MAKING THE MOST OF UCITS IV

UCITS IV

Mergers

LEGAL TEXTS: UCITS IV DIRECTIVE, CHAPTER VI, ARTICLES 37 TO 48 AND DIRECTIVE 2010/43/EU

Objective of the measure and benefits

in all juridictions and cooperation between financial Authorities. Furthermore, it appears that a great proportion of European UCITS are to be qualified as “micro-funds“ in terms of assets but incurring considerable running costs. UCITS IV removes such obstacles granting a broad range of opportunities to promoters, who may choose to concentrate flagship funds in a single domi- cile through cross-border merger(s) resulting in an absorbing UCITS broadly distributed.

UCITS IV creates a framework under which cross-border mergers between all types of UCITS (and sub-funds thereof) shall be recognised in each Member State and performed under adequated safeguard of the investors’s interests. The measure shall also impact domestic mergers to the extent that at least one of the UCITS involved distributes its units on a cross-border basis.

As of today, cross-border mergers are confronted with major tax, legal and ad- ministrative barriers linked to lack of an appropriated regulatory framework

Key features

Merging UCITS’s Home MS

Receiving UCITS’s Home MS

3 types of merger techniques 1• By absorption: One Merging UCITS is dissolved (without liquidation) and merged into another existing Receiving UCITS with transfer of all its assets and liabilities. 2• By creation of a new UCITS: Several Merging UCITS are dissolved (wi- thout liquidation) and merged into another newly formed Receiving UCITS with transfer of all their assets and liabilities. 3• By transfer of net assets only: One Merging UCITS continues to exist until discharge of its liabilities and transfers its net assets to the (existing or new) Receiving UCITS. National law continues to apply to domestic mergers which do not involve a UCITS which markets its units on a cross-border basis. Harmonised process through Level 2 Legislation 1 - Cooperation mechanisms between Regulators: Cross-border mer- gers are subject to prior authorisation by the competent authorities of the Mer- ging UCITS. It is also required to consult with the competent authorities of the Receiving UCITS as the shall assess the impacts of the merger for its unitholders and decide on the level of information to be given to them.

2 - Immediate transmission of complete merger file

Competent Authorities

Competent Authorities

3 - Considering merger file

1 - Submission of the merger file . Common draft terms of the proposed merger . Depositaries’ statements . information to unitholders . In cross-border context, an up- to-date version of the prospectus and the KIID of the receiving UCITS 1bis - If the file is incomplete: Request additional information within 10 working days

3 - Considering merger file

Entitled to request the Receiving UCITS to modify the information to be supplied to the Receiving UCITS’s unitholders within 15 working days Must state whether they are satisfied with the modified information to be provided to the Receiving UCITS’s unitholders within 20 working days of notification

Entitled to request the Merging UCITS to clarify the information to be supplied to the Merging UCITS’s unitholders 4 - Merger approval or refusal within 20 wor- king days of the submission of the complete merger file and commu- nication of such approval/refusal to the merging UCITS and competent authorities of Receiving UCITS

5 - Merger

Receiving UCITS

Merging UCITS

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