MAKING THE MOST OF UCITS IV

Mergers

Key features

2 - Third party control on the merger: The depositaries of the Merging and Receiving UCITS will be deemed to check compliance of the merger procedure with the Directive’s requirements. Furthermore, the depositary or an auditor (as required under local law) shall issue a report on the operation. Impacts of cross-border mergers for unitholders • Compulsory and accurate information on the merger shall be given to unithol- ders of both the Merging and Receiving UCITS, tailored to meet their different needs. • The Directive sets forth protection measures of unitholders’ rights in relation to the merger (e.g. right to redeem without costs prior to the merger, receive a copy of the KIID of the Merging UCITS).

Unitholders of Merging UCITS

Background reasons for the merger, possible impact differences in the rights, comparison of all charges and expenses for both UCITS, performance-related fee, relevant procedural aspects and planned effective date of the merger, etc.

Unitholders of Receiving UCITS

Specific rights (treatment of accrued income in the Merging UCITS, allocation of costs, right to obtain of the report of the independent auditor or depositary), relevant procedural aspects and planned effective date of the merger, etc.

Points of attention

Main questions that clients should address

• The major challenge consists on evaluating tax implications of each merger both at the fund le- vel and at the investor level, as UCITS IV does not establish a tax framework along with this measure; • New supervisory challenge will be that Regula- tors adequately ensure that unitholders of the Merging and the Receiving UCITS are provided with appropriate and accurate information on the merger without imposing an information process costly and cumbersome; • The Receiving and Merging UCITS have the right not to bear any cost associated with the merger. Costs should lie with promoters and investment managers (except in cases where UCITS have not designated a Management Company).

Is the cross-border UCITS merger an interesting option for us given the jurisdictions in which we are present and our distribution network? Could it enable us to achieve operational efficiencies and cost savings?

How can we efficiently manage the investor information process at the level of all UCITS involved in the merger?

To what extent does our legal documentation need to be amended to prevail from this measure?

How can our service providers (depositary, fund administrator, etc.) help us to successfully achieve mergers notably with regard to information process ?