Originally published 25th February 2011
Under the recast UCITS Directive which is due to come into effect in July 2011, the procedure for registering for sale the units of UCITS funds in other EU member states is due to undergo significant change. The new procedures have implications for both Irish authorised UCITS which are seeking to market their units in other EU jurisdictions and also for non-Irish authorised UCITS which are seeking to market into Ireland.
The existing UCITS cross-border notification procedures were included in the first UCITS Directive and were created so as to allow for the marketing of UCITS on a public basis to retail and institutional investors once a notification was effected. However, effecting and maintaining foreign country registrations has proved to be a costly and time consuming process and there are various inconsistencies in the rules that apply in the different EU member states. Under the new UCITS IV procedures, the process has been streamlined so as to enable a UCITS to register more quickly and efficiently in other EU Member States. However, although the new notification procedures significantly change the initial registration process the measures fall somewhat short of a complete overhaul of the foreign country registrations regime.
New Notification Procedures under UCITS IV
Under UCITS III, applications to market the units of a UCITS in another EU jurisdiction are made to the host state regulator of that jurisdiction. The processing of such applications can take up to 2 months depending on the capacity of the relevant regulatory authority. Under the UCITS III regime, it is often a requirement that the notification documentation be provided in the language of the host state and the preparation of translations can involve significant expense for funds which are registered in several different jurisdictions.
Going forward, the notification procedure under the UCITS IV Directive intends to simplify, expedite and reduce the costs involved in the registration process. The new notification procedure involves regulator-to-regulator communication (rather than UCITS-to-regulator) in the country in which registration is sought. The new procedures also relax the translation requirements which can prove costly and should significantly reduce the time periods involved in registration. In addition, the host regulator is precluded from imposing additional notification requirements to those which are set out in the...