements to the Ucits framework can be adopted by the 2009 European elections.”
M&G also spoke up in favour of the proposals, with Peter Grimmett, head of fund regulatory development, commenting: “M&G currently has its UK-based funds registered for sale in Germany, Austria, Switzerland, Italy, France, Spain and Luxembourg. It can typically take two or more months to get registration at present. The Ucits IV proposals aim to remove this barrier and enable virtually immediate registration, allowing EU investors to enjoy the advantage of investment far more quickly than now. It will also make future registration of funds in the other EU member states that much simpler – this helps the EU achieve its aim of a truly pan-European market for Ucits to the benefit of all EU investors.”
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