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Esma highlights late Ucits IV transposition
17 October 2011
Following news that a number of EU member states still have not transposed the Ucits IV directive into national law, the European Securities and Markets Association has proposed practical arrangements for cross-border operations
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Esma
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RBC Dexia Investment Services
The European Securities and Markets Association (Esma) has said that master feeder UCITS structures based in different EU countries should not be permitted if one or both EU member states have not transposed the directive.
Esma has proposed practical arrangements for cross-border operations that involve a member state that has not transposed the UCITS IV directive into national law.
The deadline for the transposition of the directive dates back to 1 July 2011, yet Esma says that most member states have not yet fully transposed the directive and its implementing measures.
Belgium, France, Italy, Spain and Switzerland all failed to implement Ucits IV by the deadline. According to research by RBC Dexia Investor Services, as of August 18, Belgium and Italy still had not implemented their draft laws for Ucits IV, while Spain was expected to pass its proposed bill in early October.
Esma said it aims to address the situation at an operational level in order to lessen the impact on the industry and investors.
The European body said that mergers are not possible between two Ucits established in different member states where one has not transposed the directive because the “direct applicability” of the directive would turn it into a complex operation.
However, a merger can be permitted between two Ucits funds established in the same non-transposing member state and where at least one of the two Ucits is marketed in another member state, providing that national legislation in the non-transposing country complies with certain articles of the directive.
Esma also said that Ucits fund managers based in a member state that has transposed Ucits IV should be able to create a fund in a non-transposing member state through the management company passport. However, managers in non-transposing countries can only use this method if their current national law complies with key articles of the directive.