MAKING THE MOST OF UCITS IV

UCITS IV Management Company Passport

LEGAL TEXTS: UCITS IV DIRECTIVE, CHAPTER III, ARTICLES 6 TO 21 AND DIRECTIVE 2010/43/EU

Objective of the measure and benefits

The full Management Company passport (MCP) introduced in the UCITS IV Di- rective allows Management Companies (MC) authorised in their home Member State to provide services to UCITS located in another Member State. This can be done by establishing a branch of the MC in such other Member State or through direct servicing to the UCITS located abroad. The MCP will bring flexibility and cost savings for fund promoters while esta- blishing their business model, as they will be able to geographically concentrate and allocate any of their functions wherever is best appropriated according to their specific needs.

Domicile A

Domicile B

Domicile C

UCITS

UCITS

UCITS

Freedom to provide services

Management company

Branch

Service providers of domicile A, B, C

Key features

Scope of the passport 1 - The MCP covers all the activities for which the MC has been au- thorised in its Home Member State , i.e., core functions and non-core func- tions (unchanged since UCITS III). 2 - If the MC is located in a Member State different from the UCITS: A split of competences between Authorities of the Home Member State of the MC and the Host Member State of the UCITS applies. • The MC must comply with rules of its Home Member State in terms of “subs- tance“, risk management, code of conduct and delegation as well as with fund accounting and administrative rules set forth by the UCITS’s Home Member State;

• The depositary shall enter into an agreement with the MC regulating the flow of information and procedures to perform functions and shall allow the Re- gulator of the UCITS’s home Member State to obtain information on request.

Implementing measures (Level 2) In order to ensure that investors in UCITS that are managed on a cross-border basis are not exposed to additional operational risks or lower protection, the UCITS IV implementing measures impose minimum regulatory requirements to be complied by the MC in terms of organisational requirements and conflict of interests, conduct of business and risk management, in line with MiFID regula- tions.The principle of proportionality applies to certain requirements, depending on the nature, scale and complexity of the services that the MC provides.

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