Brussels, 02/07/2010 (Agence Europe) - On Thursday 1 July 2010, the European Commission introduced a raft of improvements to the EU rules on investment funds known as UCITS (Undertakings for Collective Investment in Transferable Securities). The new rules are set out in two directives and two regulations and will empower investors by requiring a new standardised fund document, while also setting out in detail the high standards of conduct of business that UCITS fund managers must comply with. The member states now have twelve months to transpose the two directives into their legal systems. The new regulations must come into force on 1 July 2011. The Commission explains the changes in a press release:
1) A new standardised and harmonised disclosure document designed to empower investors to take effective investment decisions. An implementing Regulation covers the content and form of the document, including the use of plain language and a much more investor-friendly presentation of information about risk. The implementing regulation is supported by detailed methodologies on calculating a fund's level of risk and charges, published on 1 July 2010 by the Committee of European Securities Regulators (CESR).
2) An implementing Directive aligns organisational requirements and rules of conduct for investment firms with the standards already applied across much of the financial services through the Markets in Financial Instruments Directive (MIFiD). The Directive further obliges UCITS managers to employ sufficiently robust and effective procedures and techniques so that they are able to adequately manage the different types of risk the UCITS might face.
3) UCITS mergers and master-feeder structures - an implementing Directive details certain investor protection measures in relation to these asset pooling techniques, and establishes a common approach to the sharing of information between master and feeder UCITS. It also covers detailed rules on the liquidation, merger or division of a master UCITS.
4) Notification procedure and supervisory co-operation - an implementing Regulation sets out the details of standard documents and procedures to be used for electronic transmission in the notification procedure (used by a UCITS when it wishes to gain access to the market in another Member State). It also contains common procedures for enhancing supervisory cooperation in their oversight of fund managers' cross-border activity of fund managers. (A.B. trans fl)