UCITS IV is the third update to the original UCITS. The update was a response to the global financial crisis of 2007-2008, and the failures of existing UCITS provisions. It has since been updated by UCITS V
Summary of Changes
The major changes brought about by UCITS IV are:
- Companies are allowed to passport into other member states
- Simplifying cross-border distribution
- New "master-feeder structures" to allow asset pooling
- New rules to simplify cross border mergers of UCITS funds
- A new form to present uniform key investor information for all members states<ref>UCITS IV Directive - European Parliament approves UCITS IV Directive. Norton Fulbright Rose. Retrieved on May 26th, 2015.</ref>
Four Implementing Acts of UCITS IV
UCITS IV consists of four separate acts - two directives and two regulations. The Acts are:
- Commission Regulation (EU) No 583/2010. This centers on key investor information in a new standardised and harmonised disclosure document (called the "Key Investor Information Document," or "KIID") designed to empower investors to take effective investment decisions. It includes requirements to use plain language, more investor-friendly presentation of information about risk, and detailed methodologies on calculating a fund's level of risk and fee structure.
- Commission Regulation (EU) No 584/2010 This regulation concerns the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities. The goal of this regulation is to remove many of the administrative barriers to cross-border marketing of UCITS.
- Commission Directive 2010/42/EU This directive contains certain provisions concerning fund mergers, master-feeder structures and notification procedures. Specifically, the directive requires that each feeder fund invest at least 85 percent of its assets into one master UCITS, and the master and feeder must have a legally binding agreement in place.
- Commission Directive 2010/43/EU This directive details organizational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company.
UCITS V entered into force on September 17th, 2014. The new directive includes new rules on remuneration, liability, and depositories. The directive also seeks to align UCITS with AIFMD. Over the course of 2015 and 2016, new regulations by national authorities will be imposed under the directive's requirements. To see more information about UCITS V click HERE.
Related Documents: The Four July 2010 Acts