The Management Company Passport: A New Era of Cross Border UCITS

• Author: Jolene Quinn
• Position: BCL (Clinical) IV University College Cork
• Pages: 44-55

[2011] COLR

44

THE MANAGEMENT COMPANY PASSPORT: A NEW ERA OF

CROSS BORDER UCITS

Jolene Quinn*

A INTRODUCTION

The new provisions for a new management company passport (MCP) outlined in the

UCITS IV Directive

1

(Directive) are the next chapter in the development of the UCITS story.

The MCP will allow a management company

2

domiciled in a Member State to manage funds

established in other Member States with or without the establishment of a branch. The European

Union (EU) introduced the first UCITS (Undertakings for Collective Investment in Transferable

Securities) framework Directive in 1985.

3

This Directive introduced a single format for the open-

ended funds that invest in transferable debt or equity securities to be sold with a single

authorisation throughout the EU.

4

Today, there are around 32,000 UCITS products,

5

representing

over €6 trillion of assets under management. UCITS licensed products thereby represent about

79% of the total assets of European investment funds.

6

These figures may suggest that the

UCITS story has been a successful one however, in recent years, issues such as industry

consolidation and efficiency constraints have prevented the EU from fulfilling its main objective

of the UCITS project, to foster the development of a European single market. It was hoped this

objective would offer greater business and investment opportunities, for both industry and

investors by removing Member States barriers for the provision of financial services throughout

the European Community.

7

This new Directive is at the core of the EU's Financial Services Action Plan (FSAP). This

action plan follows on from the Communication of 28 October 1998 entitled Financial services:

building a framework for action.

8

It was presented at the request of the European Council,

meeting in Vienna in December 1998, which invited the Commission to draw up a programme of

* BCL (Clinical) IV University College Cork.

1

European Parliament and Council Directive 2009/65/EC on the coordination of laws, regulations and

administrative provisions relating to undertakings for collective investment in transferable securities [2009] OJ

L302/32 (UCITS Directive)(recast).

2

A management company is a company whose regular business is the management of UCITS in the form of

common funds or of investment companies.

3

Council Directive 85/611/EEC on the coord ination of laws, regulations and administrative provisions relating to

undertakings for collective investment in transferable securities [1985 ] OJ L375 (UCITS).

4

K Lannoo ‗EU Retail Financial Market Integration: Mirage or Reality?‘ in European Credit Research Institute

(ECRI) Policy Brief No 3 (June 2008) [97].

5

Some of the common types of UCITS products: UCITS bank deposits, UCITS U mbrella Funds, UCITS Index

Funds and UCITS Guaranteed Funds.

6

Council Directive 85/611/EEC (n 3).

7

Euro pean Parliament a nd Council of the European Union Proposal for a Directive on the coordination of laws,

regulations and administrative provisions relating to undertakings for collective investment in transferable securities

(UCITS) COM (2008) 0458 final (Proposal).

8

Commission Communication of 28 October 1998 ‗Financial services: building a framework for action‘ COM (98)

625

< http://ec.europa.eu/internal_market/finances/docs/actionplan/index/fs_en.pdf> (2 5 February 2011).