MAKING THE MOST OF UCITS IV

Profile 3

Implementation considerations & points of attention

In order to fully comply with the new regulatory framework, it is strongly recommended that you work with an expert partner able to advise you and accompany you at all the stages of implementation of your new UCITS structure.

Your main challenge will be to transfer your expertise to a new regu- latory and distribution framework. You will notably have to thoroughly understand the UCITS regulatory (eligible assets, investment restric- tions, risk management constraints, etc.), tax and operational environ- ment (flexibilities and constraints). Furthermore, you have no European presence yet.

Besides, if you choose to replace your existing local fund by your new UCITS structure, you will have additional re-structuring tasks and have to register the UCITS fund in your domestic country outside Europe. Investors’ flight risk at the time of the change of structure from local fund to UCITS should obviously taken into account. SERVICING STRUCTURE Domiciling your EU Management Company, as well as the transfer agency and fund administration, in the country of domiciliation of your UCITS will be the more efficient servicing structure, except for specific constraints (e.g. fiscal). It will notably enable you to work with a single regulator. However, as a non-EU Management Company, you may not intend to build a new structure from scratch in an EU country in an environment you are not familiar with. Consequently, you will probably be interested in a comprehensive packaged servicing structure solution inclu- ding a third-party Management Company having the substance, the staff and the adequate tools and a full service provider (trans- fer agency, depositary, fund administration, support to distribution) already set up in a cross-border UCITS distribution centre and strongly experienced in the UCITS market. It would allow you to save both time and money, gain efficiency and ensure you are fully compliant with the new environment you are entering into (in particular in terms of risk

3

Challenges related to entering the UCITS market

PRODUCT STRUCTURING Whatever the scenario chosen, you will have to select the domiciliation of your future UCITS fund according to various criteria (cross-border distribution centre, regulator, legal, tax and marketing aspects, etc.) and then to create it. You should keep in mind that UCITS are regulated structures requiring to go through a full authorisation procedure before being launched, as the regulator of the country of fund domiciliation want to legitimately know “what is behind”. You will have notably to produce a prospectus, a KIID and constitutional documents for your UCITS fund. Once your UCITS is launched, you will also have to file frequent reporting with the regulator. It will certainly be necessary to find a partner who is sufficiently experienced to help you define the optimal product structure to set up and assist you in creating your own UCITS in a cross- border centre. Close relationships of this partner with the local regulator could be a key advantage to rapidly create your new product.

CACEIS - UCITS IV |  page 23