A Guide To UCITS In Ireland

Author:Mr Edward Simpson
Profession:Dillon Eustace
 
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Introduction

Undertakings for Collective Investment in Transferable Securities, commonly referred to as UCITS, are collective investment schemes established and authorised under a harmonised European Union (EU) legal framework under which a UCITS established and authorised in one EU Member State can be sold cross border into other EU Member States without a requirement for an additional authorisation. This so-called "European passport" is central to the UCITS product and enables fund promoters to create a single product for the entire EU rather than having to establish an investment fund product on a jurisdiction by jurisdiction basis.

Originally introduced over twenty years ago, UCITS have become the gold standard EU investment fund product, recognised not only by the European financial services community but also further afield with many non-EU jurisdictions accepting UCITS as suitable for retail sale into their domestic markets. Whilst sold across the full spectrum of investor types, UCITS have been designed principally for the retail market as open-ended diversified, liquid products with their parameters - permitted asset classes and investment and borrowing restrictions - being enshrined in EU law.

Importantly, UCITS is not a product which has stood still, rather it has and continues to evolve, with a significant broadening of permitted asset classes and more robust governance requirements being introduced in 2002 and clarified in 2007. More recently, a series of additional changes have been implemented under the UCITS IV Directive in order to further simplify the European passport process for UCITS, introduce master/feeder type structures, create a framework for cross-border fund mergers, replace the Simplified Prospectus and introduce further measures in relation to the UCITS Management Company Passport. Underpinning UCITS and the proposed future evolutions of the product has been a common EU approach with involvement from securities regulators and industry participants across the European Union at each stage of the development process. Whilst at times the pace of change may be too fast for some and too slow for others, to date UCITS has generally achieved the right balance.

Ireland has become one of the leading EU "exporting" jurisdictions for UCITS having been pro-active in implementing the UCITS regime into domestic legislation in 1989, introducing a sensible investment funds focused fiscal regime and clear but prudential process...

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