EUROPE: European Commission publishes guidance on cross border notification procedure

Monday March 19 2007

Under the EU UCITS Directive, a fund authorised in one Member State can be marketed in any other provided that it is notified to the authorities of that Member State (the ’host’ authority). Under this procedure, the host authority has up to two months to review the notification and can specify how the fund should be advertised and promoted on its territory. However, national authorities are sometimes uncertain of how to apply the procedure correctly and of the borderline between the responsibilities of the Member States concerned. This has led to escalating administrative and compliance costs and significant delays in bringing authorised funds to market in other Member States.

The Commission has now clarified the relevant rules, in the form of an Interpretative Communication. In particular, the Commission has reaffirmed that an investment fund’s home supervisory authority has sole responsibility for monitoring compliance with EU rules, and that the notification procedure cannot be used by Member States to challenge authorisation of UCITS granted in another Member State.

More information is available at the above link.