EUROPE: CESR publishes advice on level 2 measures relating to mergers of UCITS, master-feeder UCITS structures and cross-border notification of UCITS

Tuesday December 22 2009

CESR has issued its technical advice to the European Commission on level 2 measures relating to mergers of UCITS, master-feeder UCITS structures and cross border notification of UCITS

This technical advice completes previous work done in regards to UCITS IV on the management company passport and the key investor information document (KII/KID) which was sent to the commission during October 2010

Fund mergers

CESR `s advice focuses on the information to be provided to unitholders of both the merging and receiving UCITS in the case of a merger. The requirements are based on the key principle that the information should be tailored to meet the different needs of the two unit holder groups ( merging and receiving UCITS).

Master-feeder structures

The second section of CESR `s advice under part III of the mandate relates to implementing measures concerning master-feeder structures. CESR `s advice covers the content of the written agreements that should be put in place between the master and feeder UCITS, as well as their respective depositaries and auditors.

Responding to complexity in creating master-feeder structures, CESR recommends that the parties to the agreements be free to choose whether the applicable law be that of the jurisdiction in which the feeder or master UCITS is located. CESR also sets out detailed requirements on the steps to be taken in the case of a liquidation, merger or division of a master UCITS in order to satisfy the time constraints set out in the level 1 Directive.

Notification Procedure

As previously reported, the recast UCITS IV Directive introduces significant changes in the area of notification of cross-border marketing of UCITS. CESR `S advice covers details including on how Member States should make available information in relation to marketing in their jurisdiction of UCITS established in another Member State; how the competent authorities of the home state should facilitate the host state `s access to updated notification documentation; the content and format of a standard notification letter and attestation; and the procedure for electronic transmission of notification files.

CESR is also undertaking work to evaluate the possibility of developing a centralised IT/ electronic system to support the notification process.

The new UCITS directive is expected to be implemented in July 2011 .

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