The UCITS IV directive, which will come into force on 1 July 2011, will bring about a number of enhancements to the existing UCITS framework.
One of the innovations of the directive will be the implementation of new cross-border passporting procedures. UCITS IV willsimplify and accelerate the passporting of UCITS funds established in an EU Member State (the “Home State”) who wish to be marketed in another EU Member State (the “Host State”).
Luxembourg has once again successfully proven to be the pioneering fund centre, by being the first to transpose the directive into national law. The UCITS IV provisions have been implemented within the 17 December 2010 law (the “2010 Law”).
According to the 2010 Law, regulated funds subject to this law will simply be required to notify the Commission de Surveillance du Secteur Financier (CSSF) of their intention to market their units in a Host State and provide the relevant documentation. The CSSF will then ensure that the pack is complete and will notify the respective regulators of the Host States within ten days.
The process will be simplified from both the Home State and Host State angles, as UCITS IV funds from other Member States, wishing to be marketed in Luxembourg can follow the same procedures in their Home States and the CSSF will be notified by the respective regulators.
These changes are a significant improvement from the UCITS III provisions which previously required funds to comply with Host States’ own individual processes.
Last week the CSSF issued a new Circular 11/509 specifying the practical and technical conditions under which passporting notifications should be filed in Luxembourg, including the contents of the notification, the attachments required as well as the descriptions of the activities with regard to marketing arrangements in the Host States. The notifications must be sent in electronic form and via confined transmission channels.
Although the notification procedures for UCITS IV cross-border passporting are now clearly defined in Luxembourg, the use of these procedures is conditional on the transposition of the UCITS IV directive in other Member States. Hence the current UCITS III passporting procedures remain in full use and will only be repealed as of 1 July 2011.
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