Brussels, 23/04/2014 (Agence Europe) - On Wednesday 23 July, the EU Council of Ministers formally adopted an EU directive to boost the protection of investments in undertakings for collective investment in transferable securities, UCITS (unit trusts) following the Madoff fraud case (see EUROPE 11043).
From January 2016 onwards, there will be better definitions of the role of depositories (companies that own the securities bought by UCITS managers) and their duties.
In order to restrict excessive risk-taking, the directive introduces conditions on the payment of the variable part of fund managers' remuneration. Bonuses will not be capped, but half must be paid solely in shares in the UCITS fund and payment of 40% of the bonus will be held back for one to three years.
Fund managers failing to comply with their duties run the risk of being fined up to €5 million for an individual or 10% of turnover for a company. Sanctions will generally be published, but can either be published anonymously or not at all depending on case-by-case assessment.
For the first time, protection has been introduced for whistle-blowers.
Member states now have 18 months to transpose the new directive, which amends Directive 2009/65/EC. Depositories will have a further transition period of 24 months, starting from the end of the transposition period. (MB)