UCITS V: Check your remuneration

UCITS V: Check your remuneration 

Managers of UCITS who do not already have 18 March 2016 marked on their calendars should do so now. That is the deadline on which the FCA must implement and enforce the transposition of UCITS V Directive (Directive) in the UK. While the burden of UCITS V is carried predominantly by depositaries, managers carry their share of the weight from the Directive’s novelties which come in the form of the new remuneration impositions.

Pay-out process rules

At the forefront of the new remuneration requirements is the application of the remuneration principles. Conceptualised to mitigate incentives for excessive risk taking, these principles impose three main restrictions on the remuneration of key staff, otherwise known as the pay-out process rules. In summary, the restrictions are:

  • A minimum of 50% of discretionary bonus should consist of the units of the UCITS managed;
  • A minimum of 40% of the discretionary bonus should be deferred for 3 years; and
  • Discretionary bonuses should be subject to clawback.

Similar to its cousin directive, the AIFMD, these principles are subject to the overarching principle of ‘proportionality’, which allows managers to dis-apply the pay-out process rules should the size and complexity of the business justify this. Managers who have delegated investment management to third parties will need to contractually ensure that they are also subject to the same remuneration requirements.


Aside from the remuneration principles are the transparency obligations on managers to disclose their remuneration and remuneration policy. Specifically, it will become mandatory for UK UCITS prospectuses and KIIDs to disclose key elements of the manager’s remuneration policy. Annual reports will need to disclose aggregate remuneration paid by managers to key staff, the number of beneficiaries and where relevant, performance fees.

Grace period

Although the transposition of UCITS V is expected to take effect as of 18 March 2016 in the UK, managers will be given a grace period to comply with the new rules. Importantly, managers will not need to comply with some of the remuneration requirements until the start of the full performance period after 18 March 2016. Prospectuses will need to be updated with the new disclosure requirements by 30 September 2016 whilst KIIDs will need to include them for their next update (and in any case before 18 March 2017).

How we can help

  • We can assist you to identify key issues which need to be addressed in your business to comply with UCITS V requirements;
  • We can review your remuneration policy and compliance documentation, help identify any changes required and adapt the documents to the relevant UCITS V requirements;
  • We can keep you updated on the latest regulatory developments.

Call our London office  +44 (0)20 738 0010  Email  [email protected]

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