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authorised according to the UCITS IV Directive or comparable UCIs as defined under article 1 (2) (a) and (b) of the same Directive. « Insolvency protection of UCITS assets when delegating the custody function (article 17): The Proposal establishes a new framework in case of insolvency of the third party to which safekeeping has been delegated. This insolvency regime goes beyond the one provided for the AIFMD depositary regime under article 99.2 of the AIFMD Delegated Acts. The Proposal sets out a “safe harbour proce- dure” to keep the UCITS assets unavailable for dis- tribution /realisation of benefit among the creditors of that third party. In particular the depositary shall undertake its duties by ensuring that the third party to whom UCITS assets safekeeping have been del- egated as described below: - The depositary shall receive a legal advice from an independent advisor confirming the recognition by the third country applicable insolvency law, of a segregation policy and unavailability of the UCITS assets; this require- ment is to be met at the time of the conclusion of the delegation agreement and over the life time of the agreement. - The depositary shall be informed by the third party where the conditions to be met under the UCITS V Delegated Act are no longer met and where there are any changes occurring in connection with the UCITS depositary clients. In comparison, article 99.2 of the AIFMD Del- egated Acts only foresees an obligation for the AIFM’s depositary to assess additional arrange- ments to minimise the risk of loss and maintain an adequate standard of protection. « No liability discharge for the UCITS depositary (article 19): By opposition to the AIFMD depositary regime where the depositary is allowed to dis- charge its liability under certain conditions, under the UCITS depositary regime this possibility is not foreseen. « Independence requirements (Chapter 4): The depositary shall perform its duties in compliance with the independence rules as set forth under the UCITS Proposal and as summarised below: - There shall be no common management between the management company and the depositary. - The appointment of the depositary and delegation of safekeeping shall be made following a strong decision making-process. In case of existence of a link or group link (article 22) between the man- agement company and the depositary appointed, the management company shall keep documen- tary evidence of the assessments of the depos-

functions within the respective companies, at least one-third of the members or two persons, whichever is lower, on the body in charge of the supervisory functions within the management company and within the depositary shall be in- dependent. For the purposes of the first paragraph, members of the management body of the management compa- ny, members of the management body of the de- positary or members of the body in charge of the supervisory functions of the above companies shall be deemed independent as long as they are neither members of the management body or the body in charge of the supervisory functions nor employees of any of the other undertakings between which a group link exists and are free of any business, family or other relationship with the management compa- ny or the investment company, the depositary and any other undertaking within the group that gives rise to a conflict of interest such as to impair their judgment. What’s next? The delegated acts shall apply 6 months after their entry into force (expected date: September 2016). LUXEMBOURG AIFM/UCITS Extension of the scope of entities subject to quarterly reporting under CSSF circular 10/467 Background On 1st July 2010, the CSSF published the circular 10/467 concerning electronic transmission of finan- cial information to be transmitted to the CSSF on a periodic basis by management companies subject to Chapter 13 of the law of 20 December 2002 (now referred to as management companies under Chap- ter 15 of the law of 17 December 2010) relating to undertakings for collective investment, as well as modifications to certain periodic tables. According THE PROPOSAL IS AVAILABLE HERE.

itary appointing process. A report based on the assessments performed shall be established. - The management company or the investment company shall demonstrate to the competent au- thority of the UCITS home member state that it is satisfied with the appointment of the depositary and that the appointment of the depositary is in the sole interest of the UCITS and its investors. - The management company shall justify to inves- tors the choice of the depositary upon request. - The depositary shall have in place a deci- sion-making process for choosing the third party to whom it may delegate the safekeeping func- tions in accordance with article 22a of UCITS IV, as amended. « Conflict of interest (article 23): Where a link or a group link exists between them, the management company or the investment company and the de- positary shall put in place policies and procedures ensuring that they: - Identify all conflicts of interest arising from that link; - Take all reasonable steps to avoid those conflicts of interest. Where a conflict of interest referred to in the first subparagraph cannot be avoided, the management company or the investment company and the de- positary shall manage, monitor and disclose such conflict of interest in order to prevent adverse effects on the interests of the UCITS and of the investors of the UCITS. In contrast, articles 30 to 36 of section 2 of the AIFMD Delegated Acts provide that the conflicts of interests (type, policy, procedures to prevent or manage, monitor and disclose potential conflicts of interests) duties lies within the AIF manager and not the depositary. « Independence of management boards and su- pervisory functions (article 24) Where a group link exists between them, the man- agement company or the investment company and the depositary shall ensure that: (a) Where the management body of the manage- ment company and the management body of the depositary are also in charge of the supervi- sory functions within the respective companies, at least one-third of the members or two per- sons, whichever is lower, on the management body of the management company and on the management body of the depositary shall be independent; (b) Where the management body of the manage- ment company and the management body of the depositary are not in charge of the supervisory

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