EUROPE: CESR publishes final guidelines on cross-border notification procedure for UCITS

Thursday June 29 2006

Following on from two rounds of consultations, CESR has today published its final guidelines, together with a feedback statement regarding the cross-border notification procedure of UCITS. The Guidelines together with Feedback Statement and Press release can be found at the above link.

The background to this is the recognition in the EC Green Paper on Investment Funds that the inconsistent and often unduly burdensome notification procedures operating in different member states is a key impediment to the development of the EU single market for investment funds.

Amongst the key developments included within today’s guidelines are:

• UCITS can submit the notification letter in a language common in the sphere of international finance to the Host competent Authority where this is not contrary to the domestic legislation or regulations;

• Once a complete notification has been filed, the notification procedure should not exceed the two-month period and possibly reduced as an average to a shorter period. The Host Member State Authority shall inform the UCITS about the incompleteness and missing information and documents as soon as possible and in any case, within one month from the date of the receipt of the incomplete notification;

• In order to simplify the practices and reduce costs, competent Authorities will rely on self-certification of copies of original attestations by the notifying UCITS, the original attestation should include an English version to be provided by the UCITS.

• Regarding new sub-funds, which are added to the umbrella fund with the intention to be marketed in the Member State , where the marketing arrangements are already familiar to the Host country competent Authority, CESR has agreed that the necessary time for the Host Authority to check should be significantly less than the two-month period. To simplify the processing by the Host competent Authority of the notification of umbrella funds with a large numbers of sub-funds to be marketed, CESR recommends that umbrella funds with a large number of sub-funds should have one full prospectus.

In the guidelines, there is a commitment by the CESR Members to evaluate the functioning of the notification mechanism within two years and CESR expect this review of implementation to begin during the second half of 2007.