Master - Feeder UCITS

Author:Mr Andrew Bates
Profession:Dillon Eustace

The UCITS IV Directive allows for the establishment of a "feeder" UCITS, which is defined in the Directive as a UCITS which has been approved to invest, by way of derogation from the existing limits on investment in other CIS, at least 85% of its assets in units of another UCITS (the "master fund"). Both the feeder and master fund must, therefore, be established as UCITS. The conditions for the establishment of a feeder UCITS, as set out in the UCITS IV Directive, are reflected in UCITS Notice 18.

Central Bank Approval

Investment of a feeder UCITS into a master fund is subject to prior approval of the Central Bank. Such approval will only be granted if the feeder UCITS, the master UCITS, the custodian / trustee and the auditors satisfy certain conditions and subject to submission of various documents to the Central Bank.

An application to the Central Bank for approval of a UCITS master / feeder must be accompanied by the following documents:

the constitutional documents of the feeder and master; the prospectus and key information document of the feeder and master; the agreement between the feeder and master or the internal conduct of business rules; where applicable, the information to be provided to investors; where applicable, the information sharing agreement between the custodian / trustee of the feeder UCITS and the custodian / trustee of the master UCITS; where applicable, the information sharing agreement between the auditor of the feeder UCITS and the auditor of the master UCITS; and where applicable, an attestation from the competent authority of the master UCITS regarding the status of the master. Prospectus Disclosure

The prospectus of a feeder UCITS must contain certain disclosures, to include a prominent statement that it is a feeder and the name of the master in which it invests 85% or more of its nets assets. The prospectus must also disclose certain information in relation to the underlying master UCITS, including information with regard to the investment objective and policy of the master, aggregate charges at the level of the feeder and the master and tax implications for the feeder arising from the investment in the master.

Other permissible asset types

Up to 15% of the assets of the feeder UCITS may be invested in other types of assets including ancillary liquid assets, financial derivative instruments (in which case, the global exposure of the feeder UCITS must be calculated taking into account global exposure...

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