EUROPE: Council confirms agreement with Parliament on UCITS V

Thursday March 20 2014

The Council of the European Union has announced that it has approved an agreement reached with the European Parliament on a proposal to amend EU rules on investment funds.

The proposal amends Directive 2009/65/EC on undertakings for collective investment in transferable securities (UCITS) as concerns depositary functions, remuneration policies and sanctions. It introduces specific provisions on the depositary`s safekeeping and oversight duties, and defines the conditions in which safekeeping duties can be delegated to a sub-custodian. The draft directive sets out a list of entities that are eligible to act as UCITS depositaries, and clarifies the depositary`s liability in the event of the loss of a financial instrument held in custody. It also includes provisions on redress. Administrative sanctions for legal persons will be set to at least 10 % of total annual turnover or €5m, for natural person to at least €5m, or in both cases to at least twice the amount of the benefit derived from the infringement, if this benefit can be determined.

As concerns remuneration, the draft directive introduces a requirement for the UCITS management company to implement policy that is consistent with sound risk management and complies with minimum principles.

The agreement will enable the amending directive to be adopted at first reading, before the Parliament adjourns for elections at the end of May. Agreement with the Parliament was reached on 25 February. Member states will have 18 months to transpose the directive into national law, and depositories will be given an additional 24-month transition period after the transposition deadline.

Click on the above link for the Council press release.