Directive 2010/44 - Implementation of Directive 2009/65/EC as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure

Contents

  1. Summary of Legislation
  2. Legislative text

1.

Summary of Legislation

Fund mergers and master-feeder structures relating to undertakings for collective investment in transferable securities (UCITS)

SUMMARY OF:

Directive 2010/44/EU implementing Directive 2009/65/EC as regards certain rules concerning fund mergers, master-feeder structures and notification procedure

WHAT IS THE AIM OF THE DIRECTIVE?

It sets out implementing rules for mergers of undertakings for collective investment in transferable securities (UCITS)* and master-feeder structures in the context of Directive 2009/65/EC on the rules applying to UCITS.

It is one of a series of 4 implementing measures adopted together in 2010, the other 3 being Directive 2010/43/EU, Regulation (EU) No 583/2010 and Regulation (EU) No 584/2010.

KEY POINTS

UCITS mergers

In the case of a merger of a UCITS, the unit-holders* must be informed of the conditions of the merger and of its potential influence on the receiving UCITS. They must receive other information including:

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    their rights before and after the proposed merger takes effect;
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    a comparison of the differences between the UCITS regarding a synthetic risk* of the key investor information and between their charges, fees and expenses;
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    whether the management or investment company of the merging UCITS intends to undertake any rebalancing of the portfolio* before the merger takes effect;
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    details concerning any accrued income in the respective UCITS.

They must also be informed of the procedure for the unit-holders’ approval of the merger proposal and the date at which the merger will take effect.

Key investor information of the receiving UCITS must be provided to the unit-holders of the merging and receiving UCITS.

Master-feeder structures

Agreements and internal conduct of business rules between feeder UCITS* and master UCITS*

The agreement must stipulate the conditions for:

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    providing a copy of precontractual documents, internal operational documents;
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    delegating investment management and risk management functions to third parties;
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    setting internal rules related to breaches and the use of derivatives;
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    making any other information-sharing arrangements entered into with third parties.

In addition, the agreement must also include with regard to the basis of investment and divestment by the feeder:

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    a statement of which share classes of the master UCITS are available for investment by the feeder UCITS;
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    the amount of charges and expenses to be paid by the feeder UCITS;
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    the terms on which any initial or subsequent transfer of assets in kind may be made from the feeder UCITS to the master UCITS.

The management company’s internal conduct of business rules must include appropriate measures to mitigate conflicts of interest between both UCITS or between the feeder UCITS and other unit-holders of the master UCITS.

Procedures in the case of liquidation of the master UCITS

Where the feeder UCITS intends to invest at least 85% of its assets in units of another master UCITS, it must submit to the competent authorities:

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    its application for approval of that investment;
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    its application for approval of the proposed amendments to its fund rules or instrument of incorporation;
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    the amendments made to its prospectus and its key investor information.

Where a feeder UCITS intends to convert into a non-feeder UCITS, it must provide to the authorities:

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    its application for approval of the proposed amendments to its fund rules or instrument of incorporation;
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    the proposed amendments to its prospectus and its key investor information.

Where a feeder UCITS wishes to be liquidated, it must notify the authorities of its intention.

The feeder UCITS must inform the master UCITS once it receives the authorities’ approval.

Procedures in the case of merger or division of the master UCITS

The feeder UCITS must provide the competent authorities with its application for approval in the following cases:

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    where it intends to continue to be a feeder UCITS of the same master UCITS;
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    where it intends to become a feeder UCITS of another master UCITS;
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    where it intends to convert into a non-feeder UCITS;
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    where it intends to be liquidated.

The feeder UCITS must inform the master UCITS once it receives the competent authorities’ approval.

The law of the EU country which applies to the agreement between the depositaries of the master UCITS and the feeder UCITS must also apply to the information-sharing agreement between the depositaries.

FROM WHEN DOES THE DIRECTIVE APPLY?

It has applied since 30 July 2010 and had to become law in the EU countries by 30 June 2011.

BACKGROUND

For more information, see:

KEY TERMS

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.

Unit-holder: any natural or legal person holding one or several shares in a UCITS.

Synthetic risk: a measure of the overall risk profile of a fund.

Rebalancing of the portfolio: a significant modification of the composition of the portfolio of a UCITS.

Feeder UCITS: a feeder UCITS is a UCITS which has been approved to invest at least 85% of its assets in units of another UCITS.

Master UCITS: a UCITS fund with one or more feeder funds as investors. It cannot itself be a feeder UCITS or hold units of a feeder UCITS.

MAIN DOCUMENT

Commission Directive 2010/44/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure (OJ L 176, 10.7.2010, pp. 28–41)

Corrigendum

RELATED DOCUMENTS

Commission Regulation (EU) No 583/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website (OJ L 176, 10.7.2010, pp. 1–15)

Commission Regulation (EU) No 584/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities (OJ L 176, 10.7.2010, pp. 16—27)

Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company (OJ L 176, 10.7.2010, pp. 42–61)

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) (OJ L 302, 17.11.2009, pp. 32–96)

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

last update 07.06.2018

This summary has been adopted from EUR-Lex.

2.

Legislative text

Commission Directive 2010/42/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure (Text with EEA relevance)